What is your plan for Needham after it forms the mutual holding company? When I say qualifying accounts, this does not mean a checking account. This will spread the risk of no conversion. Needham Bank Depositors, which will be held on July 18, 2019, at 214 Garden Street, Needham, Massachusetts, starting at 7:00 a.m. At the Special Meeting, you will be asked to consider and vote on the proposed reorganization of the Bank to a mutual holding company (MHC) form of organization. We saw what drove consolidation. Who is the CEO? He also served as CEO of Sovereign Bank, another public bank that was eventually acquired by Santander Bank. Since its footprint is in the fast-growing Boston area, Needham has been insulated from many of the issues other mutuals face, Campanelli said. We are well capitalized, profitable and strong. We’re really looking toward the future. I don’t want to make you believe there is no risk. We need to find new ways to reach that generation. So think about your classic small town bank that only people from your town or state have heard of. The $21 million deal would combine Feather River Bancorp, a small bank with deep local roots, and Plumas Bancorp, which has deeper pockets and a broader array of products and services. They want it from a branch or a call center or private bankers. You heard me say it a handful of times above, but what do I mean by mutual savings bank? We’re really good at banking the cable generation. Why not buy stock, let the stock open, cash out right away and take 100 percent profit to the bank — no pun intended. There's no such thing as the status quo. Your just waiting on regulatory approvalf for the conversion, right? As such, it will be in a unique position to pull other mutual banks under its wing once it converts to a mutual holding company form of ownership. I am instead talking about a traditional bank — not an investment bank or custodian bank — that has under $10 billion in assets. This often happens when mutual savings banks convert to stock banks, but more on that later. You really want to be opportunistic so you can do something quickly. We want to go to Palo Alto or Chicago or New York, where things are happening." Most importantly, our message to the average person is, I want your grandkids to bank at Needham. How do M&A discussions develop among mutuals? Needham Bank is a great candidate to go public for a few reasons: Nothing is a done deal, but all of these are promising signs that the bank is at the very least contemplating going public at some point. We understand our markets. Are they experiencing tremendous commercial growth? Absolutely. "Needham has a reputation as one of the leading mutual banks in the region," Campanelli said, vowing to lend his voice to the mutual cause. A former source of mine, Arthur Loomis, president of Loomis & Co., a New York-based investment bank that has worked with community banks in New England on stock conversions and mergers and acquisitions., told me this interesting statistic: Approximately 60 to 80 percent of mutual savings banks that undergo a standard conversion to stock form of ownership eventually are acquired within three to five years. Plenty of banks will form mutual holding companies and not end up going public because these holding companies can serve other useful financial purposes. Mark Kelly will step down next month as president and CEO of the Oklahoma City-based institution. A service exchange is NOT a barter network, since nothing is 'exchanged'. We’ve really diversified to compete effectively with the much larger banks, and to be much more friendly from a millennial standpoint. If both the CEO and Board of Directors are getting close to retirement, they are probably thinking about cashing in. They really want that flexibility. The Board of Directors has unanimously adopted a Plan of Reorganization of Needham Bank from Mutual Co-operative Bank to Mutual Holding Company to reorganize into a mutual holding company structure. Since 1992, Needham Asset Management has leveraged its investment experience and expertise in domestic growth equities to manage three long/short limited partnerships. Eventually one of your mutual savings banks will convert. Harmening, set to take the helm of Associated Banc-Corp next month, is being asked to replicate the digital transformation he led at Huntington Bancshares. Nothing in life is easy and investing in mutual savings banks is no exception. He will be succeeded by the credit union's executive vice president. Consult a financial professional before making any major financial decisions. Needham Bank is a mutual community bank that’s been in business for over 125 years. Needham Bank strives to give over 5% of earnings back to the community as charitable contributions annually and proudly supports over 300 local non-profits. Mutual savings banks are community banks. We see a lot of companies that have not invested in compliance. Mutual in Massachusetts lays groundwork for buying spree. Full-time journalist and Content Strategy Lead at GoingVC writing about business, the economy, startup culture movies, sports and much more. Currently, I keep all of my money in my hometown bank in Needham, Massachusetts. You may have noticed that when I was referring to certain banks above in the examples, I wrote, “Danvers Bancorp, the holding company of DanversBank.”. Then pile in with as much money as you can to buy the stock. I am going to use banks in Massachusetts as examples because that was my main coverage area when I reported on this sector, and the Bay State also houses the most mutual savings banks in the country — around 90. The agency's new leadership, which has already unwound numerous actions from the prior administration, said the January 2020 guidance implementing criteria for punishing firms that mistreat customers was “inconsistent with the bureau’s duty to enforce Congress’s standard.”. You’re either going forward or you’re going backwards. Aspiring CEOs should check out why Associated hired Andy Harmening, How banks can climb higher in Google search rankings, California credit union launches first-time auto ABS transaction, CEO of Oklahoma's Credit Union to retire after 4 decades in charge, Lenders urge Biden to remove GSE cap on 'high-risk' loans, House, Senate bills would push PPP deadline to May 31, Xceed CEO Freeborn to chair Global Women's Leadership Network, CFPB rescinds Trump-era policy defining 'abusive' conduct. The legislation would extend the Paycheck Protection Program for two months and give the Small Business Administration more time to remedy persistent system glitches that have delayed the processing of thousands of loan applications. Needham Bank experienced very strong growth in 2009, 2010 and 2011 because so many other banks were capital-constrained and pulled out of the market. Some are family run. Eventually one of your mutual savings banks will convert. We’ve lowered the average age of our clients significantly. The best part is, once a bank goes public, not only do depositors get priority dibs on stock, but they get it at a bargain. Interested banks can have the best of both worlds. Before Needham Bank can reorganize into a mutual holding company structure, “Issues around succession and diversifying product lines,” are driving many small mutuals to sell, said Thomas Fraser, First Mutual's CEO. Let’s look at the timeline of the former Belmont Savings Bank: At one point, BSB Bancorp stock got as high as $35. Sure, once you are in the right position, there is nothing particularly hard about the process once you know what you are doing. JOSEPH CAMPANELLI: I’m a big believer in maximizing flexibility. We can be versatile in each of our markets. A 2% cost of marginal borrowing and lending at 3.75% doesn’t work, so you need to diversify. With over $2 billion in assets, it is larger than most mutual banks. The account you open typically has to have around $50 in it and be open for at least six months before a bank goes public. However, one caveat in all of this is that of all those banks that failed, only 20 were actually mutual savings banks, and they only combined for $3 billion in assets, according to Americasmutualbanks.com. The $3.3 billion-asset institution is only the second CU to sell securities backed by auto loans since the NCUA gave the green light for credit union securitizations nearly four years ago. Every time you create a new channel like mobile banking, you create more cybersecurity challenges. All of these activities, which help grow total assets at a bank, require capital. And many of those were small community banks. We are happy to share that the vote has passed and we are now awaiting approval from our various regulators. We expect that the reorganization process will be completed by the end of … Public notice of proposal:. Banks leverage capital to do things like make loans, so they may get to a point where they are seeing demand, but need the capital to support it. But to truly make the most money on mutual savings banks, you want to get in before stock is a thing — when these institutions are private. The mutual's assets have increased by 15% since Campanelli arrived in late 2016. Here is one more recent example with much better stock information just so you get the point. Needham Bank operates as a bank. The beneficial thing about this for the typical stockholder is that a lot of mutual savings banks that issue a partial IPO will eventually do a second step conversion and issue stock again. Now, I know what you are thinking. We are pleased to announce that Needham Small Cap Growth Fund (Retail: NESGX; Institutional: NESIX) was named the best performing actively-managed U.S. stock mutual fund in 2019 in the Wall Street Journal’s Winner’s Circle. The bank is growing. They’re going to be forced to make some big decisions. Massachusetts Mutual Life Insurance Company 1295 State Street, Springfield, Massachusetts 01111-0001 C.M. We all want more convenience, we all want to be able to do things on our smartphones, but then we want to be able to talk to a person when and where we want to see them. Most mutual saving bank stocks tend to open at about $10 per share. All banks are now also required to hold more in reserves than before so they have excess capital to cover bad loans. I’ve been in this market 30 years and it still amazes me, the transformation. The top personal finance stories of the past week  Take a look. In 2018, there were no bank failures, which is only the third time that has happened since the FDIC was founded in 1933. Per an SEC filing in 2007 before the offering took place: Depositors who had qualifying accounts at Danversbank with aggregate balances of at least $50 as of the close of business on March 31, 2007 (were eligible to purchase stock). NB Financial, MHC and NB Financial, Inc., both of Needham, Massachusetts; to become a mutual bank holding company and a mid-tier stock bank holding company, respectively, by acquiring Needham Bank, Needham, Massachusetts, in connection with the conversion of Needham Bank from mutual to stock form. They serve lots of small businesses and provide mortgages to families for the most part. When a mutual savings bank converts to a public bank, they give stock priority first and foremost to a few different groups: The Board of Directors, senior management, employees at the bank and Depositors with qualifying accounts. Boston Private is a leading wealth management, trust, and private banking company serving customers in Boston, San Francisco, LA, New York, and Palm Beach. Overview of Needham Bank CDs. Needham Bank's CD rates are 2.40% and 2.70% for the one-year and five-year term lengths, respectively, while its highest-yielding money market account earns at a rate of 0.30%. Life Insurance Company 100 Bright Meadow Boulevard, Enfield, Connecticut 06082 Primary Insured – Insured 1 It’s an absolutely archaic industry that is slow to change and looks pale in comparison to the exciting new industries of our day such as tech. It’s got a combination of great colleges and universities breeding some strong, brilliant brainpower, and it has an airport that can fly you around the world to most destinations nonstop. We think we can be a responsible partner to other mutuals. If you think about what’s changed in our lifetimes, versus somebody just entering the workforce today, there’s going to be a lot of evolution. [At many mutuals], the customer base is getting older because they don’t have the products and services younger generations are requiring. After all, it's your money so you should be able to bank the way you want to. The bank recently reorganized to add a mutual holding company to its corporate structure. With top of the line mobile and online banking platforms, you have real-time access to your accounts and the ability to set alerts, make budgets, deposit checks, and control your debit cards. There are great brands out there like Sears & Roebuck. However, there are a few signs you can look at to see if a mutual savings bank is thinking about going public. The state’s high number of mutual banks is also thought to play a role in the IPO dearth. For reprint and licensing requests for this article. Mutual holding companies are parent companies that own a portion of the subsidiary company (the bank). The $2.3 billion-asset Needham, based in a Boston suburb, plans to convert from a mutual cooperative bank to a mutual holding company. Our customers can rest assured that their money is … This article is for informational purposes only not all information will be accurate. While it would remain depositor-owned, the new structure would give Needham more flexibility to acquire smaller mutuals across Massachusetts, CEO Joseph Campanelli said in an interview. All our products and services are very scalable. Before I can get into the actual process, I have to go over some of the banking basics so you understand the rest. The I’ll never forget, my daughter was going to go to college on the West Coast. Or a clear successor? THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR … It ended at $31. Typically, to be eligible, you must have an account open at the bank with $50 or more, and must have been a customer at the bank for about six months. Needham & Company, LLC, member FINRA/SIPC, is the distributor of The Needham Funds, Inc. Does a bank have a mutual holding company? They can have their local identity. Since Campanelli has joined the fray, total assets have climbed close to $280 million in two years, bringing the bank to $2.27 billion in assets. In Massachusetts, three of the 15 banks that went public first did a partial IPO and then a second step conversion — East Boston Savings Bank, The Provident Bank and HarborOne Bank. We’re confident we’re going to be one of them. Interest compounds daily with all CDs but only credits monthly to your account. Everything we consume is changing radically due to the Amazon effect, how it’s affecting retail in general. Employees are insured for 3X their annual salary, up to $500,000. At least one other depositor-owned mutual holding company is looking to allow the mutuals it buys to keep their charters and identity. The BankInvestor.com site was launched in 1998. The bank hired CEO Joe Campanelli in 2017. And each time, the depositor can get a discount, although the discount typically is not as beneficial during the second step conversion. After the great recession in 2008, Dodd-Frank regulation put a lot of fail safes in place. A service exchange or time bank is a network of individual, organizational and business 'members' that provide services, track and bank their hours and then spend those hours to get their own needs met. You need to make sure you have the scale to address cybersecurity and compliance issues. People are still looking for CDs and funding [near 2%]. It’s transformed the market. This should not be considered Financial or Legal Advice. NB Financial, MHC and NB Financial, Inc., both of Needham, Massachusetts; to become a mutual bank holding company and a mid-tier stock bank holding company, respectively, by acquiring Needham Bank, Needham, Massachusetts, in connection with the conversion of Needham Bank from mutual to stock form. Needham Bank Depositors Approve Mutual Holding Company. Are they acquiring banks? Sure, eventually there will be some risk, depending on how much money you put in, but nothing worth investing in comes without a little risk. We’re very fortunate that we’ve been able to grow significantly the last couple of years while maintaining very high capital levels. He was the CEO of Flagstar Bank from 2009 to 2012. Danvers Bancorp is a mutual holding company. The stock of Westfield Bank in Westfield, for example, is trading at about $7.58 a share, down from the IPO price of $10. This will spread the risk of no conversion. I’m a big believer that if you’re going to merge or acquire somebody you need to earn the right. Another one that is a wild card is Guaranty Financial Corp. (a first step mutual conversion – FDIC Document #30003) based in … Check your inboxMedium sent you an email at to complete your subscription. The article goes on to say that number is in line with the number of banks that went public in 2017, but nearly double the amount of those that went public in 2016. I’ll give you some insight on a bank I am bullish on. In the past, we’ve been approached about potential opportunities, and we had to pass because we didn’t have the right structure. The mutual concept from day one has always been a balanced approach to value creation, financial stability, community involvement, community development — not just a pure economic valuation. That would be great. But then we can give them a whole host of products and technology. While it would remain depositor-owned, the new structure would give Needham … We just thought what drove consolidation in public banks is going to drive consolidation, in all likelihood, in mutuals. There are no beer taps or sleeping pods in the office, or company parties thrown at wild clubs. The Dedham Institution for Savings is seeking to reorganize into a mutual holding company, a move that would give it greater flexibility to pursue a merger or start new lines of business. The problem is millennials don’t watch cable. So there aren’t very many banks that go public on a yearly basis. It may vary a little, but that’s the general idea. Needham Funds, Inc., the firm’s mutual fund investment arm, is founded – Needham Growth Fund (NEEGX), the firm’s first mutual fund strategy, opened to investors on January 1 1994 Raised $15 million of committed capital in the firm’s first private equity fund, Needham Capital Partners, L.P. They have boards that understand the local market. Shareholders who purchase shares during the IPO will only be minority owners of the company, hence the name minority IPO. Look for a bank with the following characteristics: It is a mutual savings bank and not yet publicly traded; it has an older Board of Directors and senior management team with perhaps some background in taking companies public; it may have a mutual holding company and is growing fast and aggressively. With all that said, let’s take a look at some real life mutual savings banks that have gone public and turned into very solid investments. This was the short, but productive timeline that took place next: Note that the bank got acquired. The fact we’re growing faster than the market proves we have a compelling proposition to position ourselves more competitively. A qualifying account is typically a savings account or another money market account. I think this whole bank local, buy local is a growing preference, especially among millennials and younger generations where they want to see companies that balance a commitment to the community along with what I always call compassionate capitalism. Now, the typical reaction when you hear the word “investing” is to think about buying stock. If you use an MHC structure you can borrow money at the holding company level and downstream it to the bank to buy a stock bank. If it’s a person who has worked at a mutual savings bank for 50 years and their son or daughter is in line to replace them, there is a good chance they will want to maintain their mutuality. We don’t need to do an acquisition to grow, but I think we have a compelling proposition. Historical Amount of Ownership (Seller) Interests information of Needham Bank at 1063 Great Plain Avenue, Needham, MA, 02492. By signing up, you will create a Medium account if you don’t already have one. One of the main reasons banks go public is to fuel growth, so keep an eye on a bank and see what they are up to. To be part of that, we want to make sure we’re positioned well. They are rarely located in the bustling cities many desire to be in, and are often run out of bland-looking buildings by old people that have worn suits since suits were still in style in the workplace. At the last minute, she decided she wanted to go to Boston College, which is seven miles away. It’s called Needham Bank. If it works, fantastic. That’s where the mutual model fits in. There are currently less than 500 mutual banks in the U.S., so it’s not a huge pool. The move follows in the footsteps of other acquisition-minded mutuals, including First Mutual Holding, which converted to the mutual holding company format in 2015 and recently announced plans to buy its third depositor-owned bank. After learning about this process, I now do my banking at one of these banks that I believe has the potential to be a terrific investment opportunity. From 2007 to 2012, more than 450 banks failed across the country, according to the FDIC, mainly due to the Great Recession. They really want to make sure that, as new technologies come in place, we still have a good compliance function. It's evolving at an ever-increasing rate. The flagship fund, Needham Emerging Growth Partners, L.P., has returned an average of 14% annually since inception in 1992. Another interesting fact about this statistic is that state-chartered banks in Massachusetts that go public must wait three years before being acquired by law, so they are really being snatched up almost as soon as allowed. If they had sold a few years earlier, they would have made more. The $2.3 billion-asset Needham, based in a Boston suburb, plans to convert from a mutual cooperative bank to a mutual holding company.