State of the Pipeline – May 2024

This feature has the latest news from the mutual bank conversion sector. As of May 29, four conversions were in the pipeline.

Fifth District Bancorp Inc., the proposed holding company for New Orleans-based Fifth District Savings Bank, has filed a prospectus for a mutual-to-stock conversion. Gross proceeds at the supermax of the offering range are $79.4 million, down from $87.3 million in the initial registration statement.

In its prospectus, Fifth District Bancorp revealed that it had identified material weaknesses related to financial reporting.

The company said that "management did not maintain sufficient evidence of independent review or supporting documentation related to key methodologies, assumptions, and calculations, including support for the qualitative factors, utilized in the allowance for credit losses as of December 31, 2023, and the allowance for loan losses as of December 31, 2022; and management did not maintain sufficient evidence of independent review or supporting documentation, including support for the qualitative factors, related to the January 1, 2023, adoption of Accounting Standard Update (ASU) 2016-13 Financial Instruments – Credit Losses."

On March 11, EWSB Bancorp Inc., the newly formed proposed holding company for Kaukauna, Wis.-based East Wisconsin Savings Bank, filed a registration statement for a standard conversion. The company disclosed in the application that the bank entered into a confidential memorandum of understanding (MOU) with the Federal Deposit Insurance Corp. (FDIC) and the Wisconsin Department of Financial Institutions in July 2023.

"The MOU requires that the Bank address certain practices and conditions identified during regulatory examinations, including, among other things, the level of its capital, earnings, liquidity, investments, and information technology. The MOU also requires enhancements to board oversight, asset/liability management, and risk management," according to the filing.

Additionally, East Wisconsin Savings Bank's net worth ratio of 4.32% at March 31, as disclosed in an amended registration statement filed April 22, was lower than the 6% requirement for Wisconsin-chartered savings banks.

"If our net worth ratio continues to be less than 6%, the Department may direct us to adhere to a specific written plan established by the [Wisconsin Department of Financial Institutions] to correct the deficiency, as well as a number of other restrictions on our operations, including a prohibition on the payment of dividends," the company said in the amended filing.

East Wisconsin Savings Bank has lost money for nine consecutive quarters. At March 31, its tangible common equity ratio was 3.92% and its leverage ratio was 6.17%.

Also noteworthy is the termination of East Wisconsin Savings Bank's planned merger of mutuals with Lake City, Minn.-based Lake City Federal Bank on Sept. 30, 2023. Lake City Federal Bank subsequently announced another merger of mutuals in December 2023 with Marshfield, Wis.-based Forward Bank, which closed May 3.

FB Bancorp Inc., the proposed holding company for New Orleans-based Fidelity Bank, submitted its standard conversion application March 4, followed by amendments dated April 15, May 2 and May 7. The pro forma valuation has not changed across the filings, with gross proceeds of $198.4 million at the supermax.

On Feb. 2, Metairie, La.-based Mutual Savings and Loan Association announced a mutual-to-stock conversion. At the end of March, the institution had $35.9 million in total assets and a tangible common equity to tangible assets ratio of 39.0%.

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

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Other news stories about mutuals, mutual holding companies, recent conversions and activist investors

Activist investor pushes Blue Foundry to sell as 3-year conversion mark nears

New Jersey-based NVE Bancorp, Connecticut-based Ion Financial to merge

OCC takes enforcement actions against 3 banks

FDIC gives 'needs to improve' Community Reinvestment Act rating to 1 bank

SR Bancorp sells $35.4M of available-for-sale securities for loss of about $4.4M

First Federal Bank of Kansas City reorganizes to form mutual holding company

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