New Haven Savings Bank approved a controversial proposal Monday that would allow it to be publicly traded, a bank corporation member confirmed.
The conversion from a mutual savings bank to a capital stock bank will change the ownership from the bank’s depositors to stock owners. The bank’s leadership has argued that the change, which will occur simultaneously with the bank’s acquisition of two other banks, will help it to grow and thrive. But opponents of the move, including New Haven Mayor John DeStefano Jr., argue that other banks who have made the same change were later acquired by larger banks.
“I know there is a tremendous amount of concern about the fact that mutual savings banks, when converted, have been sold,” said Sumner Crosby Jr. ’65, one of the bank’s corporation members who attended the meeting.
Crosby, who voted in favor of the proposal, said the the bank’s management addressed the issue “extensively” during the corporation’s meeting. He said the bank’s executives “were very concerned with remaining a savings bank for the New Haven community.”
The stock will first be offered to New Haven Savings Bank account holders who had a balance greater than $50 in their accounts as of June 30, 2002. It will then be offered in turn to employee stock benefit plans; depositors who had $50 or more in their accounts the quarter before the conversion is approved; the bank’s employees, directors, and officers; the bank’s corporation members and finally the general public.
At a press conference in front of the bank on Friday, DeStefano decried the planned changes, saying he feared a larger institution would take over the bank. DeStefano said he tried to attend yesterday’s meeting of the corporation, but the location was changed, and guards at the door of the second location would not allow him to enter the room. He accused the bank’s management of not having the “courage” to discuss the issue with him.
“It was not a high point in the life of corporate New Haven,” DeStefano said. “It was driven by a small clique in the New Haven business community.”
But Crosby said the bank has a lot to gain by making the switch, including acquiring the funds necessary to merge with two other banks, Connecticut Bancshares Inc. and Alliance Bancorp of New England. According to a New Haven Savings Bank press release, the new combined bank, still to be named New Haven Savings Bank, will be the state’s second largest savings bank and the fifth largest bank in Connecticut, with 73 branches. The combination will still be based in New Haven.
“Being a shareholders’ bank gives them a lot of arrows in their business quiver,” Crosby said.
Crosby said the tally of votes was not announced at the meeting, but he suspected it was overwhelmingly in favor of the conversion.
The Connecticut Department of Banking and the Federal Deposit Insurance Corporation must still approve the change. Mary Ellen O’Neill, director of the Bank Examination Division of the Connecticut Department of Banking, said the department will approve the conversion if it meets the requirements imposed by state law. The time it takes to process the conversion paperwork varies, she said.
The FDIC refused to comment.
The only other bank headquartered in New Haven is the Bank of Southern Connecticut, which is owned by shareholders. The Bank of Southern Connecticut’s chairman, Joseph Ciaburri, said his bank had no merger plans.
“We’re not interested in being taken over,” Ciaburri said.