A month after the chairman of Atlantic Coast Financial Corp. resigned, another director of the Jacksonville-based banking company submitted his resignation and indicated a rift on the board.
The parent company of Atlantic Coast bank said in a Securities and Exchange Commission filing on Thursday that Palm Coast resident Charles Carey resigned from the board on June 2.
This came a month after another SEC filing said that Jay Sidhu resigned his position as chairman, although Sidhu intends to remain on the board of directors until his term runs out in 2014.
Carey was appointed to the board in February but said in his resignation letter that “in the limited time I have served on the board it has become apparent to me that, given the events that have transpired, and current circumstances at ACFC, I will be unable to effectively serve as a board member.”
The resignation letter, included in the SEC filing, cited concerns about “teamwork” on the board.
“The board’s ability to effectively manage the business has been significantly thwarted by the polarization of board members and the contentious nature of interactions among directors,” it said.
Carey also cited the company’s lack of “a credible business plan” and also expressed concerns that the board has not resolved “issues associated with the CEO’s stock trades in December 2011.” The letter did not give more details about the stock trades.
Carey said Friday he could not comment beyond what was in the SEC filing.
Chief Executive Officer G. Thomas Frankland did not respond to phone messages Friday. Atlantic Coast Financial did provide responses to Carey’s concerns in the SEC filing.
The company said the stock questions related to the CEO’s purchase of 7,046 shares of Atlantic Coast Financial stock for a total of $10,143, and that the transactions were disclosed in an SEC filing on Dec. 5.
“The board has reviewed the stock purchases with the company’s counsel and has implemented certain recommendations made by such counsel relating to this matter,” it said.
The company agreed with Carey that the board has become polarized, but it attributed that to “the views and actions of certain members of the board.”
“However, the majority of the board of directors believes the company is taking appropriate actions to explore all strategic alternatives to enhance stockholder value,” it said.
As for the business plan, the company said it is operating “under a business and capital plan that has been reviewed and approved by federal regulators.”
Carey’s resignation leaves nine directors on the board, including Frankland and Sidhu. Frankland is the only company executive on the board.
Flowers Foods expanding its footprint
Flowers Foods Inc. has long been a Southern company, but the maker of breads and other baked goods under brands such as Nature’s Own, Sunbeam and Cobblestone Mill is expanding its national footprint, particularly in the Northeast.
A year ago, Flowers acquired Philadelphia-based Tasty Baking Co., makers of Tastykake snacks which are an iconic brand to anyone who grew up in that region.
Two weeks ago, Flowers moved farther north by announcing an agreement to buy Auburn, Maine-based Lepage Bakeries Inc. for $370 million in cash and stock. Lepage produces goods under the Country Kitchen and Barowsky’s brands.
Thomasville, Ga.-based Flowers currently operates 41 bakeries mainly in the Southeastern states, including a bakery in Jacksonville.
The Lepage deal adds three more bakeries in Maine and Vermont and will increase its market penetration from stores serving 64 percent of the U.S. population to 70 percent. The company’s goal is to reach 75 percent of the population by 2016.
Flowers said the acquisition, expected to close in the current quarter, will add 3 to 5 cents of earnings per share this year and 8 to 12 cents next year.
The average forecast of analysts for Flowers had been $1 per share this year, according to Thomson Financial.
The deal is already paying off for shareholders, with Flowers’ stock reaching a record high of $23.59 last week.
BMO Capital Markets analyst Amit Sharma said in a research note that the Lepage deal “highlights Flowers’ familiar playbook of buying smaller regional companies” to expand into adjacent markets and to expand distribution of its existing brands.
“Second, the acquisition not only accelerates Flowers’ timetable to fully penetrate densely populated markets in the Northeast but also gives it access to high-margin bakeries,” Sharma said.
“Third, we expect Flowers to remain an active acquirer in the consolidating U.S. bakery industry, particularly to fill up its distribution on the coasts,” he said.
SunTrust Robinson Humphrey analyst William Chappell upgraded his rating on Flowers’ stock from “neutral” to “buy” on the same day of the Lepage agreement but before the deal was announced.
He speculated that “there could be more than one sizable deal in the pipeline” after the company recently sold $400 million in senior notes.
“Flowers has a strong track record for integrating deals and generating revenue and cost synergies, and we would expect these potential deals to be no different,” Chappell said in his report.
Chappell also cited a better environment for the baking industry in his upgrade.
“Following first-quarter results, we believe the fresh bread category has stabilized both in terms of promotional activity and rising input costs,” he said.
Chappell set a $28 price target on the stock.
Analyst feels good about Convergys
In the past three months, Convergys Corp. has announced a restructuring of its business and new top management.
Robert W. Baird analyst David Koning recently met with company executives and came away with a positive impression of the company’s direction.
“Convergys has done a commendable job simplifying the business over the past two-plus years. Now, Convergys is focused on delivering long-term value to shareholders through strategic M&A, stock buybacks, and dividends,” Koning wrote in his report.
After selling off a division that provided human resources management services in 2010, Cincinnati-based Convergys in March announced an agreement to sell its information management division.
That leaves Convergys with its customer management division, which provides outsourced customer service functions and employs about 1,500 people in Jacksonville.
Last month, Convergys announced that Andrea Ayers, president of the customer management division, will succeed Jeff Fox as CEO of the company later this year.
It also said Andre Valentine, senior vice president of finance for customer management, will become chief financial officer.
“We are becoming increasingly comfortable with the recent management transition announcements,” Koning said.
He said that Ayers and Valentine had been given increasing levels of responsibility in recent years before the promotion.
“Fox emphasized that the transition has been in the works for a while, and expressed his confidence that both Ayers and Valentine are the right people to lead the firm going forward,“ Koning said.
Seacor has 47 percent of Trailer Bridge
When Trailer Bridge Inc. emerged from Chapter 11 bankruptcy at the end of the first quarter with senior noteholders owning most of its stock, it was clear that Seacor Holdings Inc. would be the largest shareholder.
However, the bankruptcy court documents never said just how much of Trailer Bridge would be owned by Seacor.
That was finally made clear when Fort Lauderdale-based Seacor filed its first-quarter report with the SEC. It shows that Seacor now owns 47 percent of the Jacksonville-based marine and truck freight company, which is no longer publicly traded.
Regency gets plug from Forbes
Jacksonville-based Regency Centers Corp. received a plug last week in an article on Forbes magazine’s website that was titled “Stock up on this grocery-anchored REIT.”
The article said that Regency has differentiated itself from other shopping center real estate investment trusts by focusing on centers anchored by high-quality supermarket chains.
“Regency’s strategy of investing and developing highly productive grocery-anchored shopping centers in trade areas with above-average income has been a leading differentiator that has resulted in reliable income and growth,” the story said.
“This strategy has resulted in a recession proof model that generates consistent customer traffic and repeatable revenues. In addition, the grocery-based model is not as threatening to grocers as the other retailers that are impacted by e-commerce sales,” it said.
356-2466