National Bankshares in Blacksburg, Va., is facing more pressure from an investor to return capital to shareholders.
Abbott Cooper, manager of Driver Management, said in an Oct. 19 letter to National's board that he wants the $1.3 billion-asset company to appoint a special committee and hire an investment bank to look into buying back stock or declaring dividends.
Driver, which owns just 1% of National's stock, included a shareholder proposal to appoint independent directors to serve on the special committee.
While Cooper isn't pushing National to sell itself, he said in an interview that such a decision would also make him happy.
"They have a very solid deposit franchise and a lot of liquidity ... so they would be an attractive target for a lot of banks," said Cooper, who
"I think one of the reasons that they have a lot of excess capital is to deter suitors, but with the way that [tangible book value] dilution works in M&A deals, and investors continued focus on that metric, the merger math for many acquirers would be very favorable," Cooper added.
Cooper said in his letter that he was unsatisfied with CEO Brad Denardo's prior responses to his suggestions.
"The excess capital is deal money ... and the excess equity masks the company's otherwise stellar results," Cooper wrote. "In the few conversations we have had on this topic, you have shown no inclination whatsoever to examine this issue in any depth or with any rigor."
Denardo declined to comment.
