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Mutual thrifts looking to convert to publicly traded companies run the risk of increased pressure from activist investors. While the conversion process alone makes it easier for dissidents to accumulate shares, some observers say mutuals are also suffering from lax enforcement of rules designed to protect them.
August 17
Sound Financial in Seattle is nearing its conversion a fully stock-owned company.
The $355 million-asset parent of Sound Community Bank said last week that its shareholders and depositors have approved its plan to sell 1.4 million shares, at $10 each, currently held by its holding company. The stock sale is expected to be completed Thursday, at which point the holding company would be renamed Sound Financial Bancorp and its stock would trade under the symbol SFBC.
A former credit union that converted to a thrift a decade ago, Sound Financial became a mutual holding company in 2008 by selling 45% if its shares to the public. In an interview with the Puget Sound Business Journal last week, Chief Executive Laurie Stewart said the company opted to sell the remaining shares — raising roughly $14.1 million — so that it could expand its loan portfolio and invest in new branches and technology.
It is one of several mutual holding companies that has either converted or announced plans to convert to a 100% stock company. Sound first announced its plan to pursue a
"Capital is king in our industry right now," Stewart said in the interview. "To grow the bank, we really needed more capital."
Sound had been under an enforcement order to raise additional capital, but that
