Seeking additional capital for balance sheet growth, SSB Bancorp Inc., the proposed mid-tier stock holding company for SSB Bank, is undertaking a mutual holding company conversion offering.
The shares offered for sale represent a 45% stake in the company. Gross proceeds at the supermax of the offering range are $10.1 million and would push the pro forma tangible capital ratio above 12%.

Loan composition and growth
From its two-branch footprint in Pittsburgh, SSB Bank has substantially altered its loan portfolio in recent quarters according to regulatory filings. From March 31, 2015, to Sept. 30, 2017, commercial real estate loan balances jumped to $41.7 million from $14.2 million. Additionally, construction and development loans have more than quadrupled while commercial and industrial loans have nearly tripled. One- to four-family loans, once the dominant product, now represent less than half of total loans.

Material weakness found
The company has identified a material weakness in its internal controls over loan loss allowance financial reporting. In the prospectus, the company said: "Most significantly, management is re-evaluating and enhancing internal controls relating to separating the accounting models used for loans held-for-sale and loans held-for-portfolio, updating the assumptions used to calculate specific reserves for impaired loans, and enhancing the analysis and support for qualitative factors utilized in the allowance calculation. Enhancing internal controls includes developing and/or revising formal policies and improving relevant processes. We plan to complete this remediation process as quickly as possible."
Insider purchases
Executive officers and directors plan to purchase an aggregate of 124,500 shares, representing 12.3% of the shares offered at the supermax. Five of the eight insiders, including President and CEO J. Daniel Moon IV, are springing for the purchase limitation of 20,000 shares. Moon joined the company in 2009.
Benjamin Contrucci is the newest executive hire, coming over in April as vice president of retail operations and merchant services. Previously, he worked at Emlenton, Pa.-based Farmers National Bank of Emlenton and Pittsburgh, Pa.-based United-American Savings Bank, which was acquired in April 2016.

Peer analysis
S&P Global Market Intelligence created a peer group for SSB Bancorp, consisting of 10 select fully converted thrifts that are not merger targets, do not trade on the Nasdaq and held between $100 million and $250 million in total assets at Sept. 30. SSB Bancorp's efficiency ratio is similar to the peer median, but its margin is considerably lower.
At the supermax, SSB Bancorp is priced at 73.2% of pro forma tangible book on an as-reported fully converted basis. Its peers were trading at 90.3% of tangible book as of Nov. 28. Trading activity for shares of SSB Bancorp likely will be limited.

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