Roger Hornsby, president and CEO of the $40 million-asset Martinsville First Savings Bank, calls it the “trials and tribulations of a very small financial institution.”
Earlier this year, the southern Virginia mutual’s core provider gave Hornsby a “drop-dead date” to update its operating system, spurring management to meet with the board and discuss their options — including affiliating with First Mutual Holding in Lakewood, Ohio.
“The thought had been around for a while,” Hornsby said in an interview.
After months of discussions and due diligence, Martinsville First agreed to be acquired by the $2.3 billion-asset First Mutual in a deal expected to close in the first quarter. The 96-year-old Martinsville First will keep its charter, brand and management team, while gaining the backing it needed to address its back-office and technology issues.
“I was very impressed with First Mutual and their operation,” Hornsby said. “This is the best way for us to maintain our independence.”
Hornsby is embracing a strategy that First Mutual and Thomas Fraser, its president and CEO, have been pursuing in recent years. Martinsville First is the fifth depositor-owned bank to agree to merge with First Mutual since 2015.
“We believe strongly in the independent banking model and in the vital role strong mutual banks play in helping their communities thrive by keeping deposit dollars local, promoting economic development, and supporting local families and organizations,” Fraser said.
First Mutual merged its first two subsidiaries, Doolin Security Savings Bank in Doolin, W.Va., and Belpre Savings Bank in Belpre, Ohio, to create a larger, more sustainable institution. Two subsequent acquisitions — the $34.8 million-asset
First Mutual also includes its flagship bank, the $2.1 billion-asset First Federal Savings in Lakewood. Fraser was First Federal's president and CEO from 2013 to until June 2018, when he
Fraser said he is hoping to bring more mutuals into the fold.
“We feel the same pressures Roger does, so we would expect some $400 million-asset or $500 million-asset mutuals are experiencing those pressures as well,” Fraser said.
Fraser said he is satisfied by the progress First Mutual has made the holding company was formed five years ago.
“If we measure things in terms of how many transaction we can do, I think five [deals] in five years is right on target,” he said.
First Mutual’s latest deal comes three months after the $12.3 billion-asset Eastern Bank in Boston, the nation’s oldest and largest mutual bank, announced plans to
Fraser had no criticism for Eastern’s choice.
“It’s up to each board to think about how it can best serve the community,” he said. “I’m heartened there are still almost 500 [banks] that are still committed to mutuality."
For Hornsby and Martinsville First, Virginia’s last remaining depositor-owned institution, conversion wasn’t an option they were eager to take. Not all the bank’s clients understand its ownership structure, Hornsby said, but most appreciate its small-town way of doing business.
“Believe me, they see the difference when they walk through the door,” Hornsby said. “They can sit down in my office, talk about the weather, complain about something or whatever. They know they can’t do that at any other bank."
