Webster Five To Form Holding Company | CEO says move opens up bank's options
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Richard Leahy, president and CEO of Webster Five Cents Savings Bank.
State bank regulators have had a busy couple of years approving bank conversions to stock banks, and now Webster Five Cents Savings Bank is looking to get in on the act.
Webster Five, which is already a mutual bank, has asked the state Division of Banks for permission to reorganize under a mutual holding company to be known as WebFive Financial Services Inc.
“Whether you’re Bank of America or Webster Five, margins are getting squeezed,” said Richard Leahy, president and CEO of Webster Five.
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Organizing a mutual holding company allows Webster Five to get involved with “non-bank entities” like insurance agencies or real estate firms, business that would produce income for the bank without creating unwanted margin pressure.
“What’s happening in the industry is everybody is realizing the charter is just too limiting,” Leahy said.
“In this economy, it’s good to have the ability to react to opportunities that may come our way.”
Webster Five does have a lot of company in its pursuit of a mutual holding company. There are currently 69 mutual banks in the state and 35 of them have established mutual holding companies in the last year, Leahy noted.
Included in that group is Webster Five’s neighbor Southbridge Savings Bank, which expects the division of banks to grant final approval to its conversion to a stock bank owned by a mutual holding company by the end of the month.
Philip Pettinelli, president of Southbridge Savings, said that while he has met with Leahy at Webster Five recently, the two banks have no plans to merge.
“Their reasons are pretty much the same as ours,” Pettinelli said. “The advantages outweigh one negative: that it costs a few dollars to do these transactions.”
The division of banks scheduled a hearing on the Webster Five mutual holding company for last week. The public comment period on the matter ends Oct. 1. Leahy said the bank’s board of corporators approved the move unanimously in June and he expects the board to hold a final vote sometime before the end of the year.
As of June 30, Webster Five had $545 million in assets, $396 million in deposits and total interest income of $14.2 million. For the same period in 2007, the bank had assets of $495 million, $358 million in deposits and interest income of $13.6 million.
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