The first Fairfield County company to file for an initial public offering of stock in 2010 was perhaps a surprising one ”“ a venerable Fairfield County Bank in business some 140 years.
The Ridgefield-based bank has hired Sandler O”™Neill & Partners L.P. to manage the IPO scheduled for the second quarter, which will involve as much as 6 million shares of its stock, 47 percent of Fairfield County Bank”™s equity. Priority for purchasing stock will go to depositors with qualifying deposits at Fairfield County Bank as of Dec. 31, 2008.
Fairfield County Bank will list its shares on the Nasdaq Global Market under the “FFBK” ticker symbol.
Among other goals, the company plans to use the proceeds to fund its operations, including possibly creating new branches and increasing lending; and possibly to acquire other financial institutions, though it stressed it has no plans to do so at present.
In January, Fairfield County Bank opened a new branch at 20 Compo Road South in Westport, and last year it opened its first branch in Stamford on East Main Street as well as one at the iPark 7 complex in Norwalk. The company has 23 branches today and 330 employees.
In both the fourth quarter of 2009 and the first quarter of 2010, there were nearly 60 IPO filings in the U.S., according to Greenwich-based Renaissance Capital L.L.C. That was more than the preceding six quarters combined, and the most since companies filed 95 offerings in the fourth quarter of 2007.
In the first quarter, however, deal size was down 60 percent due to a surge in March filings by smaller-cap companies like Fairfield County Bank; the largest U.S. deal was the $570 million offering by Sensata Technologies.
The average IPO this year has had an 11.9 percent on its offering price on a year-to-date basis, Renaissance Capital calculated.
Fairfield County Bank did not immediately state whether it might in time seek approval for a “second step” offering to sell additional shares to the public.
The company traces its history to 1871, when it was founded as Ridgefield Bank. In January 2004 it merged with Norwalk-based Fairfield County Savings Bank, and in 2007 the combined company was reorganized as a mutual holding company operating under the name of Fairfield County Bank MHC.
In connection with the IPO, Fairfield County Bank Corp. is being organized as a federally chartered savings and loan holding company. It will become the wholly owned subsidiary of Fairfield County Bank MHC and the holding company for Fairfield County Bank.
CEO Gary Smith drew $1.2 million in compensation; if the IPO hits its $10 offering price, he would see the value of his shares hit $1 million.
In 2009, Fairfield County Bank reported $2 million in net income, down from $5.3 million in 2008. In 2009, the company more than doubled its provision for loan losses to $8.7 million while troubled loans in workout situations more than tripled to $85.6 million. The company deemed nearly 4.8 percent of its loans in 2009 to be nonperforming, up from 2 percent of loans meeting that description in 2008 and 1 percent in 2007.
While Fairfield County Bank has drastically cut its portfolio of construction loans, it has increased commercial lending, whether to support real estate deals or for general business purposes.
As of December 2009, the company”™s largest commercial real estate loan was a $13.4 million loan to an unspecified country club; the second loan on the books was initially originated as a construction loan in 2006 to a local business and a private developer for the construction of 10 condominiums in Greenwich on a speculative basis. Nine units remain unsold but have been leased. Fairfield County Bank stated both loans are currently performing in accordance with their terms.
That month, it also proclaimed itself the top lender in Fairfield County for loans to small businesses with less than $1 million in revenue; late last year it received the Eagle Award from the Small Business Administration for leadership in small-business lending, particularly under the SBA”™s ARC program.
On the mortgage front, Fairfield County Bank said it ranked in the top 10 percent of banks included in its federal assessment area for mortgages provided in economically depressed areas.
“Although 2009 had been a challenge for business and the financial service industry, Fairfield County Bank remained strong,” said Bill Starbuck, executive vice president of commercial lending, in a statement at the time. “When other banks weren”™t lending, we were.”
