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Clover Partners analyst seeks 2 seats on Coastway Bancorp board

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Clover Partners analyst seeks 2 seats on Coastway Bancorp board

Mike Shafir, an analyst at hedge fund Clover Partners LP, intends to nominate himself and David Verlander for election to Warwick, R.I.-based Coastway Bancorp Inc.'s board at the 2018 annual shareholder meeting, according to an amended Schedule 13D filed Dec. 22 by the Johnny Guerry-led investor group that includes Clover Partners and MHC Mutual Conversion Fund LP. This filing hinted at a "potential proxy contest."

Shafir beneficially owns 3,750 Coastway Bancorp common shares in the aggregate, representing less than 1% of the company's outstanding shares.

Shafir is currently a director at Bank Mutual Corp. A March proxy filing listed his beneficial ownership at 100 shares in the Milwaukee-based company, where he was nominated and elected under an agreement with Clover Partners in 2016. His title was listed as partner (since 2014) with Clover Partners, which beneficially owned 1,873,012 shares of Bank Mutual common stock, or 4.1% of that company's outstanding shares, as per its filing. At Clover Partners, he is "responsible for generating investment ideas in both the general banking and MHC conversion sectors," according to the latest ownership filing that he jointly filed along with the investor group. His LinkedIn profile lists him as analyst at the hedge fund. Prior to joining Clover Partners in 2012, he was working with Sterne Agee & Leach Inc. as a bank analyst.

Verlander founded DLV Capital LLC in 2008. He launched the DLV Financial Fund, an equity long/short financial services sector fund with a focus on smaller community banks, in 2014. He is MHC Mutual Conversion Fund's portfolio manager, responsible for its day-to-day management. Before founding DLV Capital, David was a principal and portfolio manager for Basswood Capital Management LLC, a hedge fund focused primarily on the financial services sector, according to the ownership filing. Verlander does not own any Coastway Bancorp common shares.

The filing included a letter, titled "Notice of Intent to Nominate Directors," undersigned by Shafir, bearing Clover Partners' letterhead. It highlighted the two individuals' experience, skill sets and qualifications and stated that they had "gained familiarity with the Company's financial statements and understand both the demands of operating a business and the challenges currently facing the Company, which will make them a valuable resource on the Board of Directors."

The Guerry-led group disclosed beneficial ownership of 370,100 Coastway Bancorp common shares, or an 8.4% stake, based on 4,392,441 outstanding common shares as of Oct. 31. MHC Mutual Conversion Fund effected the purchase of 10,000 Coastway Bancorp shares at $21.05 apiece on Dec. 12 and 50,000 shares at $21.00 per share on Dec. 13 in the open market.

In July, the group disclosed beneficial ownership of 394,094 Coastway Bancorp shares, representing a 9.0% stake based on the company's 4,392,441 outstanding common shares as of May 1.