Investors are quickly choosing sides in a proxy battle at Financial Institutions in Warsaw, N.Y.
Clover Partners, an activist investor that owns 5.5% of Financial Institutions' stock, disclosed in a regulatory filing that it had rejected an offer by the $3.4 billion-asset holding company for Five Star Bank to avert a fight. Financial Institutions' offer involved adding a "mutually agreeable" director with no ties to the company or Clover.
Clover, which is looking to replace two directors with its own nominees, has been critical of Financial Institutions' recent acquisitions and had been pressing management and the board to sell the company.
Johnny Guerry, Clover's managing partner and one of its nominees, wrote in a letter to Martin Birmingham, Financial Institutions' chief executive, that the compromise was "a feigned attempt" to resolve the situation. Guerry also disclosed in his letter that Financial Institutions had considered his offer to join the board before dismissing the notion.
"If your board wanted to find a mutually acceptable candidate … the time for that was four months ago, when you had the information that you settled on to reject your third-largest shareholder as a candidate," Guerry wrote.
Guerry said his firm is willing to discuss adding both of its candidates to the board, instead of replacing Financial Institutions' nominees.
Financial Institutions did return requests for comment on Clover's rejection letter.
Clover isn't the only investor looking for change.
Peter Humphrey, a former Financial Institutions chief executive and a descendant of its founder, said recently that he also wants the company to consider selling itself.
Other family members disagree.
Richard Humphrey, one of Peter Humphrey's cousins, recently sent a letter to Birmingham and the company's board that openly supported their strategy. The March 22 letter obtained by American Banker claimed to speak for four family members who collectively own 6.4% of the company's stock.
"My family has thoughtfully considered the recent correspondence from other shareholders and do not share their views," Richard Humphrey said. "We have been impressed by the progress that had been made during the last three years on improving the operation performance of the bank."