There are plenty of rumors swirling around town concerning Oxford Bank and its future.
‘It’s unfortunate, but it’s not unusual,? said C. James Bess, the bank’s president and Chief Executive Officer since June 2009. ‘It’s the risk you take when you have people with a little bit of information and a lot of imagination.?
In an effort to separate fact from fiction, the Leader sat down with Bess last week to discuss the current status of the 126-year-old financial institution and where it’s headed.
‘I think it’s in everybody’s best interests that they deal with facts, not a bunch of rumors on the street,? he said.
To that end, Bess prepared a ‘fact sheet? detailing the bank’s present financial condition and what steps have been taken to strengthen it. That statement appears in an advertisement on Page 5.
One of the most persistent rumors seems to be the idea that Oxford Bank has been or is going to be sold.
The reality is the bank has not been sold.
But when asked about the possibility of selling it, Bess replied, ‘Everything’s on the table.?
‘This is a bank in crisis. There’s a whole bunch of banks in crisis in southeast Michigan,? he continued. ‘The Number One goal is to do what you can for shareholders and retain an independent community bank here.?
Right now, Bess said the main goal is to recapitalize the bank and get it ‘back on its feet.?
However, raising enough capital to do this could lead to an investor taking control of the institution by virtue of purchasing enough stock.
‘If somebody comes in here with whatever the number would be ? $20 million, $30 million ? they obviously have control. That’s not necessarily a sale, but it’s control,? Bess said. ‘If (the bank) gets recapitalized, you’re talking about a big dilution for existing shareholders. It’s just a fact of life.?
‘It only takes $5 million (and) they’ll have control of this bank ? less than $5 million, frankly,? he noted. ‘The actual value of the shares (is) probably less than a dollar if we got a fairness opinion on the stock today.?
At the bank’s annual meeting in May 2009, in an effort to raise capital, the shareholders approved offering up to 12.5 million shares of stock under a Private Placement Memorandum (PPM).
‘It’s a way to raise additional capital (from) accredited investors. You have to reach certain income, certain net worth thresholds,? Bess explained. ?(The PPM) was for a minimum of $10 million (and) a maximum of $25 million at $2 a share.?
So far, no one’s taken advantage of the offering.
‘We don’t have any subscriptions at this point,? Bess said.
But Bess isn’t discouraged by that.
‘We do have some fairly encouraging balance sheet fundamentals that we think are ultimately going to attract investors,? he said.
The problem with finding investors in this market is competition from the federal government.
‘You’ve got a lot of banks failing and a lot of investors are sitting on the sidelines buying stuff from the (Federal Deposit Insurance Corporation) for pennies on the dollar,? Bess explained. ‘The FDIC’s the biggest competition you have as far as finding investors right now.?
Despite that, the bank is currently talking with a number of private investors who could provide the capital it needs.
‘We have four private sources right now that we’re in negotiations with,? Bess said. ‘Whether or not they’ll be successful, we don’t know.?
Bess could not reveal the identities of these investors nor could he say if they’re local, in-state or out-of-state.
He did confirm that none of investors are larger banks looking to take over Oxford Bank. He said, ‘They’re all private investor sources.?
‘Our Number One goal with an investor is to find somebody that will keep the name up, keep it an independent community bank,? Bess said. ‘That doesn’t mean that it will (happen). We can still get bought by Mr. Big. Mr. Big cannibalizes. If it gets sold to a Comerica or Chase, you know what they do ? they cannibalize banks.?
Bess views selling out to a larger financial institution as Plan Z.
‘If it had to come to that, that would be our last resort,? he said.
Those who visit or do business with Oxford Bank on a regular basis have probably noticed a lot of missing faces since Bess came to town last year.
Since June 2009, the bank has lost 33 employees due to staff reductions, retirements and attrition.
When asked how this has affected morale at the bank, Bess replied, ‘I don’t think it’s a question of morale.?
‘We’ve reduced the number of officers and staff to fit the bank’s asset size,? he explained. ‘This bank was a $550 million bank a few years ago. It’s a $300 million bank today. You have to adjust. We think it fits.?
Bess indicated he doesn’t anticipate the bank making anymore layoffs this year.
As for next year, he said, ‘If you can tell me what the economy’s going to be next year, I can talk to you about that.?
Will the bank be doing any hiring?
‘It depends, if we have an opening,? Bess said. ‘We’re not expanding per se, but if we have somebody who leaves for retirement or whatever reason or if we think we have a need, we certainly have the flexibility to hire if we choose to. We don’t have any specific hiring plans right now.?
Bess plans to stay in Oxford ’till we get the job done,? which means raising capital for the bank and returning it to profitability.
‘Or until the directors decide they don’t want me anymore. I serve at the discretion of the board,? he noted.
Looking to the future, Bess is optimistic about the bank’s prospects for recovery.
‘It’s our full intention that we’re going to be still standing when a lot of these others have failed,? he said. ‘Time will tell. It’s not an exact science and you can’t make promises except that you work hard at it and you work at it everyday.?