MutualFirst Financial in Muncie, Ind., is facing pressure from an activist investor to explore a potential sale, even after the bank earlier this year agreed to implement a demand made by the same activist.

Ancora Advisors in Cleveland on Friday said that it plans to press MutualFirst management to seek a sale, citing poor returns on equity and an undervalued stock, according to a regulatory filing.

"We believe the bank would achieve a valuation in excess of $30 per share in a merger with a larger, more well capitalized partner," Ancora said in the regulatory filing. "We also believe shareholders would benefit from a very large (likely 100%+) increase in the dividend yield from the current price."

MutualFirst closed at $21.99 per share, at the end of Tuesday trading. A spokesperson for the $1.4 billion-asset MutualFirst declined to comment.

Ancora, which holds a 5.1% stake in MutualFirst, earlier this year withdrew a planned proxy battle, after the company agreed to change a rule that required directors to live inside MutualFirst's home county of Delaware County.

Ancora, which had requested the company remove the rule, seemed "a little surprised when we took that step" of removing the eligibility requirement, David Heeter, MutualFirst's chief executive, told American Banker in February. "My perspective is that they were satisfied that we listened to them."

MutualFirst's maneuver was enough to bring about a truce with the activist PL Capital. In exchange for allowing PL Capital's Richard Lashley to join the board (Lashley does not live in Delaware County, Ind.), PL Capital agreed to not seek proxies to oppose the board's recommendations, or try to force the company to sell itself.

Ancora, however, apparently was not satisfied with MutualFirst changing the rule.

"While representatives of [Ancora] generally like Mr. Heeter on a personal level and believe he is making the best of the current situation, [Ancora] continues to have concerns about the bank's strategy of remaining independent," the activist said in the regulatory filing.

We "plan to continue to engage management and members of the Board of Directors in dialogue," Ancora said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.