Larry Seidman is trying to shake things up at another bank. The New Jersey activist investor said in a regulatory filing he owns 5.57 percent of the shares of Colonial Financial Services, a small Vineland, NJ bank holding company for Colonial Bank, FSB with eight branches.
Seidman said he will try to meet with the company’s Board of Directors and management to review ways to maximize shareholder value. According to the regulatory filing, he has already spoken with the President and requested a meeting with the entire Board or a committee of the Board to talk about share repurchases after the one-year regulatory prohibition ends, as well as discuss the company’s philosophy on dividends in general.
After his meeting Seidman plans to evaluate the position taken by the company to determine his next course of action. “Mr. Seidman is hopeful that the Board is receptive to an open discussion of all the available options,” his firm, Seidman & Associates, stated in the filing. Edward J. Geletka, President and CEO of Colonial, did not return a phone message.
Never heard of Seidman? Well, let’s just say he is the Carl Icahn of puny banks and thrifts. Since 1983, the 63 year-old has been buying undervalued banks that are generally selling below tangible book value and tries to encourage them to either sell to another institution or at least repurchase their shares.
According to data tracker Dealogic, there have been 322 bank mergers this year, way up from 290 last year and just 184 in 2008. Many of them are the smaller banks; the average value of the deals this year is $51 million, way down from $196 million last year and $415 million in 2008.
Seidman also points out that many previously mutually owned banks that converted to public status recently are reaching their one-year anniversary, allowing them to repurchase their shares. Many of them are trading at just 75 cents to 80 cents for every dollar of book value. “Some are trading at 65 percent to 70 percent of tangible book value,” Seidman adds.
The Parsippany, NJ-based investor won’t say how much money he manages. Seidman is a former attorney with the Securities and Exchange Commission and for more than the past 12 years has been the manager of various investment vehicles, principally involved in the purchase and sale of publicly traded bank and thrift stocks. From November 1991 to December 31, 2005, he was also a consultant, President and General Counsel to Menlo Acquisition Corp., a holding company for an environmental consulting and remediation company and a laboratory company.
Going back to 1995, Seidman has been involved in at least 33 activist situations with small banks, according to regulatory filings. He has initiated or been a part of about a dozen proxy fights and at least 20 of the bank companies were acquired by another institution after Seidman took a position.
He has also sat on the Board of Directors of at least six of the companies, while associates of his sat on the Boards of a number of other companies.
In one case, he lost a proxy contest trying to get two directors elected to the Board of Directors of Citizens First Financial. However, Seidman successfully got CBK to conduct a “Dutch Auction” for 15 percent of its outstanding shares. Seidman agreed to tender all the shares he controlled into the auction and to execute a Standstill Agreement.
In May 2005, Seidman’s group ran a vote “No” campaign against SE Financial, which was seeking approval for its 2005 Stock Option Plan. On the day of the annual meeting on which the option plan was to be voted on by shareholders, SE withdrew the plan from shareholder consideration. This was also a rare case in which Seidman Entities never owned more than 4.9 percent of the stock, so no Schedule 13D was filed.
Seidman, of course, is not always successful. Earlier in the decade, he and other investors requested that Kankakee Bancorp increased the size of its Board and place a Seidman representative on the Board, and that KNK maximize shareholder value. The request was rejected by KNK. Seidman then conducted a proxy contest at the 2002 annual meeting, seeking to elect two directors in opposition to the two directors proposed by the management. Alas, Seidman lost and the management slate was elected.
In the case of Colonial, in July it completed its stock offering in connection with the conversion of Colonial Bank, FSB from a mutual holding company structure to the fully public holding company structure. Under regulatory rules, banks must wait one year after the conversion is completed to buy back their shares.
Meanwhile, sources say Seidman plans to file a 13D on yet another small bank in early January.
Icahn is not the only busy hedge fund activist.
