In an effort to continue its rapid growth and to stay independent, Rockville Bank’s board of directors recently announced plans to sell a minority interest in the bank.
The board has authorized the bank’s management to begin the process of planning a stock offering to the bank’s depositors, directors, employees and the public, according to a bank-issued press release.
“We are definitely going to stay independent,” said bank President and Chief Executive Officer William J. McGurk.
The board decided to sell the stock after the bank’s capital-to-assets ratio went down 2 points in one year, McGurk said. The bank’s capital-to-assets ratio has since improved to a level the board is comfortable with, he added.
“We’re doing quite well,” he said.
The board therefore had a choice between stopping the bank’s fairly rapid growth and to possibly turn potential customers away, or to keep growing, McGurk said. The sale of some stock will allow the bank to expand and to invest in new technology, according to information released by the bank.
But one of the main reasons the board decided to sell the stock was so the bank could remain independent. The bank’s main competitors in Hartford’s northeastern suburbs, Tolland Bank and The Savings Bank of Manchester, could not do so after New Haven Savings Bank acquired them last year and formed NewAlliance Bank, a conglomerate of the three banks. Rockville Bank’s directors didn’t want that to happen to them.
“[Tolland Bank and The Savings Bank of Manchester] were 100 percent publicly owned. Now both banks have disappeared,” McGurk said in a prepared statement. “These recent consolidations mean the loss of local community banks and familiar faces at the teller windows. We know from our own market research that when communities lose their local bank they suffer a real sense of loss. But that is not going to happen at Rockville Bank – we intend to stay independent as the major remaining community bank in our market area.”
Controlling Destiny
The bank will soon file for permission to open some new locations, McGurk said. Those will be in the bank’s current area.
“We’ll expand within our existing footprint,” he said. “No real surprises or anything.”
The bank also will invest in some free-standing, drive-through ATMs, he said.
“The proceeds from the stock sale will allow us to make investments in such things as new branches and technologies that will help us compete with larger banks, while we continue to provide personal, community-based service,” McGurk said in a prepared statement. “The stock will allow our proposed new charitable foundation to fund greater investments in the community and also maintain the bank’s capital levels to support our recent growth.”
The board will make the prospectus available early in 2005, McGurk said. The sale of stock will take place during the first half of the year, and the bank hopes the investors will be local, he noted.
The bank’s management is working toward a plan regarding the amount of stock to be offered and its cost.
The bank’s mutual holding company – which has been in place since 1997 – will continue to hold the majority of stock so it can retain voting control of the bank, according to a release from the bank.
“We want to control our own destiny and we like being independent, calling our own shots, making local decisions in our local headquarters to benefit our customers and local communities,” McGurk said in a prepared statement. “By offering only a minority of the stock for sale, depositors, directors, employees and the public will get the opportunity to own a part of Rockville Bank, and the bank will be protected from a takeover by a large financial institution from out of town. Superior customer service will continue to be our trademark and our customers will see no change in business.”
Rockville Bank is a 16-branch community bank with branches in Rockville, Vernon, Ellington, Coventry, Tolland, Manchester, East Hartford, South Windsor, East Windsor, Suffield, Enfield and Somers. The bank has four supermarket locations that are open seven days a week.
