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Activist investors urge Empire Bancorp to explore strategic options

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Activist investors urge Empire Bancorp to explore strategic options

The following is a summary of recent activist investor news from the bank and thrift space. Each company "in play" is listed along with the activist group and that group's ownership stake in the company, where applicable.

Islandia, N.Y.-based Empire Bancorp Inc.

Investor: Lawrence Seidman

Aug. 27: Activist investor Lawrence Seidman is making an effort to convince Empire to consider strategic options including a sale.

Seidman, who manages Seidman & Associates LLC, said in a letter to Empire's board that he is "aware of two larger financial institutions that would be interested in discussing a possible merger with Empire" and that he has mentioned these potential buyers in conversations with Chairman and CEO Douglas Manditch.

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Ashland, Ky.-based Poage Bankshares Inc.

Investor: Joseph Stilwell, et al., 4.4%

Aug. 27: Stilwell and his investment vehicles lowered their stake in Poage Bankshares to 4.4%, according to an Aug. 27 ownership filing.

The stake — which translates to a beneficial ownership of 152,895 common shares, based on 3,497,243 shares outstanding as of Aug. 13 — is lower than the investor group's 5.9% stake in the company disclosed in an Aug. 15 ownership filing.

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Islandia, N.Y.-based Empire Bancorp Inc.

Investor: Clover Partners LP

Aug. 16: Clover Partners urged Empire to engage a third party to explore strategic options such as remaining independent, acquiring an institution, and partnering with a larger institution as a seller.

In a letter, Clover Partners' Mike Shafir wrote that Empire's core deposit franchise and 68% loan-to-deposit ratio could draw a larger institution to pay a "significant premium" to Empire's current share price. Shafir estimated that Empire is worth between $19 and $20 per share in a sale, based on recent transactions in the Northeast and mid-Atlantic. Empire's common shares closed at $14.75 on Aug. 16.

Shafir wrote that the company should take action to address its "weak profitability metrics and share price performance" relative to peer banks such as Patriot National Bancorp Inc. and 1st Constitution Bancorp.

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Lawrenceburg, Ind.-based United Community Bancorp

Investor: Paul Parshall

Aug. 13: A shareholder lawsuit against United Community Bancorp in connection with the bank's pending deal with Civista Bancshares Inc. was voluntarily dismissed in the Superior Court for the State of Indiana in Dearborn County.

Parshall had filed a putative class-action suit in June against United Community, its directors, unit United Community Bank, Civista Bancshares and its unit Civista Bank, seeking to block the deal. The complaint alleged, among other things, omission of certain material information in the proxy statement related to the merger, and breach of fiduciary duties by United Community's directors.

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Grand Island, Neb.-based Equitable Financial Corp.

Investor: Elkhorn Partners LP, et al., 9.8%

Aug. 3: Elkhorn Partners said that it was contacted by a party interested in acquiring Equitable Financial.

Elkhorn Partners, which considers Equitable Financial as a strong acquisition candidate, believes that the price the unnamed interested party is willing to pay to acquire Equitable Financial would be in the best interest of all shareholders, and Equitable Financial's board should consider this potential transaction.

In addition, Elkhorn Partners believes that Equitable Financial's board has been "less than aggressive" in buying back Equitable Financial's common shares at below book value, which Elkhorn Partners said would have boosted the stock price.