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Section 1: SC 13D/A (AMENDMENT NO. 14 TO THE SCHEDULE 13D)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No. 14)1

First United Corporation

(Name of Issuer)

Common Stock, $0.01 par value

(Title of Class of Securities)

33741H107

(CUSIP Number)

J. ABBOTT R. COOPER

DRIVER MANAGEMENT COMPANY LLC

250 Park Avenue

7th Floor

New York, NY 10177

(212) 572-4811

 

with copies to:

 

ANDREW FREEDMAN, ESQ.

OLSHAN FROME WOLOSKY LLP

1325 Avenue of the Americas

New York, New York 10019

(212) 451-2300

 

EITAN HOENIG, ESQ.

KLUK FARBER LAW PLLC

166 Mercer Street, Suite 6B
New York, New York 10012
(646) 850-5009

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

 

February 12, 2020

(Date of Event Which Requires Filing of This Statement)

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.

Note:  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See § 240.13d-7 for other parties to whom copies are to be sent. 

 

1              The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

CUSIP No. 33741H107

  1   NAME OF REPORTING PERSON  
         
        Driver Opportunity Partners I LP  
  2   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☒
        (b) ☐
           
  3   SEC USE ONLY    
           
           
  4   SOURCE OF FUNDS  
         
        WC, OO  
  5   CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)     ☐
       
           
  6   CITIZENSHIP OR PLACE OF ORGANIZATION  
         
        Delaware  
NUMBER OF   7   SOLE VOTING POWER  
SHARES          
BENEFICIALLY         360,637  
OWNED BY   8   SHARED VOTING POWER  
EACH          
REPORTING         - 0 -  
PERSON WITH   9   SOLE DISPOSITIVE POWER  
         
          360,637  
    10   SHARED DISPOSITIVE POWER  
           
          - 0 -  
  11   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON  
         
        360,637  
  12   CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES     ☐
       
           
  13   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)  
         
        5.07%  
  14   TYPE OF REPORTING PERSON  
         
        PN  

  

2

CUSIP No. 33741H107

  1   NAME OF REPORTING PERSON  
         
        Driver Management Company LLC  
  2   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☒
        (b) ☐
           
  3   SEC USE ONLY    
           
           
  4   SOURCE OF FUNDS  
         
        AF, OO  
  5   CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)     ☐
       
           
  6   CITIZENSHIP OR PLACE OF ORGANIZATION  
         
        Delaware  
NUMBER OF   7   SOLE VOTING POWER  
SHARES          
BENEFICIALLY         360,637  
OWNED BY   8   SHARED VOTING POWER  
EACH          
REPORTING         - 0 -  
PERSON WITH   9   SOLE DISPOSITIVE POWER  
         
          360,637  
    10   SHARED DISPOSITIVE POWER  
           
          - 0 -  
  11   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON  
         
        360,637  
  12   CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES     ☐
       
           
  13   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)  
         
        5.07%  
  14   TYPE OF REPORTING PERSON  
         
        OO  

  

3

CUSIP No. 33741H107

 

  1   NAME OF REPORTING PERSON  
         
        J. Abbott R. Cooper  
  2   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☒
        (b) ☐
           
  3   SEC USE ONLY    
           
           
  4   SOURCE OF FUNDS  
         
        AF, OO  
  5   CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)     ☐
       
           
  6   CITIZENSHIP OR PLACE OF ORGANIZATION  
         
        United States of America  
NUMBER OF   7   SOLE VOTING POWER  
SHARES          
BENEFICIALLY         360,637  
OWNED BY   8   SHARED VOTING POWER  
EACH          
REPORTING         - 0 -  
PERSON WITH   9   SOLE DISPOSITIVE POWER  
         
          360,637  
    10   SHARED DISPOSITIVE POWER  
           
          - 0 -  
  11   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON  
         
        360,637  
  12   CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES     ☐
       
           
  13   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)  
         
        5.07%  
  14   TYPE OF REPORTING PERSON  
         
        IN  

  

4

CUSIP No. 33741H107

 

  1   NAME OF REPORTING PERSON  
         
        Michael J. Driscoll  
  2   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☒
        (b) ☐
           
  3   SEC USE ONLY    
           
           
  4   SOURCE OF FUNDS  
         
        PF  
  5   CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)     ☐
       
           
  6   CITIZENSHIP OR PLACE OF ORGANIZATION  
         
        United States of America  
NUMBER OF   7   SOLE VOTING POWER  
SHARES          
BENEFICIALLY         3,500  
OWNED BY   8   SHARED VOTING POWER  
EACH          
REPORTING         - 0 -  
PERSON WITH   9   SOLE DISPOSITIVE POWER  
         
          3,500  
    10   SHARED DISPOSITIVE POWER  
           
          - 0 -  
  11   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON  
         
        3,500  
  12   CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES     ☐
       
           
  13   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)  
         
        Less than 1%  
  14   TYPE OF REPORTING PERSON  
         
        IN  

  

5

CUSIP No. 33741H107

 

  1   NAME OF REPORTING PERSON  
         
        Lisa Narrell-Mead  
  2   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☒
        (b) ☐
           
  3   SEC USE ONLY    
           
           
  4   SOURCE OF FUNDS  
         
        PF  
  5   CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)     ☐
       
           
  6   CITIZENSHIP OR PLACE OF ORGANIZATION  
         
        United States of America  
NUMBER OF   7   SOLE VOTING POWER  
SHARES          
BENEFICIALLY         650  
OWNED BY   8   SHARED VOTING POWER  
EACH          
REPORTING         - 0 -  
PERSON WITH   9   SOLE DISPOSITIVE POWER  
         
          650  
    10   SHARED DISPOSITIVE POWER  
           
          - 0 -  
  11   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON  
         
        650  
  12   CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES     ☐
       
           
  13   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)  
         
        Less than 1%  
  14   TYPE OF REPORTING PERSON  
         
        IN  

  

6

CUSIP No. 33741H107

 

  1   NAME OF REPORTING PERSON  
         
        Ethan C. Elzen  
  2   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ☒
        (b) ☐
           
  3   SEC USE ONLY    
           
           
  4   SOURCE OF FUNDS  
         
        PF  
  5   CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)     ☐
       
           
  6   CITIZENSHIP OR PLACE OF ORGANIZATION  
         
        United States of America  
NUMBER OF   7   SOLE VOTING POWER  
SHARES          
BENEFICIALLY         425  
OWNED BY   8   SHARED VOTING POWER  
EACH          
REPORTING         - 0 -  
PERSON WITH   9   SOLE DISPOSITIVE POWER  
         
          425  
    10   SHARED DISPOSITIVE POWER  
           
          - 0 -  
  11   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON  
         
        425  
  12   CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES     ☐
       
           
  13   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)  
         
        Less than 1%  
  14   TYPE OF REPORTING PERSON  
         
        IN  

  

7

CUSIP No. 33741H107

The following constitutes Amendment No. 14 to the Schedule 13D filed by the undersigned (“Amendment No. 14”). This Amendment No. 14 amends the Schedule 13D as specifically set forth herein.

 

Item 4.Purpose of Transaction.

Item 4 is hereby amended to add the following:

On February 7, 2020, Driver delivered a letter (the “Part 4 Letter”) by email to shareholders of the Issuer. Also on February 7, 2020, Driver deliver an open letter (the “February 7 Letter”) to the Issuer’s Lead Independent Director, John McCullough. On February 10, 2020, Driver delivered a letter (the “Shareholder List Response”) to Tonya K. Sturm, Senior Vice President, Corporate Secretary and Chief Financial Officer of the Issuer. On February 11, 2020, Driver delivered a letter (the “Part 5 Letter”) by email to shareholders of the Issuer.

The Part 4 Letter, the February 7 Letter, the Shareholder List Response and the Part 5 Letter are attached hereto as Exhibits 99.1, 99.2, 99.3 and 99.4, respectively, and are incorporated herein by reference.

Item 7.Material to be Filed as Exhibits.

Item 7 is hereby amended to add the following exhibits:

99.1The Part 4 Letter, dated February 7, 2020

99.2The February 7 Letter, dated February 7, 2020
99.3The Shareholder List Response, dated February 10, 2020
99.4The Part 5 Letter, dated February 11, 2020

8

CUSIP No. 33741H107

SIGNATURES

After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: February 12, 2020

  Driver Opportunity Partners I LP
   
  By: Driver Management Company LLC
    its general partner
     
  By: /s/ J. Abbott R. Cooper
    Name: J. Abbott R. Cooper
    Title: Managing Member

 

  Driver Management Company LLC
   
  By:

/s/ J. Abbott R. Cooper

    Name: J. Abbott R. Cooper
    Title: Managing Member

 

 

   
 

/s/ J. Abbott R. Cooper

  J. Abbott R. Cooper

 

   
 

/s/ Michael J. Driscoll

  Michael J. Driscoll

 

   
 

/s/ Lisa Narrell-Mead

  Lisa Narrell-Mead

 

   
 

/s/ Ethan C. Elzen

  Ethan C. Elzen

9

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Section 2: EX-99.1 (PART 4 LETTER)

Exhibit 99.1

What’s Wrong With This Picture?

Part 4—About that dividend . . .
 

February 7, 2020
 

Fellow Shareholders,
 

In a recent letter to shareholders, John McCullough, First United’s Lead Director, highlighted the fact that the “team” at First United “has been responsible for . . . reinstituting our quarterly dividend.”[1]


What Mr. McCullough failed to mention, however, is that the First United “team” was also responsible for the actions that led to the suspension of First United’s dividend on November 15, 2010 due to regulatory action.
[2]

 

Fact: First United Paid No Dividends on its Common Stock from November 2010 until May 2018
 

As a refresher, it is worth remembering that:

·Immediately prior to the onset of the financial crisis, First United launched a particularly unfortunate strategy that included: (i) increasing leverage, (ii) investing in pooled trust preferred securities, (iii) investing in loan participations and (iv) increasing acquisition and development lending.[3]
·The consequences of this unfortunate strategy were clearly seen by October 31, 2010, when First United reported the following results:[4]

 

Net Loss per Common Share
 
$(1.12)
 
Average Equity to Average Assets 5.72%

 

 

 

·In its 10-Q for the quarter ended October 31, 2010, First United disclosed that it entered into “informal” agreements with regulators, pursuant to which First United would not pay any dividends without prior approval.[5]
·On November 17, 2010, First United announced that regulators had “requested” that First United defer all dividends on the preferred stock issued to the U.S. Treasury under TARP, effectively mandating the cessation of First United’s common stock dividend.[6]
·Many of the members of First United’s “team” that, according to Mr. McCullough, were responsible for reinstating the dividend, were also part of the “team” when regulators forced First United to suspend the dividend:

 

  November 15, 2010
 
January 20, 2020
 
Carissa Rodeheaver Executive Vice President and Chief Financial Officer Chairman and
Chief Executive Officer
 
M. Kathryn Burkey, Robert Kurtz, John McCullough, Elaine McDonald, Gary R. Ruddell, I. Robert Rudy, H. Andrew Walls Director Director

 
Given the reasons why First United was forced to stop paying a dividend for seven and a half years, we believe that reinstating the dividend was long overdue and not something this “team” should brag about.

If you agree with us, please communicate your views to the Board of Directors by calling or mailing Tonya Sturm, Secretary and Chief Financial Officer.  First United has represented to shareholders in its proxy statement that Ms. Sturm “will deliver all shareholder communications directly to [the Board] for consideration.”
 

 

 

DRIVER HAS NOMINATED THREE HIGHLY-QUALIFIED, INDEPENDENT NOMINEES FOR ELECTION TO THE BOARD AT FIRST UNITED’S 2020 ANNUAL MEETING

 

Due to First United’s refusal to heed shareholders’ calls for a sale process, we were left with no choice but to nominate three highly-qualified, independent director candidates, Michael J. Driscoll, Ed.D, Ethan C. Elzen and Lisa Narrell-Mead, for election to the Board at the upcoming annual meeting.

Driver is committed to transparency and effective information sharing. We invite all shareholders to visit
www.RenovateMyBank.com to learn more about our case for change and sign up for e-mail updates.  
 
Sincerely,
 
J. Abbott R. Cooper
Managing Member
Driver Management Company LLC

About Driver Management Company
 
Driver employs a valued-oriented, event-driven investment strategy that focuses exclusively on equities in the U.S. banking sector. The firm’s leadership has decades of experience advising and engaging with bank management teams and boards of directors on strategies for enhancing shareholder value. For information, visit
www.drivermanagementcompany.com.
 

 

 

CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
 
Driver Management Company LLC, together with the other participants named herein (collectively, “Driver”), intend to file a preliminary proxy statement and accompanying WHITE proxy card with the Securities and Exchange Commission (“SEC”) to be used to solicit votes for the election of its slate of highly-qualified director nominees at the 2020 annual meeting of stockholders of First United Corporation, a Maryland corporation (the “Corporation”).
 
DRIVER STRONGLY ADVISES ALL STOCKHOLDERS OF THE CORPORATION TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S WEB SITE AT 
HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS’ PROXY SOLICITOR.
 
Participants in the Solicitation
 
The participants in the proxy solicitation are anticipated to be Driver Management Company LLC (“Driver Management”), Driver Opportunity Partners I LP (“Driver Opportunity”), J. Abbott R. Cooper, Michael J. Driscoll, Ed.D, Lisa Narrell-Mead and Ethan C. Elzen.
 

 

 

As of the date hereof, the participants in the proxy solicitation beneficially own in the aggregate 365,212 shares of Common Stock, par value $0.01 per share, of the Corporation (the “Common Stock”). As of the date hereof, Driver Opportunity beneficially owns directly 360,637 shares of Common Stock. Driver Management, as the general partner of Driver Opportunity, may be deemed to beneficially own the shares of Common Stock directly beneficially owned by Driver Opportunity. Mr. Cooper, as the Managing Member of Driver Management, may be deemed to beneficially own the shares of Common Stock directly beneficially owned by Driver Opportunity. As of the date hereof, Dr. Driscoll directly beneficially owns 3,500 shares of Common Stock. As of the date hereof, Ms. Narrell-Mead directly beneficially owns 650 shares of Common Stock. As of the date hereof, Mr. Elzen directly beneficially owns 425 shares of Common Stock.

 


[1] https://www.sec.gov/Archives/edgar/data/763907/000110465920001175/tm201253d1_ex99-1.htm

[2] https://www.sec.gov/Archives/edgar/data/763907/000121390010004880/f8k111510_firstunited.htm

[3] First United provides a fairly detailed explanation of the rational for this strategy and its consequences in its 2009 and 2010 annual letter to shareholders (https://www.sec.gov/Archives/edgar/data/763907/000114420410016081/v178824_ex99-1.htm and https://www.sec.gov/Archives/edgar/vprr/1100/11006577.pdf), albeit with more than a reasonable amount of shifting blame for the massive losses sustained by First United to other parties, events and circumstances.

[4] As of or for the nine months ended September 30, 2010 https://www.sec.gov/Archives/edgar/data/763907/000121390010004490/f10q0910_firstunited.htm

[5] https://www.sec.gov/Archives/edgar/data/763907/000121390010004490/f10q0910_firstunited.htm

[6] https://www.sec.gov/Archives/edgar/data/763907/000121390010004880/f8k111510_firstunited.htm

(Back To Top)

Section 3: EX-99.2 (FEBRUARY 7 LETTER)

Exhibit 99.2

February 7, 2020

 

First United Corporation

19 South Second Street

Oakland, MD 21150

Attn: Mr. John McCullough

 

Mr. McCullough,

 

We believe your letter dated February 6 represents nothing more than a disingenuous, misleading attempt to disparage and undercut one of First United Corporation’s (“First United” or the “Company”) largest shareholders. More importantly, we consider your account of our recent attempts to participate in an appropriately-structured meeting in New York City to be egregiously inaccurate, representing further evidence of First United’s persistent disregard for both sound corporate governance and transparent communication with investors.

 

Before addressing what we believe to be the litany of inaccuracies in your letter, I do want to reiterate that it disturbs us—and other shareholders apparently—that First United treats Driver Management Company (together with its affiliates, “Driver” or “we”) like a reviled adversary undeserving of the respect and honesty one hopes to receive as a top 5 shareholder. All we want is for First United’s Board of Directors (the “Board”) to focus on enhancing shareholder value and take the logical step of exploring a sale to one of the many suitable acquirers capable of paying a meaningful premium in a transaction. Rather than vilifying Driver for wanting these outcomes, the Board should remember it is in place to represent and prioritize the best interests of shareholders—not themselves, management, or any other constituency.

 

In response to the specific distortions hurled at Driver yesterday, we must correct the record with a few key points:

 

1.Please do not pretend that you and First United have any interest in “furthering our dialogue.” If that were really the case, it would not have taken several months for you to even consider giving Driver a meeting with a sub-set of the Board’s independents directors. As you know, all previous offers to meet or speak directly have always been subject to illogical conditions (e.g. making our director nominees available for interviews). Whenever we have spoken with Carissa Rodeheaver—First United’s chairman and chief executive—she has failed to articulate a viable standalone business strategy while refusing to address what seems to be shareholders’ most pressing question: why will First United not test the market to see what price it could get in a sale? It is also worth noting that you—First United’s lead independent director—have ignored our many attempts to engage with you despite the fact that we have sought to do so in a manner consistent with how a major shareholder and independent director should interact when a company has a combined chairman and chief executive role.

 

 

 

2.Your legal counsel contacted mine in January to propose a meeting with you and possibly other independent members of the Board of Directors. It was relayed to us that “everything would be put on the table” in terms of areas of discussion. At that time, Ms. Rodeheaver—who appears to hold an increasing level of inappropriate influence over all aspects of First United due to her combined role—was not mentioned as attending. We took that to be intentional given Ms. Rodeheaver’s presence at a meeting to discuss our main concern, which is the Board’s lack of exploration of a sale of First United, would be inappropriate given her obvious conflict of interests.

 

3.Driver and its legal counsel certainly never said that having Ms. Rodeheaver and Tonya Sturm at the prospective meeting would be appropriate or acceptable. While we may not have previously stated that it was a non-starter, we thought it was clear that Ms. Rodeheaver’s presence would be an inappropriate addition and an obstacle to any type of remotely productive discussion between the independent directors and Driver. If that was not obvious, perhaps First United should hire a third law firm and a second investor relations consultant to explain how appropriate shareholder-director interaction works.

 

4.Your contention that Driver contributed to the wasting of shareholder resources is nonsensical given we know your trip to New York City was not planned around us. You and your legal counsel should get your stories straight, since he had clearly indicated to our attorney that you were scheduled to be in New York City anyway to meet with other investors. In fact, the timing of our prospective meeting on February 6th was specifically targeted for noon because another meeting had apparently already been scheduled during the earlier 11:00 AM slot. So, what shareholder resources could possibly have been wasted by virtue of our having canceled the meeting?

 

5.Keep in mind that Driver is bearing more than 5% of the costs of your trip to New York City (unless you paid your own way), which goes the same for Ms. Rodeheaver and Ms. Sturm’s recent junket to sunny Arizona. How much of those costs are you bearing?

 

6.We believe the record of M. Kathyn Burkey as a director—and for that matter, the record of all First United’s directors—is an insult to shareholders. To the extent that Ms. Burkey or any of the other First United directors do not want public scrutiny of their records and the Company’s performance during their tenures, I would suggest they consider resigning now.

 

7.As to your use of the term “unprofessional” in your disparaging letter, my profession is about increasing the value of our investments for our limited partners. What is yours? As a professional, though, I will offer you this advice: the existence of settlement negotiations (which is what your attorney led us to believe were to be the subject of the meeting that did not take place due to your intransigence) are best kept confidential.

 

 

 

8.We do not know what strong momentum you are talking about since First United generated a 0.80% return on assets during the fourth quarter of 2019.1

 

If you want to speak, please call me at any time. You have my phone number. But if you do, please spare me the false indignation and just get to business. You can start by explaining why the Board will not do what is right by shareholders and at least test the market for a sale.

 

J. Abbott R. Cooper
Managing Member
Driver Management Company LLC


1 Source: S&P Global Market Intelligence

 

 

CERTAIN INFORMATION CONCERNING THE PARTICIPANTS

 

Driver Management Company LLC, together with the other participants named herein (collectively, “Driver”), intend to file a preliminary proxy statement and accompanying WHITE proxy card with the Securities and Exchange Commission (“SEC”) to be used to solicit votes for the election of its slate of highly-qualified director nominees at the 2020 annual meeting of stockholders of First United Corporation, a Maryland corporation (the “Corporation”).

 

DRIVER STRONGLY ADVISES ALL STOCKHOLDERS OF THE CORPORATION TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS’ PROXY SOLICITOR.

 

Participants in the Solicitation

 

The participants in the proxy solicitation are anticipated to be Driver Management Company LLC (“Driver Management”), Driver Opportunity Partners I LP (“Driver Opportunity”), J. Abbott R. Cooper, Michael J. Driscoll, Ed.D, Lisa Narrell-Mead and Ethan C. Elzen.

 

As of the date hereof, the participants in the proxy solicitation beneficially own in the aggregate 365,212 shares of Common Stock, par value $0.01 per share, of the Corporation (the “Common Stock”). As of the date hereof, Driver Opportunity beneficially owns directly 360,637 shares of Common Stock. Driver Management, as the general partner of Driver Opportunity, may be deemed to beneficially own the shares of Common Stock directly beneficially owned by Driver Opportunity. Mr. Cooper, as the Managing Member of Driver Management, may be deemed to beneficially own the shares of Common Stock directly beneficially owned by Driver Opportunity. As of the date hereof, Dr. Driscoll directly beneficially owns 3,500 shares of Common Stock. As of the date hereof, Ms. Narrell-Mead directly beneficially owns 650 shares of Common Stock. As of the date hereof, Mr. Elzen directly beneficially owns 425 shares of Common Stock.

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Section 4: SC 13D/A (EX 99.3 - SHAREHOLDER LIST RESPONSE)

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Section 5: EX-99.4 (THE PART 5 LETTER)

Exhibit 99.4

 

https:||gallery.mailchimp.com|12890d7aedd2d81c5bc0955af|images|d0cbbdcd-4f5e-496e-bd5a-34d827f74efe.png

 

What’s Wrong With This Picture?

Part 5--Get To Know Your Directors:  Robert Kurtz and Brian Boal (or, “Bob’s your uncle”)
 

February 11, 2020

Fellow Shareholders,

How well do you know the Board of Directors (the “Board”) of First United Corporation (“First United” or, the “Company”)? Let’s discuss. Next up, Robert Kurtz and his nephew, Brian Boal.

What? One of First United’s directors is the nephew of another director?
Yes, Robert Kurtz is Brian Boal’s uncle—it is literally a case of “Bob’s your uncle.”

I’ve never heard that expression--where does “Bob’s your uncle” come from?

According to Wikipedia:

The origins are uncertain, but a common theory is that the expression arose after Conservative Prime Minister Robert Gascoyne-Cecil, 3rd Marquess of Salisbury (“Bob”) appointed his nephew Arthur Balfour as Chief Secretary for Ireland in 1887, an act of nepotism which was apparently both surprising and unpopular. Whatever other qualifications Balfour might have had, “Bob’s your uncle” was seen as the conclusive one.
[1]

Is First United a family business?

You might think so (especially given the multiple Rodeheavers), but First United is in fact a public company owned by its shareholders.

 

 

But Robert Kurtz and Brian Boal must at least own a lot of First United stock, right?

Robert Kurtz owns 10,521 shares of First United Common Stock (about 0.15% of the outstanding shares) and Brian Boal owns 8,337 shares (about 0.12% of the outstanding shares).
[2]  Based on the closing price of First United Common Stock on February 10, 2020 of $23.92 per share, that is $251,662 worth of stock for Robert Kurtz and $199,421 worth of stock for his nephew, Brian Boal.

Have they served on the Board for long?

Brian Boal joined the Board in 2014.  Robert Kurtz has been on the Board since 1990, so approximately 30 years

That is a really long time—Robert Kurtz must have some great qualifications to justify such an incredibly long tenure, right?

Robert Kurtz was Chief Risk Officer when First United decided to increase leverage in order to buy pooled trust preferred securities and out of market loan participations, so . . . .
[3]

OK, maybe not—wait, is it appropriate for family members to serve on the same board of directors?

Well, it depends on who you ask.  At least one major proxy advisory firm has made it clear that directors who have family relationships (including uncle/nephew) with other directors should not be considered independent.
[4]

Does it matter if Robert Kurtz and Brian Boal are independent directors?

Both Robert Kurtz and Brian Boal serve on the Audit Committee— which is supposed to include only independent directors—and Brian Boal is its Chairman, so it should matter that they are capable of making objective decisions in the best interest of shareholders, free from inappropriate influences.

Is it true that the word “nepotism” literally comes from elevating a nephew to a high position?

Yes— “nepotism” comes from the Latin word for nephew and refers to the practice of popes appointing their nephews to the high office of cardinal.
[5]

 

 

That is really interesting, but I don’t like this situation—how do I let First United know?

You can call or mail Tonya Sturm, First United’s Corporate Secretary and Chief Financial Officer.  First United has represented to shareholders in its proxy statement that Ms. Strum “will deliver all shareholder communications directly to [the Board] for consideration.”
 

* * *

 

DRIVER HAS NOMINATED THREE HIGHLY-QUALIFIED, INDEPENDENT NOMINEES FOR ELECTION TO THE BOARD AT FIRST UNITED’S 2020 ANNUAL MEETING


Due to First United’s refusal to heed shareholders’ calls for a sale process, we were left with no choice but to nominate three highly-qualified, independent director candidates, Michael J. Driscoll, Ed.D, Ethan C. Elzen and Lisa Narrell-Mead, for election to the Board at the upcoming annual meeting.

Driver is committed to transparency and effective information sharing. We invite all shareholders to visit
www.RenovateMyBank.com to learn more about our case for change and sign up for e-mail updates.  
 
Sincerely,
 
J. Abbott R. Cooper
Managing Member
Driver Management Company LLC


 

 

About Driver Management Company

Driver employs a valued-oriented, event-driven investment strategy that focuses exclusively on equities in the U.S. banking sector. The firm’s leadership has decades of experience advising and engaging with bank management teams and boards of directors on strategies for enhancing shareholder value. For information, visit
www.drivermanagementcompany.com.
 
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
 
Driver Management Company LLC, together with the other participants named herein (collectively, “Driver”), intend to file a preliminary proxy statement and accompanying WHITE proxy card with the Securities and Exchange Commission (“SEC”) to be used to solicit votes for the election of its slate of highly-qualified director nominees at the 2020 annual meeting of stockholders of First United Corporation, a Maryland corporation (the “Corporation”).
 
DRIVER STRONGLY ADVISES ALL STOCKHOLDERS OF THE CORPORATION TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S WEB SITE AT 
HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS’ PROXY SOLICITOR.
 

 

 

Participants in the Solicitation
 
The participants in the proxy solicitation are anticipated to be Driver Management Company LLC (“Driver Management”), Driver Opportunity Partners I LP (“Driver Opportunity”), J. Abbott R. Cooper, Michael J. Driscoll, Ed.D, Lisa Narrell-Mead and Ethan C. Elzen.
 
As of the date hereof, the participants in the proxy solicitation beneficially own in the aggregate 365,212 shares of Common Stock, par value $0.01 per share, of the Corporation (the “Common Stock”). As of the date hereof, Driver Opportunity beneficially owns directly 360,637 shares of Common Stock. Driver Management, as the general partner of Driver Opportunity, may be deemed to beneficially own the shares of Common Stock directly beneficially owned by Driver Opportunity. Mr. Cooper, as the Managing Member of Driver Management, may be deemed to beneficially own the shares of Common Stock directly beneficially owned by Driver Opportunity. As of the date hereof, Dr. Driscoll directly beneficially owns 3,500 shares of Common Stock. As of the date hereof, Ms. Narrell-Mead directly beneficially owns 650 shares of Common Stock. As of the date hereof, Mr. Elzen directly beneficially owns 425 shares of Common Stock.

 


[1] https://en.wikipedia.org/wiki/Bob%27s_your_uncle

[2] Based on the most recent ownership table disclosed by First United.  https://www.sec.gov/Archives/edgar/data/763907/000110465919073043/tm1926282d1_ex99-1.htm

[3] Mr Kurtz served as President and Chief Risk Officer from 2006 until December 15, 2009.  In 2006, First United implemented a “$45 million leverage strategy,” buying trust preferred securities funded with three month brokered CDs.  In 2007, First United purchased an additional $25 million of trust preferred securities. For 2009, First United recorded a net loss of over $12 million due in part to a $24 million other than temporary impairment charge related to the trust preferred securities.  Source:  First United filings.

[4] “An independent director has no material financial, familial or other current relationships with the company, its executives, or other board members, except for board service and standard fees paid for that service.”  https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_US.pdf

[5] https://en.wikipedia.org/wiki/Nepotism

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