Needham Bank's Ashland branch in 2019. Courtesy photo/ File
Needham Bank has filed papers with the Securities and Exchange Commission to go public after 131 years as a mutual bank.
The IPO exercise should net the bank and its holding company around $294 million from the sale of up to 34.5 million shares at $10 per share in a standard thrift conversion, its SEC filing says. Piper Sandler is managing the public stock offering. The Boston Business Journal first reported the filing.
Half the proceeds will be invested in Needham Bank, itself, while 40.8 percent will be retained by parent company NB Bancorp for future share repurchases, cash dividends and potential branch expansion or mergers and acquisitions.
The $3.72 billion-asset bank hopes to use the capital it raises to support future lending, with a particular focus on construction and real estate development lending, small business lending, middle-market commercial lending and structured financing. Other major drivers listed in Needham Bank’s IPO filing include competing for larger loans to retain clients and investing in unspecified new technologies that could unlock products.
The bank is well-known in the Boston area as a prominent player in its commercial real estate lending scene, and has a significant presence financing the marijuana industry after buying Century Bank’s cannabis banking unit after that bank was bought by Eastern Bank.
The bank also plans an employee stock ownership plan that will purchase around 8 percent of the shares being offered in its IPO that, the bank’s filing said. The ESOP is intended to help it recruit and retain workers in the future.
The remainder of the IPO proceeds, expected to be $2 million, will be donated to a new charitable foundation established as part of the public offering, along with 4 percent of its common stock. With stock banks restricted from making charitable contributions to their foundations post-IPO, a donation of stock can help set a foundation up for future success. Eastern Bank’s 2020 IPO included a similar donation worth about $90 million.
Needham Bank’s IPO takes place amid a generally softer market for all IPOs, driven by rising interest rates and economic uncertainty. Everett Bank, the most recent local mutual bank to go public, had to extend its subscription offering by two weeks ast June in order to sell enough shares to complete its IPO and the proceeds fell short of the bank’s midpoint target, grossing $89.2 million.
