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Activist shareholder Frank Williams targeting MainStreet Bank

By WTOP Staff

It looks like Fairfax-based MainStreet Bank is in for a fight.

As I report in Friday’s print edition, local activist shareholder Frank Williams Jr. is taking aim at the 9-year old institution, which he calls underperforming. He hopes to marshal a stockholder revolt to shake up the board, fire management and sell the bank to the highest bidder.

“We’re looking to see if we can get any support for a proxy contest,” Williams told me.

MainStreet, which has $271 million in assets and five branches, is an unusual bank with a different strategy from other local institutions. While most nondistressed local community banks have been feverishly expanding in recent years, stealing business from the big banks that retrenched during the downturn, MainStreet has been targeting growth of about 5 percent a year — a fraction of what many local banks have been posting. The bank is hesitant to overextend itself in what CEO Jeff Dick sees as a still uncertain economy.

While Dick tells me that his institutional investors agree with the bank’s slow growth strategy, its stock is trading at $6.35 — well below its $9.73 book value and the $10 per share that original investors paid.

Williams and his allies are miffed about it.

“With a mixture of a weak board and a management that’s driven by feathering their own nest, it’s a perfect storm for shareholders,” says Kevin Keyes, a former MainStreet director who has teamed up with Williams to try to force changes. “That’s why Frank and I and many other shareholders have decided that we own this institution. Management doesn’t. And we’re going to work to try to take it back. It’s as simple as that.”

Aside from the bank’s slow growth and low profitability, the bank’s sparkling new headquarters also has become a soar spot for Williams and his allies. The 30,000-square-foot building is decked out with a fitness center, locker rooms, a TV production studio and an office for the CEO that is designed to mimic an English pub. Williams and Keyes point to it as an example of management enriching themselves at the expense of shareholders. Dick counters that the bank needed new space and got a fantastic deal on the building.

Williams, who owns stock in a least a half dozen local banks, has done this before. He successfully waged a similar campaign at Alliance Bank, which he pressured to appoint new directors, ax the CEO and sell itself.

“This is an environment that could be ripe for that kind of activity,” said Columbia, Md., banking consultant Anita Gentle Newcomb. “There are banks that are underperforming, and these activist shareholders who have an interest are looking to change that.”

How often are these activists successful?

“It’s hard to say,” Newcomb said. “It takes a lot to get them to go away, if they ever go away. They just stay on it. … This is a fear of every bank, that suddenly you have an activist shareholder that shows up on your doorstep.”

I asked the CEOs of Access National Bank and Freedom Bank of Virginia, where Williams also is a stockholder, if they get a flicker of fear whenever he calls.

“I have a good relationship with Frank,” said Reston-based Access National CEO Mike Clarke. “He has expectations on what he wants as an investor, and I don’t think his expectations are unreasonable. I think that my interests and Frank’s are aligned.”

But Clarke also said that most shareholders at community banks don’t pay nearly as much attention to what’s happening as Williams does.

“One of the challenges or problems with our industry is that a lot of investors are apathetic,” Clarke said, explaining that this often allows management to operate without paying much mind to stockholders.

“For a shareholder who cares about their economic interests, it’s extraordinarily frustrating,” he said. “That’s the angle that Frank comes from.”

Craig Underhill, CEO of Fairfax-based Freedom Bank, also said he has a good relationship with Williams, who got a little irked a year or two ago about the bank’s progress and made his feelings known. The bank listened.

“Frank is very supportive of the strategy we’re following,” Underhill said, adding later: “As with all shareholders, he’s looking for a return, and we are looking to provide him with one.”

“We certainly respect him as a knowledgeable community bank investor,” Underhill continued. “He is willing to put his money into community banks, and none of us can be in business without that capital.”

Taking stock

Here’s a non-comprehensive list of local banks where Williams is a stockholder

  • MainStreet Bank
  • Virginia Commerce Bank
  • Capital Bank
  • Access National Bank
  • Freedom Bank of Virginia
  • Millennium Bank

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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