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Mutual holding companies appear to be fleeing the format and converting to stock companies, but Northeast Community CEO Kenneth Martinek remains a staunch supporter of the model. That may be partly because he's being sued by an activist investor who is pushing him to convert Northeast to a stock company from an MHC.
August 23 -
Camden National Bank in Maine has agreed to sell a branch in Rockland, Maine, that it is buying from Bank of America (BAC) because of competition concerns raised by the Justice Department.
July 2 -
Some analysts believe the time is ripe for second-step conversions by mutual holding companies. Still, some bankers believe the floodgates will remain closed until regulators decide to let MHCs pay a special dividend before converting.
April 17 -
Banks with at least $10 billion of assets saw their share of deposits increase to 74.4% at midyear from 72.4% a year earlier, the FDIC said Tuesday in its annual Summary of Deposits. Also, the number of U.S. branches and thrifts shrunk.
October 2
Mutual thrifts are
Thrifts managed to increase aggregate deposits in Maine by nearly 5% over the 12-month period that ended June 30, according to figures released earlier this week by the Federal Deposit Insurance Corp. Thrifts now hold nearly a third of the state's deposits.
In nearby Massachusetts, deposits held by thrifts fell 20% over the same period. Thrifts in states such as Connecticut, New Hampshire and New York also lost ground.
A slight case of xenophobia could contribute to the trend in Maine. Locals tend to be wary of outsiders, or "people from away" as native Mainers call them, says Bob Strong, a finance professor at the University of Maine.
"The notion that the guy who's deciding on your loan is two blocks away, as opposed to two states away, is appealing," says Strong, who is also a director of the $2.7 billion-asset Bangor Savings Bank. Bangor Savings is the nation's eighth-largest mutual thrift.
At the same time, big banks have tended to avoid the state, says Doug Faucette, a lawyer at Locke Lord. Of the 33 financial institutions that operate in Maine, excluding credit unions, only four are based outside the state.
Toronto-Dominion Bank's TD Bank had about 40% of Maine's $34 billion in deposits at June 30, though most of those funds are associated with brokerage accounts at TD Ameritrade. KeyCorp in Cleveland had an 8% share, and Bank of America in Charlotte, N.C., held 5% of deposits. People's United Financial in Bridgeport, Conn., held about 2.5% of Maine's deposits. Bank of America is shrinking in Maine by
"Maine has not been the kind of place where your larger financial institutions have thought it was worth their while to expand," Faucette says.
Many of Maine's institutions are savings banks, including a large number that are mutually owned. Bangor Savings is the state's largest mutual thrift with 6% deposit market share, followed by the $957 million-asset Machias Savings Bank, and the $965 million-asset Norway Savings Bank.
The number of mutual thrifts in Maine has held firm in part because they have largely resisted an urge to convert to stock companies. Bangor Savings' mutual holding company, Bangor Bancorp, has routinely considered converting because a stock company can more easily raise capital, Strong says. "We've been able to acquire other branches, or another bank in the past, and we've not been short on capital," he says.
The lure of a second-step conversion may be weighing heavily on the minds of directors at Maine's mutuals, says Frank Schiraldi, an analyst at Sandler O'Neill & Partners. Schiraldi says he
Mutual thrifts in Maine have not felt as much pressure to convert, because many avoided high concentrations of construction loans or other risky assets, says Jim Fleischer, a lawyer at Silver, Freedman & Taff. "Fewer thrifts got into trouble and needed capital," he says.
Bangor Savings doesn't need to convert, says Yellow Light Breen, the thrift's executive vice president and chief strategic officer. Bangor Savings doesn't think of itself as an old-line savings and loan that focuses largely on residential mortgages.
Rather, the thrift has diversified into commercial real estate and commercial-and-industrial loans, along with trust and payroll-processing services. "We're not a typical savings bank," Breen says.
At June 30, Bangor Savings had the both the largest loan book, at $1.8 billion, and the largest C&I loan portfolio, at $208 million, of any bank doing business in Maine, according to BankDataworks.com.
Diversification has helped Bangor Savings combat a trend of the
Bangor Savings has taken advantage of bigger banks' lack of interest in customers with more-limited assets. "I used to joke that the best place to put one of our new branches was the parking lot of a big bank," Breen says.
