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Regulatory Hoops Rarely Insurmountable
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Business New Haven
08/04/2003
By: M.C.B.
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Before New Haven Savings Bank can convert from a mutual savings bank to a public stock company, it must satisfy regulators at both the state Banking Commission and the Federal Deposit Insurance Co. (FDIC). In addition, such converting institutions must also be in compliance with regulations issued by the Office of Thrift Supervision (OTS) of the U.S. Department of the Treasury.
According to Howard F. Pitkin Jr., administrator of depository institutions for the state Banking Commission, NHSB must file a Plan of Conversion with the commissioner and the FDIC. The purpose of that plan is to detail the steps that the bank will take to become public.
"We make sure that the rights of the depositors of the bank are protected at all stages of the conversion," Pitkin explains.
Regulators define the steps banks such as NHSB must take to begin selling their stock. "The types of offerings they might go through [involve] a subscription offering, which would include directors, officers, employees, eligible account-holders," Pitkin says. "There’s an eligibility date that entitles that class to purchase stock. There’s a maximum they can purchase [as determined by the conversion plan]."
Following that process, Pitkin says, "If there are shares left over, there will likely be a community offering by which stock is offered to [an entity] such as the city of New Haven. Finally, after that, if there are any shares at all left over, they would go to a public offering and be sold on the open market."
Although his office has seen no filings from the bank (which has said it plans to complete its conversion in the first quarter of 2004), Pitkin notes that it would be unusual for the Banking Commissioner’s office to reject a bank’s proposal to convert.
"Certainly the commissioner can deny the Plan of Conversion if there is a reason to do so," Pitkin says, although he adds that he can’t recall any being rejected during his tenure. "We always carefully analyze them, and if we feel that changes are needed, we ask that they be made — and hopefully we arrive at a plan that is fair to all parties."
The last two Connecticut banks to convert were American Savings Bank and, coincidentally, the Savings Bank of Manchester, both in 1999.
The approval process, Pitkin says, is likely to take up to three months "to get through all the offerings and all the paperwork. It’s a voluminous application," he adds.
Pitkin emphasizes that banks are answerable to both banking and securities regulators. "We always act to try to protect the depositors as well as the public," he says.
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