At $205 million in assets, Georgetown Bank would be in a somewhat precarious position as a mutual cooperative or savings bank.
In fact, its name change from Georgetown Savings Bank to just Georgetown Bank highlights that fact. And that new name, new logo and new marketing go along with deeper change.
Georgetown is undergoing a second step conversion to fully convert the bank to stock. It was partially converted about five years ago. To manage the bank under its new structure and new name, Georgetown is setting up a new bank holding company, Georgetown Bancorp, to replace the prior mutual holding company, Georgetown Federal, as well as its mid-tier stock holding company.
The bank last week began the syndicated community offering portion of the second-step conversion to sell shares of common stock not subscribed for in the subscription offering or the community offering.
About 786,000 shares were subscribed for in the subscription and community offering. The total number of shares sold assumes 68,000 shares, or 8 percent of all shares offered, are subscribed for by the Georgetown Savings Bank Employee Stock Ownership Plan.
The bank’s board of corporators is scheduled to vote on the conversion July 9. Beyond that, the conversion and offering is subject to, among other things, the sale of at least 850,000 shares in the offering and approval of the plan by depositors and stockholders of Georgetown Federal.
Georgetown reported a first quarter profit of $153,000, compared to $332,000 for the same period a year prior. Net interest income was down to $1.8 million from $2.1 million, and return on average assets was 0.30 percent compared to 0.65 percent. The bank’s return on average equity fell to 2.99 percent from 6.85 percent and its net interest margin fell to 3.79 percent from 4.34 percent.
Still, assets, cash and deposits all grew. Non-performing loans decreased to $2 million from $3.1 million, and its efficiency ratio increased to 86 percent from 75 percent.
Eyeing Expansion
Full conversion is probably still a few months away, Georgetown President and CEO Robert Balletto told Banker & Tradesman. But like many banks Georgetown’s size, the dragging economy has taken its toll, and even the glimmer of recovery signaled Georgetown to strike.
“The markets were down for quite a while,” Balletto told Banker & Tradesman. “But now that it has recovered to a point, we wanted to make sure we had sufficient capital to grow our business lending.”
Balletto said Georgetown’s board “felt it was in our best interest to be in a more familiar form, to raise additional capital and to expand a bit.”
He said potential customers made the mistake of assuming a savings bank wouldn’t offer commercial loan products often enough to concern Balletto and the board.
As a stock bank, Georgetown becomes an undeniable acquisition target for larger stock banks, many of which have been very active over the last five years, including Rockland Trust, Berkshire Bank and United Bank.
But Balletto said that is not in the offing. Instead, Georgetown will concentrate on enhancing its technology offerings and, when prudent, branching out.
“But we have to be very careful with entry costs and (market) saturation.”
