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After hiring former executives from East Boston Savings Bank and Century Bank, Everett Bank has revealed its next move: The $666 million-asset bank plans to convert to a stock bank.
Everett Bank has filed applications with state and federal bank regulators to convert from a mutual cooperative bank to a publicly traded bank, according to regulatory and securities filings.
The move requires approval from the Massachusetts Commissioner of Banks, the FDIC and the Federal Reserve. The bank’s depositors will also need to approve the conversion. Depositors must also approve the plan.
The bank intends to issue up to approximately 12.2 million shares at $10 per share for net proceeds of $119.7 million, according to a prospectus filed last week with the Securities and Exchange Commission.
Everett Bank said in the prospectus that it had conducted a review of its loan operations, retail, information technology and other strategies under the leadership of Richard O’Neil, who became the bank’s CEO in 2016, and Chief Operating Officer John Citrano, who joined the bank in 2019.
The bank also recently hired two former executives from stock banks involved in acquisitions. John Migliozzi, East Boston Savings Bank’s former executive vice president and senior lender, is now Everett Bank’s executive vice president and head of commercial banking and mortgage. Cary Lynch, Century Bank’s former senior vice president and director of retail sales and service, joined Everett Bank in a newly created role of senior vice president and head of retail banking.
Everett Bank in the prospectus cited these and other hirings as positioning the bank for some key features of its modified business strategy: growing its commercial real estate business and retail operations.
The bank plans to increase its commercial real estate lending, including offering larger loans and keeping loans on its balance sheet that might previously have been part of participations with other banks.
“Historically, given our size, capital position and lending team experience and capacity, we have originated for participation to other local banking institutions our larger commercial real estate and commercial loans,” the prospectus said. “Despite these loans being originated under prudent standards and our desire to retain and portfolio these larger loans, we generally have not held any loan or portion of a loan we originated in excess of $8.4 million.”
The bank said in the prospectus that it plans to put half the money raised in the initial public offering, approximately $59 million, into Everett Bank.
Another $49.2 million will be retained by the ECB Bancorp Inc., the holding company that will be created as part of the conversion. The bank said it could use some of those funds for future business expansion by opening or acquiring new branches. The bank, which has branches in Everett and Lynnfield, said it does not have any current plans for new branches.
The bank will also make a $600,000 contribution to its charitable foundation.
Everett Bank said it expects the common stock to be listed on the Nasdaq Capital Market under the symbol ECBK.
Everett Bank had net income in 2021 of $4 million and $4.9 million in 2020, according to the prospectus. The bank at the end of 2021 had total deposits of $571 million and about $517 million in net loans.
While acknowledging that the bank’s noninterest expenses will increase and affect net income because of technology costs, executive hirings and other expenses associated with the new strategy, the bank said it has created the framework to execute on its strategy for growth and compete for larger loans.
Everett Bank is the second Massachusetts-based community bank to offer at least some shares in an initial public offering. Quincy-based Colonial Federal Savings Bank in January completed a first-step stock conversion with an initial public offering of a minority of its shares.
