By Michael Mazur
While the subject of mutual-to-stock conversions periodically attracts attention, the vast majority of mutual institutions take pride in differentiating themselves from other financial services companies. As of Sept. 30, 2009, there were 689 mutual, community-based institutions in the U.S. with assets of over $269 billion. Of these, 167 were organized as mutual holding companies. Most mutuals have weathered the storm roiling the financial markets.
Recently, the ABA’s Mutual Institutions Council commissioned a survey of mutuals nationwide to gauge the opinions of bankers in this current economic/regulatory environment, as well as see how mutuals are working to stay competitive. For this survey, the ABA’s Benchmarking & Survey team collected responses from 216 participants.
Asked if and how they differentiate themselves, three quarters of the respondents said they promote their bank as a mutual institution. More than 50% emphasized both community banking and their mutuality, and the fact that they were not investor driven.
On the subject of merging—which drew 176 responses—the mutual bankers were nearly split with 47% saying they have considered merging with another mutual while 53% have not. (Merging with a stock institution was not specifically asked.) Of those who said “yes,” the most frequent ways to preserve their bank’s culture and mutuality in a merger was through looking for a partner with a similar mutual structure, seeking a mutual with a shared philosophy, and/or integrating boards.
Looking at their current condition (as of last fall), 90% said they did not have, nor did they foresee having, any liquidity challenges.
Capital adequacy over the next two years, however, is a main concern among more than a quarter of respondents. This concern was primarily due to the anxiety of meeting higher regulatory capital standards as well as concerns of a further decline in the economic climate. (For more on mutuals’ capital, see p. 18.) Like almost all types of banks, the anxiety over regulatory/legislative change was the number one concern of mutual bankers.
Finally, when looking at 2010, while bankers polled were concerned about such issues as the tightening of monetary policy and the rise of inflation, they were still optimistic that their institution’s profitability would increase in 2010. In addition, when it comes to delinquencies and foreclosures, the percentage of respondents was close between those who see an increase and those who see no change at all in the future. •
Michael Mazur is senior manager in ABA’s Benchmarking and Survey Research Group. For more information on the ABA Mutual Bank Survey, please contact Mako Parker at
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