State of the Pipeline – March 2025

This feature has the latest news from the mutual bank conversion sector. As of March 26, five conversions were in the pipeline.

Winchester, Massachusetts-based Winchester Bancorp Inc. closed the community offering for its mutual holding company conversion, while Wausau, Wisconsin-based Marathon Bancorp Inc. extended its second-stage conversion community offering. In an 8-K filing, Marathon Bancorp said that it "intends to close the stock offering at or near the midpoint of the offering range" but that it "may choose to close the community offering between the minimum and midpoint of the offering range."

On March 14, Avidia Bancorp Inc., the proposed holding company for Hudson, Massachusetts-based Avidia Bank, filed a registration statement for a standard mutual bank conversion. Gross proceeds at the supermax of the offering are $224.8 million, which would represent the fourth-largest standard conversion offering completed in the last 10 years.

In the filing, the company disclosed that at the end of 2024, the bank's loan portfolio was dominated by four major categories: one-to four-family residential (23.3%), commercial and industrial (C&I) not related to condominium associations (22.8%), condominium associations (22.5%) and commercial real estate (22.1%).

The bank initiated condominium association lending in 2014. Of the $494.9 million in condominium association loans at year-end 2024, 48.7% was in Massachusetts, 15.9% was in Florida and 9.3% was in New York. The largest loan in the category was on a complex in Miami Beach, Florida, with a $19.4 million outstanding balance.

Within the other C&I loan category, the company listed dental practice loans of $190.5 million and solar plant loans of $76.9 million. Those lending lines began in 2010 and 2015, respectively.

The company said in the filing, "To sharpen its business focus and to increase efficiency and profitability, in 2024, Avidia Bank exited the banking of cannabis businesses and sold its credit card portfolio."

Robert Cozzone joined Avidia Bank in March 2023 as President and CEO. He was previously the COO at Rockland, Massachusetts-based Independent Bank Corp. Other recent hires include CFO Jonathan Nelson in October 2024 and chief administrative officer Barry Jensen in May 2024, both of whom formerly worked at Independent Bank Corp.

The purchase limitation in the offering is $400,000 for individuals and $600,000 for groups. Cozzone, Nelson and Jensen each plan to buy $400,000 worth of stock. The aggregate proposed outlay for directors and executive officers is $6.9 million, or 3.1% of the gross proceeds at the supermax.

Also on March 14, Dunkirk, New York-based Lake Shore Bancorp Inc. filed a registration statement for a second-stage conversion. The purchase limitation for both individuals and groups is $1.5 million. The exchange ratio for the newly-issued shares is between 1.1632 at the minimum of the offering range and 1.8098 at the supermax.

On March 11, Lake Shore Bancorp suspended cash dividend payments pending the completion of the second-stage transaction. The company paid an 18-cent per share dividend for the past four quarters. It will pay dividends after the conversion but the amount hasn't been determined.

On March 4, the Federal Reserve terminated its enforcement action against Lake Shore Bancorp and parent company Lake Shore MHC. Last December, Lake Shore Savings Bank, the federal savings bank subsidiary in the corporate structure, announced the termination of an enforcement action by the Office of the Comptroller of the Currency.

On Sept. 12, 2024, Security Midwest Bancorp Inc., the proposed holding company for Springfield, Illinois-based Security Bank SB, filed a registration statement for a standard conversion.

In the filing, the company said it implemented a cannabis-related business (CRB) program in 2018, offering deposit and cash-management services to licensed cannabis-related businesses. It added that it offers depository accounts to customers operating licensed cannabis businesses in Illinois, Michigan and Ohio. In December 2022, Security Bank initiated lending to cannabis organizations and their associated real estate entities.

As of June 30, 2024, Security Bank held $54.8 million of deposits from CRB customers, representing roughly 27% of total deposits, as well as $20.3 million of loans to CRB customers and associated real estate entities, comprising about 19% of total loans. One individual customer accounted for just over half of the CRB deposits. Additionally, fee income related to CRB deposit accounts made up more than 50% of total noninterest income during the 18 months ended June 30, 2024.

The company said in the filing that it intends to grow the CRB program "modestly."

Download a template showing the conversion pipeline, market performance of recent conversions, valuations of mutual holding companies and a list of conversion candidates.