First Seacoast Bancorp, the proposed stock holding company for Dover, N.H.-based Federal Savings Bank, is on track to become just the second New Hampshire-based banking institution to complete a mutual holding company conversion offering in more than 10 years. The bank, which added four members to its board of directors in 2018, plans to use some of the net proceeds from the offering to pay down borrowings and rebrand.
New Hampshire conversion history
Peterborough, N.H.-based Monadnock Bancorp Inc. completed the last two mutual bank conversions in New Hampshire: A second-stage conversion in 2006 and an MHC conversion in 2004. Profile Bancorp Inc. started an MHC conversion offering in 2007 in conjunction with the conversion of Rochester, N.H.-based Profile Bank. The company terminated the conversion in January 2008 when it failed to reach the minimum of the offering range.
Federal Savings operates five branches in New Hampshire: Four in Strafford County and one in Rockingham County. According to consumer data provider Claritas, the median household incomes for those counties are $76,909 and $91,891, respectively, considerably higher than the national median of $63,174. Additionally, both counties have higher projected five-year income growth rates than the 8.8% national aggregate.
The bank bolstered its board of directors with four new members in 2018, according to its prospectus. James Brannen started at the bank in 2007 as CFO and executive vice president and became president, CEO and a director in 2018. Mark Boulanger is a partner at Raiche & Co. CPAs PA, Erica Johnson is COO of software company QA Cafe LLC and Paula Williamson-Reid is the founding owner and CEO of Reid & Co. Executive Search Ltd.
Directors and executive officers anticipate purchasing 104,000 shares in the offering, representing 3.9% of the shares offered at the supermax. Director James Jalbert is proposing to buy 25,000 shares, which is the maximum permitted for groups. Directors Michael Bolduc and Janet Sylvester expect to buy 15,000 shares each, the individual purchase maximum.
Federal Savings had $81.6 million in Federal Home Loan Bank advances at March 31, representing about 21% of total funding. The interest cost of the borrowings was 2.6% in the first quarter. The company intends to use a portion of the net offering proceeds to repay its FHLB borrowings, which it may do without incurring prepayment penalties.
Federal Savings is changing its name to "First Seacoast Bank." According to the prospectus, the bank expects to spend approximately $334,000 in 2019 and $100,000 in 2020 on expenses associated with the name change, including new signage, new website and mobile banking designs, reissuance of debit/ATM cards and new office materials.
Peer group analysis
S&P Global Market Intelligence created a custom peer group for First Seacoast, consisting of 10 fully public thrifts trading on the Nasdaq that are not merger targets and with total assets between $200 million and $800 million at March 31. The peer group was trading at 110.1% of tangible book value at May 30. First Seacoast is priced at 72.5% of pro forma fully converted tangible book value at the supermax, representing a 34.2% discount to the peer median.
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