National Bankshares is facing pressure from an investor that wants the Blacksburg, Va., bank to return more capital to shareholders.
Hilton Capital Management in Garden City, N.Y., is calling on the $1.3 billion-asset company to repurchase stock or declare a special dividend. The investor argued in a letter to National Bankshares CEO Brad Denardo that such efforts would be good for shareholders.
"National Bankshares is a great bank,” said Abbott Cooper, a portfolio manager for Hilton. “But it has a lot of excess capital — far more that it is likely to ever be able to deploy to make loans and support business in its markets."
Cooper said in the letter that he was first drawn to National Banskshares because of its “attractive performance measures and attractive deposit franchise.” He added that he bought the stock for client accounts he manages.
Over time, Cooper said, he came to believe the company would benefit from reassessing its capital planning. Cooper estimated that National Bankshares has about $12 a share in excess capital.
Denardo declined to comment.