Avidia Bank's Framingham branch building in 2019. Photo courtesy of Avidia Bank
A MetroWest bank that came to prominence before the pandemic for its digital-forward thinking is taking a step to raise millions in cash – and potentially make it easier to acquire other banks.
An application by Hudson-based Avidia Bank’s parent company, Assabet Valley Bancorp is now pending and would see the $2.66 billion-asset bank ditch mutuality. Avidia executives wrote in the application that they believe the conversion, which they hope will raise $225 million, will help the bank continue to grow. The Boston Business Journal first reported the application.
“We believe our existing franchise and infrastructure is able to support further growth to increase scale and improve operational efficiencies and thereby enhance profitability,” the Securities and Exchange Commission filing states. “The proceeds from the stock offering will enable us to continue to implement prudent growth, and we plan to employ the following strategies to also maximize profitability.”
Shares would initially be offered at $10 each, followed by a community offering to residents in its service area. Avidia must sell a minimum of 14,450,000 shares to complete the conversion and stock offering. The newly public holding company would also establish a charitable community foundation with a gift of $11.5 million in cash and stock.
The Avidia filing highlights commercial real estate, commercial and industrial and payment processing as potential areas of growth after the conversion. Additionally, the bank believes the conversion to stock ownership could help expansion efforts.
“We intend to grow our balance sheet organically on a managed basis,” the prospectus states. “The capital we are raising in the conversion and stock offering will enable us to increase our lending and investment capacity. In addition to organic growth, we may also consider expansion opportunities in our market area or in contiguous markets that we believe would enhance our franchise value and stockholder returns. These opportunities may include establishing new, or de novo, branch offices, acquiring branch offices, establishing loan production offices, or acquiring other financial institutions. The capital we are raising in the stock offering would help us fund any such opportunities that may arise.”
The form states that there are currently no plans for expansion, but banks Avidia’s size are under pressure from regulatory reporting requirements and competition from larger regional and national lenders, leading to expectations from industry observers that another spate of community bank consolidation is on the horizon.
Avidia’s conversion will be the second this year after Winchester Savings Bank filed plans for its own offering that will see its current mutual holding company remain the newly public bank’s largest shareholder.
The bank was formed in 2007 by merging Hudson Savings Bank and Westborough Savings Bank.
