Community banks line up to go public
Here in go-go Massachusetts, we see a lot of companies itching to go public.
There’s a long list of local biotech businesses that launched initial public offerings last year. We’ve got a crowd of big data companies and other technology ventures anxious for a shot at an IPO.
And then there are your community banks.
Yes, an unusually large collection of Massachusetts banks have filed papers or stated their intention to go public this year. Most of these proposed stock offerings are relatively small, coming from institutions that exist to serve local communities by taking deposits and making loans.
Show me another industry that has less in common with the high-tech revolution we usually associate with the IPO boomlet.
Beverly Bank, the latest institution rolling out plans for the public market, operates just four branches and oversees $324 million worth of assets. It followed two other very small banks, Melrose Cooperative and Pilgrim Bank of Cohasset, which together hope to raise about $45 million.
Two bigger deals in the works would raise considerably more money.
The parent company of East Boston Savings Bank, which sold a minority interest to the public in 2008, plans to go all-in later this year. And Blue Hills Bank, which customers knew as Hyde Park Savings for more than a century, hopes to raise nearly $240 million by going public.
Banks preparing IPOs usually explain by telling the world they have major plans or simply need to get bigger to make their way in a more competitive world.
Many years of experience tells me most bankers take their institutions public for a different reason. They do it for the opportunity to sell those banks before very long.
Lots of people typically make big money in that process — including the executives who took the bank public in the first place. It’s a very familiar story.
I don’t know any of the managers running the current crop of banks lining up for IPOs this year. But I’d gladly make a modest bet that most of their institutions will be acquired by some larger banking company within the next five years.
The fact that there are a lot of banks getting ready to go public is an encouraging sign for our economy. Massachusetts banks that go public must remain independent for at least three years before they are merged or sold.
The line forming at the moment suggests that many bankers believe the economy of the next several years will be strong enough for them to grow and avoid serious loan problems. That’s as clear an economic signal as you are ever going to get from your local banker.
The Red Herring
Could the story about all the crazy new government-mandated medical diagnostic codes get any stranger?
Of course it can — Congress is on the case.
Last week, I wrote about the many thousands of new codes, known as ICD 10, and how doctors were complaining about plans to implement the system on Oct. 1. The day after that column appeared, the US House of Representatives voted to extend the implementation date an additional year. Now the issue has moved to the Senate.
The column about diagnostic codes that cover everything from the rare to the bizarre — such as bites from parrots to injury-inducing collisions with spacecraft — generated a lot of e-mail. Many writers offered their favorite ICD 10 codes. A sampling:
■ Code V91.07XA — Burn due to water skis on fire, initial encounter.
■ Code W56.21XD — Bitten by orca, subsequent encounter.
■ Code Z63.1 — Problems in relationship with in-laws.