Article in Independent Banker: Key Issues in Attracting Capital Stock Investors to Your Community Bank

It never has been easy for community banks to raise capital despite some recent improvement, but since 2007 it has been more difficult with a weak economy, regulatory excess and surprises, compliance costs, weak loan demand and financial setbacks. But there are ways for many community banks to significantly improve their chances to raise capital from investors.

A large majority of community banks won’t be able to raise capital by copying what large banks do. For many, the public capital markets are not open or not attractive. These are not conventional times, so it is necessary for community banks to think unconventionally in finding ways to sell their stock.

Unless your community bank is fortunate enough to have a committed group of deep pocket investors sitting around its board table or in its shareholder base, raising capital requires strategic thinking, serious consideration of regulatory attitudes and regulatory changes, and an honest assessment of your bank’s financial condition, business plan and prospects.

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