ASB Bancorp in Asheville, N.C., has received its second challenge in less than a month from an activist investor. The latest seeks a sale of the company.
Firefly Value Partners in New York on Friday sent a letter to the $783 million-asset holding company for Asheville Savings Bank, requesting that its board "initiate a competitive auction process to identify potential acquirers and to sell the bank for a premium that maximizes shareholder value."
Firefly owns a 9.6% stake in ASB and has been a shareholder since October 2011. The firm said that "throughout the duration of our investment, we have been patient and supportive" of the company's management and the board. However, ASB Bancorp's return on assets was less than 0.5%, and its return on equity less than 4%, in the second quarter, Firefly noted.
"The company's small size impedes its ability to generate adequate returns," Firefly said in the letter. "A larger institution (a 'potential acquirer') will utilize the company's assets to earn returns greater than those the company can earn on a stand-alone basis."
ASB had not filed its response to Firefly with the Securities and Exchange Commission as of Monday afternoon.
Also on Friday, ASB reported a lower second-quarter profit, although both net interest income and fee income increased, and noninterest expense declined.
Last month, New Jersey activist investor Lawrence Seidman said he might seek a seat on ASB's board after he ended talks with the company's chief executive, Suzanne DeFerie, "regarding ways to maximize shareholder value." Seidman owned a 6% stake in ASB Bancorp as of March 31.