Between legal and accounting fees, being a public company costs Empire State Bank roughly $10,000 a month.
But, the bank took steps to end those expenses Monday, when it filed papers to deregister its common stock. Once the Securities and Exchange Commission processes the bank's papers — which takes about 90 days — Empire State will no longer have to file quarterly or annual reports or proxies.
The move should help drive profits at the three-branch bank, which has struggled with lackluster performance. Empire State, founded in 2004, on Monday reported a loss of $54,000 in the first quarter, down from a quarterly profit of $38,000 a year before.
Costa was only able to deregister because of President Barack Obama's Jumpstart Our Businesses (JOBS) Act, signed into effect early last month.
Companies with more than 300 shareholders had previously been barred from deregistering, precluding his bank from doing so, Costa said.
The new law ups the threshold to 1,200 shareholders, Costa said.
This is a great way for small companies to become more profitable. While the intrinsic value of the businesses should go up with these sorts of transactions, a lot of people are scared to death to own the stock of a non reporting company. Certainly, this could make liquidity go down for the companies, and thus, their share prices could lag with an absence of buyers. If markets over-react to the downside, there could be some great opportunities.
Disclosure/Disclaimer: I have no position in regard to the company mentioned. I reserve the right to change any of my positions at any time. This is not advice of any kind and is solely my own opinion. Always do a ton of your own research in regard to anything that I say, do, write, or so much as even think about.