BankNewport will hold a special meeting of the bank’s eligible depositors on Oct. 27 at 6 p.m. at the Hyatt Regency Hotel in Newport to approve the bank’s plan to form a mutual holding company.
The proposed reorganization is authorized by legislation enacted by the Rhode Island Legislature in 2001 and regulations by the state Department of Business Regulation.
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A mutual holding company is a financial institution in mutual form that is organized to act as the holding company for a mutual bank. Like BankNewport, the mutual holding company will be a Rhode Island corporation headquartered in Middletown.
Typically, a mutual holding company does not engage directly in business activities other than making investments and acquisitions. Its primary function will be to act as the holding company for the bank and other business organizations it may organize and acquire.
“This is a typical growth step for a bank our size,” said BankNewport President and CEO Tom Kelly. “We have discussed this natural evolution of the bank at our last two annual meetings and it has been greeted with positive support.”
By forming a mutual holding company, the bank gains certain business powers and flexibility that stock banks have without converting the bank to a stock-held institution or sacrificing its mutual ownership character, the bank reports.
Although technically the bank will be converting to a stockholder-owned bank, it will not become a publicly traded institution. Under the plan, all of the bank’s stock will be retained by the mutual holding company.
In addition, all employees of the bank and its affiliates, Corrigan Financial and Bank of Newport Insurance Services, will continue after the holding company formation. Their jobs, reporting relationships and work locations will not change as a result of the holding company formation, the company said in a press release.
According to the bank, eligible depositors – those who had accounts at the bank prior to July 2003 – will soon receive a mailing outlining all the details of the mutual holding company formation, along with an invitation to attend the special meeting and to complete and return the enclosed proxy card in the postage-paid return envelope provided.
Rhode Island law requires approval of the Plan of Mutual Holding Company Reorganization by a majority of eligible depositors attending the Special Meeting of Depositors in person or by proxy.
In addition to approval by the bank’s depositors, the bank’s Plan of Mutual Holding Company Reorganization is subject to approval by the Rhode Island Department of Business Regulation, the FDIC and the Board of Governors of the Federal Reserve System.
BankNewport, founded in 1819 and currently holding $920 million in assets, is an FDIC-insured mutual savings bank. Along with its two business partners, Bank of Newport Insurance Services and Corrigan Financial, BankNewport serves customers from banking offices located throughout southeastern New England.
