S-1/A: EWSB Bancorp Seeks Up to $11.6 Million in Stock Offering for Mutual-to-Stock Conversion

EWSB Bancorp, Inc. is offering up to 1,157,188 shares of common stock at $10.00 per share in connection with its conversion from a mutual holding company to a stock holding company.

Summary

• EWSB Bancorp, Inc., the proposed holding company for East Wisconsin Savings Bank, is undertaking a mutual-to-stock conversion.
• The company is offering up to 1,006,250 shares of common stock, subject to an increase up to 1,157,188 shares, at a price of $10.00 per share.
• The minimum offering size is 743,750 shares.
• Eligible depositors of East Wisconsin Savings Bank have priority to purchase shares in the subscription offering.
• Shares not purchased in the subscription offering may be offered to the general public in a community offering, with preference given to residents of Outagamie, Calumet, and Winnebago Counties, Wisconsin.
• Any remaining shares may be offered in a syndicated community offering managed by Performance Trust Capital Partners, LLC.
• The company intends to contribute at least 50% of the net proceeds to East Wisconsin Savings Bank.
• The primary reasons for the conversion are to increase capital, enhance access to capital markets, improve risk management, and enhance community ties.
• The company incurred net losses of $935,000 and $4.2 million for the years ended December 31, 2023 and 2022, respectively, primarily due to rising interest rates.
• The company expects its common stock to be quoted on the OTCQB Market upon completion of the conversion and stock offering.

Sentiment

Score: 5

Explanation: The document presents a mixed picture. While the conversion aims to improve the bank's financial position and flexibility, the recent losses and regulatory challenges raise concerns. The sentiment is neutral, reflecting both opportunities and risks.

Positives

• The conversion will provide additional capital to support future growth and profitability.
• The company will transition to a stock holding company structure, which gives it greater flexibility to access the capital markets.
• The conversion will enhance the company's ability to manage risk.
• The conversion will enhance community ties by providing customers and members of the community with the opportunity to acquire an ownership interest in the company.
• The company has taken steps to enhance its lending function to increase residential loan production.
• The company has adopted a new asset/liability management policy and revamped its interest rate risk management processes and procedures to reduce interest rate risk exposure.

Negatives

• The company incurred net losses of $935,000 and $4.2 million for the years ended December 31, 2023 and 2022, respectively.
• The company is subject to a confidential memorandum of understanding (MOU) with the Department and the FDIC, which imposes certain restrictions on its operations.
• The company is subject to a 6% net worth ratio requirement under Wisconsin law, and its current net worth ratio is below this level.
• The company may not be able to realize the value of its deferred tax assets.
• The company faces significant operational risks because of its reliance on technology.
• The future price of the company's shares of common stock may be less than the $10.00 purchase price per share in the stock offering.
• The implementation of a stock-based benefit plan may dilute your ownership interest.

Risks

• The company's results of operations are significantly impacted by its oneto four-family residential lending.
• The company's emphasis on oneto four-family residential mortgage lending exposes it to credit risks.
• The company's geographic concentration of its loan portfolio and lending activities makes it vulnerable to a downturn in the local economy.
• Future changes in interest rates could reduce the company's profits and asset values.
• The company's securities portfolio impairment in difficult market conditions could have adverse effects on its results of operations.
• The company's business may be adversely affected by the credit risk associated with jumbo real estate loans.
• The company may not be able to return to sustained profitability in the future.
• The company may be unsuccessful in executing on its business plan.
• The company's stock value may be negatively affected by applicable regulations that restrict stock repurchases.
• Various factors may make takeover attempts more difficult to achieve.

Future Outlook

The company's future operating results will be significantly dependent upon its ability to increase its net interest margin as well as its originations of oneto four-family loans, including in particular loans available-for-sale, which drive mortgage banking income.

Management Comments

• Our primary reasons for the conversion and offering are to: increase capital to improve our regulatory capital position and support future operations and profitability; transition our organization to a stock holding company structure, which gives us greater flexibility to access the capital markets compared to our existing mutual holding company structure; enhance our ability to manage risk; and enhance our community ties by providing customers and members of our community with the opportunity to acquire an ownership interest in New EWSB Bancorp and the Bank.

Industry Context

The document relates to a specific bank's conversion from a mutual holding company to a stock holding company, a process that has been common in the financial services industry as institutions seek to raise capital and gain flexibility.

Comparison to Industry Standards

• The appraisal peer group consists of eleven publicly traded savings and loan and bank holding companies, all of which are traded on the Nasdaq Stock Market.
• Compared to the average pricing of the peer group, the company's pro forma pricing ratios at the midpoint of the offering range indicated a discount of 34.9% on a price-to-book value basis and a discount of 35.6% on a price-to-tangible book value basis.
• Due to the company's recent net loss, its calculated price-to-core earnings ratio at the midpoint was not meaningful and, therefore, not subject to comparison with the peer group.

Stakeholder Impact

• Eligible depositors of East Wisconsin Savings Bank have priority to purchase shares in the subscription offering.
• The conversion will not affect the normal business of the Bank of accepting deposits and making loans.
• The conversion will not affect the balance or terms of deposits or loans, and deposits will continue to be federally insured by the FDIC up to the maximum legal limits, without interruption.
• Depositors will no longer have voting rights in the MHC upon completion of the conversion.
• The implementation of a stock-based benefit plan may dilute your ownership interest.

Next Steps

• Obtain approval of the plan of conversion from the members of the MHC.
• Obtain approval of the plan of conversion from the MHC, the sole stockholder of Old EWSB Bancorp.
• Receive all required final approvals of the Department and the Federal Reserve Board to complete the conversion and the offering.
• Complete the stock offering and issue shares of common stock.
• Implement a stock-based benefit plan no earlier than six months after completion of the conversion, subject to stockholder approval.

Key Dates

Keywords

stock offering, mutual-to-stock conversion, EWSB Bancorp, East Wisconsin Savings Bank, subscription rights, community offering, OTCQB, Performance Trust, regulatory capital, Feldman Financial Advisors