Altabancorp in American Fork, Utah, is facing pressure from a large investor block.
Members of the Gunther family who own nearly a third of the $3.2 billion-asset company's outstanding stock are urging the board to "conduct a full review of ... strategic alternatives," including a possible sale.
“Such a review may lead you to conclude that partnering with another larger organization may be the best way to ensure the realization of Altabancorp’s value as a franchise as well as providing a better set of opportunities to our employees, customers and communities,” brothers Dale and Blaine Gunther wrote in a Jan. 13 letter to Altabancorp’s board.
The Gunthers said they are representing the interests of nearly two dozen family members.
A third Gunther brother, Paul, recently resigned from Altabancorp’s board, attributing his decision to the board’s “recent tenor toward my family and disregard of its concerns.”
The board and the family "are on divergent paths concerning the future of the organization,” Paul Gunther wrote in his resignation letter. “Accordingly, I believe my support for my family’s objectives precludes my continued service.”
While activist investor challenges are hardly a new phenomenon, the Gunther family has a unique connection to Altabancorp.
The family’s involvement in the 115-year-old bank goes back to 1952, when Orville Gunther — the father of Blaine, Dale and Paul — bought his first shares in what was known as People’s State Bank of American Fork. Orville would later become the bank's chairman and president.
Dale Gunther was the bank's president from 1988 to 2005. Paul Gunther, who joined the board in 1984, was chairman from 2003 to 2018. Blaine Gunther was a director for more than 15 years before stepping down in 2013.
The Gunthers said in a regulatory filing last June that they were hoping to open a dialogue between family members and the board, but the talks never happened, Dale Gunther said in an interview.
“We were unable to get them to agree to let us communicate with the whole board,” Dale Gunther said.
While Altabancorp’s management has "done a good job on the financial side,” Dale Gunther said the family believes the company has "achieved maximum performance and cannot deliver more for the shareholders."
The Gunther family has bigger concerns about morale at Altabancorp. “There have been a number of high-producing employees that have left citing a change in the culture” at the company, Dale Gunther said.
Altabancorp earnings for the first nine months of 2020 were flat from a year earlier, at $32.5 million. Asset quality was solid with nonperforming assets totaling 0.22% of total assets and charge-offs equal to 0.28% of average loans.
The Gunther family has also taken issue with Altabancorp’s plan to pursue acquisitions, including banks outside Utah. In a conference call with analysts in October, President and CEO Len Williams said Altabancorp would consider expanding into Arizona, Colorado, Idaho and Wyoming.
“We do not believe that this strategy holds much promise and are ready to share with the board the analysis of these opportunities that led us to this conclusion,” Blaine and Dale Gunther wrote in their Jan. 13 letter to the board.
"The board will carefully review and consider the letter," Richard Beard, Altabancorp's chairman, said in
Williams said in the filing that Altabancorp had hired a leadership development company "to help us strengthen and build a unique culture of commitment, accomplishment and accountability" as the company looks to become a regional community bank.
“I’m proud of the financial performance our strategic plan has shown to date," Williams added.
The company, which
