IPOs For The Everyman

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But at least in this respect mutual bank IPOs are different. There is no “insider-owner” who decides to sell shares, since the owners are the depositors of the bank. The management of the bank – the board, president and key executives – is a kind of insider-group, but they also generally line up to purchase shares in a mutual bank IPO. They are certainly not selling. They can’t, since they are not owners.

As always, investing involves risk, and buying shares in a bank I don’t know anything about isn’t something I’d normally recommend. And yet, mutual bank IPOs that I’ve participated in since 2002 have a positive track record overall.

Third Federal Savings and Loan (renamed TFS Financial Corporation, TSFL) popped from $10 to 11.8 on its the first day in April 2007.

North East Community Bank (renamed Northeast Community Bancorp, NECB) traded to 11.25 on the first day in July 2006.

Atlas Bank, purchased by Kearny Financial (KRNY) ended its offering on the first day 10.9 in 2015.

I managed to lose money on Sound Community Bank (SNFL) in January 2008 and Cape Bank of New Jersey (CBNJ) in March 2008. I explain those anomalies as “everything risky lost money in 2008.” Those IPOs both opened below $10 per share, and I sold shares in both at a loss.

There have been a half-dozen others I’ve participated in since 2002, all up something after the IPO except for those two in 2008.

As with all investing opportunities that diverge from my 6-word investing mantra – Buy equity index funds! Never sell! – I’m not saying you should necessarily do this. There’s a real hassle factor involved in this mutual bank IPO hack. Bank statements and privacy notices fill up my post office box throughout the year. My accountant thinks I’m bizarre, collecting and reporting tiny amounts of interest from numerous banks. If I keeled over and died tomorrow, would my wife be willing or able to track down the 31 different CDs and savings accounts I have at mutual banks scattered around the country?

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