Magazine article American Banker

Wis. Bank's Directors Let in New Stock Buyers

Magazine article American Banker

Wis. Bank's Directors Let in New Stock Buyers

Article excerpt

When a Wisconsin bank company's recent stock offering was oversubscribed, its board members looked beyond their short-term interests.

Directors of Hartland, Wis.-based Fortress Bancshares decided to reduce their purchases in order to accommodate demand from new and existing shareholders in key markets.

Such a situation isn't rare, but it is one thing small, closely held banks are going to have to do more of if they want to remain independent -and relevant -according to observers.

"It's a good strategy," said Marilyn Seymann, president and chief executive of M One Inc., a Phoenix-based community bank consulting firm. "You tend to, sometimes, when it's very closely held, lose some external perspective."

As small banks try to expand and remain competitive in a changing and consolidating banking environment, their boards may face dilemmas similar to Fortress': Who gets stock when there are too many takers?

"With all of these things, you examine all of the pros and cons to a decision," said Jon Bruss, chairman of $102 million-asset Fortress.

In this case, the nonpublic company had held a small private placement to help finance two planned acquisitions, seeking to raise just under $1 million by selling 39,960 shares in the offering that closed last week.

Unlike three previous offerings, which weren't oversubscribed, investors wanted 10% more shares than were being offered. So the seven-member board - two insiders, four outsiders, and an advisory member - convened for a special meeting to decide what to do. …

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