Malvern Federal in Pennsylvania Faces New Activist Threat

An activist investor with a reputation for pressuring management teams is pushing for a seat on the board of Malvern Federal Bancorp in Paoli, Pa.

Joseph Stilwell, known as one of the banking industry's most aggressive investors, declared his intentions in a regulatory filing Wednesday. Stilwell said in the filing that he intends to nominate John O'Grady for election to the board at Malvern's 2014 annual meeting.

Stilwell, a Malvern investor since 2008, said he controls nearly 10% of the $656 million-asset company's common stock through various funds. PL Capital, another activist investor, and Sandler O'Neill each own at least 9.7% of the company's common stock, according to the bank research team at Keefe Bruyette & Woods.

Word that Stilwell is seeking representation on Malvern's board comes less than a year after he successfully pushed the company to convert to a public company from a mutual. Stilwell filed a lawsuit against Malvern in 2011 to force it to undergo a second-step conversion, according to the investor's regulatory filing. Stilwell's filing said that he dropped the suit in January 2012 after the company announced plans to convert; Malvern converted last October, raising $36 million.

The analysts at KBW wrote that Stilwell's push for a seat could eventually lead to shareholder gains by forcing the company to sell. Malvern is barred from selling for three years after its conversion.

Stilwell is not the only activist putting heat on Malvern. Last year, PL Capital said it planned to vote against future executive compensation packages unless the company allowed investors to vote on changes to its bylaws.