Peoples Federal Savings Bank, a Brighton-based bank with a longtime Jamaica Plain branch, is seeking to change its organization so that it is owned by stockholders instead of by its depositors.
Better financial stability is the reason cited in bank documents.
The 120-year-old Peoples Federal is a “mutual” bank, meaning that its depositors and borrowers have ownership and decision-making stakes. If it becomes a stock-based bank, only people who buy shares of stock will have that ownership stake.
The current depositors and borrowers of Peoples Federal must approve the change in a vote scheduled for June 28 at the Brighton headquarters of Peoples Federal MHC, the corporation that wholly owns the bank. It would become Peoples Federal Bancshares if the stock change goes through. The bank is also seeking to form a new, stock-funded charitable foundation in a separate vote the same day.
The “Peoples Federal Savings Bank” name on the branches would stay the same, and so would all of the bank’s accounts, staff and services, according to a press release and the official prospectus document about the change.
“It will be business as usual,” according to the prospectus.
Gazette Publications, Inc., the company that publishes the Gazette, is a Peoples Federal depositor.
Peoples Federal did not respond to a Gazette e-mail for this article, and phone calls were sent only to a customer hotline.
“The additional capital we raise from the transaction will better position us to take advantage of growth opportunities in the future and make us an even stronger institution,” said Thomas Leetch, Peoples Federal’s president and chief operating officer, in a press release.
Mutual banks are typically small and focused on community-based lending. But that model has run into financial trouble lately.
One example is the JP-based Roxbury Highland Bank, a mutual that began seeking merger partners early this decade. In 2003, Roxbury Highland proposed a merger with Peoples Federal, but that was shot down by chanting protestors at the vote meeting.
Roxbury Highland later merged with Mt. Washington Bank, a South Boston mutual bank. But a short time later, Mt. Washington itself merged with East Boston Savings Bank, which is stock-based.