Astoria Financial taking time in response to activist, sector advisors say

Provided exclusively by Mergermarket

Astoria Financial (NYSE:AF) is not rushing to launch a sale process despite pressure from activist Basswood Capital Management, several sector advisors said.

The Lake Success, New York-based former savings bank has turned to long-time financial advisor Sandler O’Neill for advice on the matter, some of these sector advisors said. The extent of Sandler’s role is unclear.

Astoria and Sandler did not return requests for comment.

In August, Basswood filed a 13-D that argued that USD 15bn asset Astoria has “substantial opportunities” to enhance value either as an independent bank or through a merger. The well-known financial services activist also asked for a board seat at Astoria. Representatives for the fund did not return requests for comment.

Astoria has been considered a prime activist target owing to its continued underperformance and entrenched management team, this news service has previously reported.

Basswood’s filing has generated considerable attention, one of the sector advisors said. The commotion, though, may not translate into a near term event. Astoria is historically a slow moving company, noted a second sector advisor said.

The bank could look to settle with Basswood, give the fund a board seat and pursue a sale in 2016, the third sector advisor said.

Astoria has been taking steps to rebrand its imagine and diversify its loans and deposits. It has historically relied on savings deposits to fund residential mortgage and multifamily loans.

The bank’s primary appeal to potential buyers is its scarcity value as a sizable franchise in the New York City metro area.

In 2014, Basswood and a separate activist PL Capital began agitating for Harrisburg, Pennsylvania-based Metro Bancorp (NASDAQ:METR) to consider alternatives.

The community bank ultimately settled with PL and sold to F.N.B. (NYSE:FNB) in August. The bank, advised by Sandler O’Neill, was already evaluating alternatives by the time of the settlement and the activist was only one factor that led to the sale, this news service previously reported.

by Jay Antenen

As seen in the mergermarket newsletter on 07/10/2015

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