Investing in small banks can be a lucrative form of investing that the average person can participate in very easily. Let’s review the process:
- Open up a savings account at a mutual savings bank likely with less than $10 billion in assets. The account you open typically has to have around $50 in it and be open for at least six months before a bank goes public.
- Look for a bank with the following characteristics: It is a mutual savings bank and not yet publicly traded; it has an older Board of Directors and senior management team with perhaps some background in taking companies public; it may have a mutual holding company and is growing fast and aggressively.
- Once the bank goes public, this is when you want to buy as much stock as you can afford because you will likely get it at a nice discount, perhaps up to 50 percent off.
- Watch the stock for three to five years and wait for a possible acquisition to happen, giving the stock another nice premium.
If you really want to find a mutual savings bank that will eventually go public, make lots of modest-sized deposits in all local area mutual savings banks — you only need $50 per deposit. This will spread the risk of no conversion. Eventually one of your mutual savings banks will convert. Then pile in with as much money as you can to buy the stock.