One of the region’s largest local banks is looking to go public.
Franklin Federal Savings Bank, which was started in 1933, is in the early stages of a plan to convert from a mutual savings bank to a publicly traded stock corporation.
CEO Rick Wheeler said that he was limited as to what he could say about the pending conversion but that the plan would help position the bank for growth in raising capital and making acquisitions.
Michael Schwartz covers banking for BizSense. Please send news tips to Michael@richmondbizsense.com.
Many mutual savings banks (where depositors are shareholders) are using this strategy to raise additional capital either to grow or fund losses. The difficulty will be to raise capital when banks are typically not performing well in this economic environment.
That might hold up some institutions, but it won’t be an issue for Franklin Fed, one of the most conservative lenders in the market place. They are very strong.
These deals have not done well for the stock buyers in recent years. Most of these stocks that were sold to depositors at $10.00 per share are selling for $2 to $9. About 75% of them have lost money. I will be very carefully before I convert my insured deposit into a crap game.
This would have been good many years ago when the depositors actually owned the bank, but I believe that the ownership was transfered to a holding company years ago so unless I am mistaken there is no benefit to the depositors now