Friday, 24 Jan 2020

Activist investor Driver Management wants Community Bankers Trust to sell itself

(Reuters) – Driver Management Company LLC, an activist investor targeting U.S. banks, said on Monday it wanted Community Bankers Trust Corp (ESXB.O), the holding company for Virginia community bank Essex Bank, to sell itself.

In an open letter to other Community Bankers shareholders reviewed by Reuters, Driver said it was worried the bank was losing out to its competitors and its Chief Executive Officer Rex Smith may have deterred possible suitors.

“We do believe that (Community Bankers) could obtain a significant premium to its current market value now through a sale to one of the many logical acquirers in the marketplace,” said Driver, which holds a stake of roughly 1.5% in Community Bankers, according to a source familiar with the matter.

Driver said in the letter that it believed Smith has unrealistic expectations of a sale price and has required that he remain in the bank’s senior management in any deal. It did not state how it arrived to this conclusion.

Community Bankers, which has a market capitalization of about $200 million, did not immediately return a request for comment.

The activist investor said in the letter that it has expressed its concerns to Community Bankers’ chairman, John Watkins, a former Virginia state senator, but has only received “perfunctory and formulaic responses.” Driver added that it believes that the bank’s board is overly deferential to Smith.

The activist investor is asking Community Bankers’ to “immediately hire experienced investment bankers” to find a buyer.

Dealmaking in the banking sector has been rising ever since U.S. President Donald Trump lowered corporate taxes and eased financial regulations on regional banks.

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