Independent Banker - January 2025 - 48

the over-the-counter (OTC)
market, but for others, an
initial public offering could
serve the bank better. This
decision will depend on various
factors, including your long-term
goals and size.
Your existing ownership structure
and the owners' plans are significant
considerations in the case of a tightly
held bank. If you have an 85-year-old
chief executive who owns 25% of the
bank and the heirs want no part of
it, says Arvia, it's a whole different
conversation than if you have a group
of younger owners willing to add
capital as necessary.
You must also consider why your
community bank needs capital and
how much more you anticipate
needing as it grows. If you are
looking to make significant capital
investments in the bank or acquire
other community banks, other
options, such as private equity,
may be less ideal than tapping
public markets.
You also have to consider the
increased regulatory burden and
costs associated with offering shares
to the public, and, of course, the
added public scrutiny that can come
with having a larger investor base.
Don't be in a hurry, says Shawn
Davis, senior vice president and
director at $1.7 billion-asset CNB
Bank & Trust, N.A. in Carlinville,
Ill., which has listed its shares on
the over-the-counter market since
September 2018. Davis recommends
banks compile as much information
and advice as they can from
investment bankers, accountants,
lawyers and other relevant
professionals before making a
decision. " It's a strategic decision, " he
says. " It's not one-size-fits-all here. "
THE OVER-THE-COUNTER OPTION
Many community banks, especially
smaller ones, opt to list their shares
on the over-the-counter market,
sometimes as a starting point for
later listing on the New York Stock
Exchange (NYSE) or Nasdaq. Being
listed OTC doesn't offer as much
liquidity for a company's shares as
being on an exchange might, but it's
less expensive and doesn't come with
as many regulatory requirements.
It's important to note that it's also a
riskier option for that reason.
CNB Bank & Trust trades on the
OTCQX, which is the top tier of the
three marketplaces for the overthe-counter
trading of stocks. The
community bank decided to list
" [Our bank does]
things that are right
for the community
as opposed to
what's right for a
corporate structure. "
-Mark Lemmon,
Bank of Eastern Oregon
Mark Lemmon, Bank
of Eastern Oregon's
executive vice
president and CFO,
notes that an overthe-counter
listing
has fewer regulatory
requirements than an
exchange listing.
48 // ICBA Independent Banker // January 2025
Photo by Phylicia Garcia

Independent Banker - January 2025

Table of Contents for the Digital Edition of Independent Banker - January 2025

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Independent Banker - January 2025 - Cover1
Independent Banker - January 2025 - Cover2
Independent Banker - January 2025 - Contents
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