Farmington Savings Bank has established a holding company, just as The Simsbury Bank & Trust Co. (above) did last month.
The string of Connecticut banks establishing holding companies continued last month when the state Department of Banking granted approval for Farmington Savings Bank to form the holding company First Connecticut Bancorp.
The bank will stay exactly the same, but will be placed under the umbrella of the new holding company, said Bryan Bowerman, president, chief executive officer and chairman of Farmington Savings Bank.
The bank’s executives and board decided to form a holding company after a new law was adopted that allows banks to get involved in different businesses, such as insurance brokerage or trust companies, Bowerman said.
“[The law] came out, we looked at it, we liked it,” he noted.
Other banks across the state have been taking advantage of the law, adding car finance companies, real estate brokerages or small community banks to their holding companies.
“It gives you a lot of flexibility,” Bowerman said.
Bowerman added that he does not have specific plans for what kinds of entities he would like to add to the new holding company, but he is “out there looking.” He mentioned businesses like trust companies or investment houses as possibilities to operate as subsidiaries of the holding company.
Many other banks have been taking advantage of the new regulations.
The Simsbury Bank & Trust Co. last month also established a holding company. The bank announced in early March that it completed a reorganization into a holding company structure earlier this month. It is now wholly owned by SBT Bancorp.
Reorganizing into a holding company structure also allows the companies to issue public stock offerings. The reorganization of Simsbury Bank will give the company the flexibility to issue trust-preferred shares as a way to raise capital as it grows, according to Susan Presutti of Simsbury Bank & Trust. After expanding in the late 1990s from the bank’s headquarters in Simsbury to two additional branches in Avon and Granby, it is now opening more branches in the area. A branch in Canton opened last November, and one in Bloomfield is scheduled to open in May or June. There are no concrete plans for additional expansion, according to bank President and Chief Executive Officer Martin Geitz, but the bank will continue to look at opportunities as its customer base grows.
Bowerman said Farmington Savings is not planning to issue a public stock offering.
“We have no plans for that,” he noted.
The approval process for establishing the holding company took about four months, Bowerman said, because the bank had to go through several regulatory agencies, including the state Department of Banking. But the opportunities available through the establishment of holding companies will benefit banks in the future.
“I think we’ll find this to be a great vehicle for banks,” Bowerman said.
