- Bank said to work with Sandler O'Neill on potential deal
- Shares of the company climb as much as 6.2% in New York
Astoria Financial Corp., a New York City-area thrift under pressure from activist investor Basswood Capital Management LLC to boost the share price, is exploring a sale, according to people familiar with the matter. The stock climbed.
The lender, which has 87 branches and a market value of about $1.7 billion, is working with Sandler O’Neill & Partners LP on the potential sale, said the people, who asked not to be identified because the matter hasn’t been made public.
A representative for Astoria Financial had no immediate comment, and Sandler O’Neill didn’t return calls for comment.
Takeovers of small banks have been accelerating this year as bigger players look for growth while grappling with low interest rates that make it hard to make money on loans. BB&T Corp. in August agreed to pay $1.8 billion for National Penn Bancshares Inc., and First Niagara Financial Group Inc. hired an adviser to explore a sale, people briefed on the matter said in September.
Astoria Financial would be an “attractive” takeover target for New York Community Bancorp, People’s United Financial Inc., and Investors Bancorp, three lenders that already have a presence in the New York City area, David Darst, an analyst with Guggenheim Securities LLC, said in a research note in September. Officials at the three banks didn’t immediately return voice messages seeking comment.
In August, Darst speculated in another note that Astoria Financial could fetch about $18 a share in a potential sale, or a price equivalent to about 1.4 times the value of its tangible equity, or book value excluding goodwill, intellectual property and other intangibles.
Astoria Financial rose 1.3 percent to $17.30 at 2:32 p.m. in New York, after climbing as much as 6.2 percent. The shares gained 38 percent in the 12 months through Thursday. Basswood reported a 9.22 percent stake in the Lake Success, New York-based company in August, saying in a regulatory filing that it was seeking a seat on its board.
Astoria Financial, which has $15.3 billion in assets and $9.2 billion in deposits, is the 15th-largest bank by deposits in the New York City metro area, according to data from the Federal Deposit Insurance Corp. compiled by Bloomberg Intelligence. Primarily a home lender, Astoria Financial in recent years has been seeking to expand its share of the region’s competitive market for apartment-building mortgages.
Profit fell about 6 percent from a year earlier in the first half of 2015, to $50.7 million, according to its second-quarter report.