Joining a growing list of community banks, First Ipswich Bancorp in Ipswich, Mass., said Tuesday that it plans to go private so that it can reduce regulatory expenses and improve profitability.
"Quite simply, given the high cost of regulation, the benefits of being a publicly traded community bank don't exist today," Russell G. Cole, the company's president and chief executive officer, said in a press release. "The trading volume of our stock does not justify the tremendous expense we incur by being a public company."
The parent of the $298 million-asset First National Bank of Ipswich said it would propose reclassifying common stock held by those with fewer than 200 shares as shares of preferred stock on a one-for-one basis. Common stock owned by those with 200 or more shares would be unaffected.
The company said the reclassification would reduce the total of common shareholders below the level at which the Securities and Exchange Commission requires extensive reporting.
The preferred stock is expected to trade in the same price range as the common stock, and bid and ask prices for both classes of stock would be posted on the OTC bulletin board, the company said.
First Ipswich's shares last traded on Aug. 13 at $9. The company had second-quarter net income of $53,000 compared with a net loss of $649,000 a year earlier.
The 115-year-old First National, which reported four consecutive quarterly losses through the third quarter of last year, has been operating under a formal agreement with the Office of the Comptroller of the Currency since June 2006. The agreement required the bank to increase capital levels, retain competent management, develop a strategic plan, and improve liquidity and profitability, among other things.
In an SEC filing, First Ipswich attributed its improved second-quarter earnings to the strategic plan the bank adopted. So far this year, the bank has sold a branch and $15 million of loans, closed another branch, and raised $1 million in capital with a private placement as part of its strategy.
The bank's efficiency ratio was 92.3% in the quarter, an improvement from 118.9% the year earlier, according to data from the Federal Deposit Insurance Corp.
