Ryan Beck & Co. plans to launch a unit investment trust in the next few weeks that will offer retail investors a basket of 23 small to midsize bank and thrift stocks.
It will be the investment bank's second unit investment trust specializing in bank and thrift stocks. The first one attracted $7 million and has earned a 9.2% total return since its December inception.
The new one, the Ryan Beck Banking Opportunity Trust, Series 2, is expected to attract upward of $10 million, said Ben Plotkin, director of corporate finance at the West Orange, N.J.-based firm.
Mutual funds and trusts have had a hard time attracting retail investors to small-capitalization banks and thrifts, he said. Many of these companies, however, have attractive earnings and dividends, he added, and many are takeover candidates.
"We thought this was a more effective way for customers to buy a basket of banks than to buy a mutual fund or buy them separately," he said.
Unit investment trusts, unlike mutual funds, have fixed investments and have a maturity date, in Ryan Beck's case four years. They are becoming popular among banks and thrift investors, though they still do not nearly command the capital of mutual funds.
Stifel, Nicolaus & Co. manages an $18 million unit investment trust that holds stocks of Chicago area banks and thrifts. And First of Michigan Corp. manages a $10 million unit investment trust with stakes in Midwestern banks and thrifts.
The banks and thrifts chosen for the Ryan Beck Banking Opportunity Trust, Series 2, range in size and geography, though most are based along the East Coast.
The banks include Central Fidelity Banks Inc. of Richmond, Va.; First Hawaiian Inc. of Honolulu; First American Corp. of Nashville; and Summit Bancorp. of Chatham, N.J.
The thrifts include Collective Bancorp of Egg Harbor City, N.J.; GP Financial Corp. of Flushing, N.Y., and Bell Bancorp of Chicago.
The list also includes two mutual holding companies, Northwest Savings Bank of Warren, Pa.; and Fidelity Federal Savings Bank of Florida, headquartered in West Palm Beach. Ryan Beck advised both institutions on their conversion from mutual to holding company status.
The up-front load for the Ryan Beck trust will be 5.5%, and it will include an annual expense of 25 basis points, Mr. Plotkin said. The minimum purchase price is $5,000.
The U.S. Trust Co. of New York will act as trustee for the Ryan Beck unit investment trust, and Nike Securities LP will be the administrator.