Beverly Bank is joining a growing list of small Massachusetts banks that are selling stock to the public this year in an effort to raise additional money.
The 125-year old bank is the fifth financial institution in recent weeks to announce it plans an initial public offering this year. The decision by the bank’s board of trustees was first reported by the Salem News.
The bank has not yet filed an application with regulators, including the Securities and Exchange Commission and the Massachusetts Division of Banks.
Michael Wheeler, Beverly Bank’s chief executive, could not be reached for comment on Friday.
According to the Salem News, Wheeler said the bank has to raise money to “continue to grow our franchise while maintaining our commitment to the communities we serve.”
Incorporated as a cooperative, Beverly has assets of $324 million and four branches on the North Shore. Its pretax profits declined by 20 percent in 2013 to $2.4 million, according to its financial reports.
After receiving just one or two applications a year from community banks wanting to go public, Massachusetts is on track this year to have five banks pursuing that route. Despite the improving economy small banks profits are being squeezed by low interest rates, leaving them few options to finance expansions, innovate with new technologies or updates their systems to comply with new regulations. Going public is one of the only available ways for them to raise that capital.
Blue Hills Bank of Hyde Park filed with the SEC earlier in March for a stock sale to raise nearly $240 million. It was the largest of the community banks to file for IPOs, but was joined by Melrose Cooperative Bank and Pilgrim Bank of Cohasset, which expect to raise $28.5 million and $17.7 million, respectively.
East Boston Savings Bank, which sold a minority share in stock in 2008, also announced in March that it will sell more stock to become completely shareholder owned.
But conversions can also make these banks more attractive targets for acquisitions by larger financial institutions and lead to big payouts for shareholders, including the bank’s top executives and directors.
Beverly Bank’s plan to sell stock must be approved by state and federal regulators.