Although an overwhelming majority of Macon Bank’s members approved of the institution’s plan to convert to stock ownership during a special meeting on Nov. 8, 2011, the Bank’s Board of Directors decided not to move forward with the conversion due to the nation’s economic woes and financial problems in Europe, a banking crisis that some analysts predict will disintegrate the European Union. Macon Bank’s Board of Directors unanimously adopted a plan to convert the company to stock ownership on Jan. 19, 2011. Their decision to postpone the conversion was attributed to the poor performance of U.S. bank stocks in the market this year.
After filing with the U.S. Securities and Exchange Commission in June, Macon Bank began to offer shares in September at $10 a share. After the Board of Directors halted the bank’s transformation to stock ownership, Macon Bank’s CEO Roger Plemens sent a letter to stock subscribers stating that Macon Bank would return their funds. Plemens went on to state that the Bank’s current intent is to consider a stock conversion at a time “when market conditions allow the bank’s value to be fairly recognized,” he said.
Macon Bancorp, a locally controlled financial institution with more than one billion dollars worth of total assets and 179 employees, operates 11 full-time offices throughout Western North Carolina. Their corporate headquarters is located in Franklin, along with two branch offices. The bank currently has 45.2 percent of the market share in Macon County and 47.8 percent of the market share in Franklin. Its 2010 annual report showed that the bank’s total net assets amount to $1.012 billion.
The purpose of the stock conversion, according to bank officials, was to raise additional capital investment. According to a Macon Bank press release from Jan. 20, 2011, the conversion would have given bank officials more flexibility in structuring their operations, supported future growth in the Bank’s communities, and would allow the institution to tap into new markets.
The consummation of the conversion was subject to four different sets of criteria. First, the plan had to be approved by a majority of the bank’s members. Secondly, the bank had to meet all required regulatory mandates, as well as receive favorable tax opinions. Lastly, an independent appraiser had to determine the amount of stock Macon Bank was allowed to offer for sale, which “was prepared in conformance with the regulatory appraisal methodology that requires a valuation based on an analysis of the trading prices of comparable public companies whose stock has traded for at least one year prior to the valuation date,” wrote Roger Plemens, President and CEO of Macon Bank.
Ultimately, the Bank’s directors reached the conclusion that the timing of the conversion was simply not right. “We decided to delay the action until a later date,” said Plemens. “With the banking crisis in Europe and the uncertainty of Washington’s ability to get anything done, we just felt like we should wait until market conditions improve. In the past few months, U.S. bank stocks have been on a roller coaster ride and we thought it would be better to wait,” he said.
The Bank’s Board of Directors consists of nine members, including Macon County Commissioner Ronnie Beale and Ed Shatley, chairman of Macon County’s Economic Development Commission. Plemens also serves on the nine-member board. The Board of Directors met immediately following the Nov. 8 special meeting to discuss the conversion more thoroughly, and finally decided to delay the conversion.
Macon Bank will likely go through with the transformation once the economy rebounds and U.S. bank stocks are not so volatile, according to Plemens.