First Federal Bank of Wisconsin Inc. has plans to initiate a stock repurchase program for up to 385,250 shares, or 5%, of the company’s outstanding shares of common stock, the bank recently announced.
In 2017, FFBW sold 45% of the company to its depositors. In early 2020, the company sold the remaining 55% of the bank, fully converting from mutual bank/mutual holding company to a publicly traded company.
As a recently converted entity, the company is required to obtain the approval or non-objection of the Federal Reserve for any stock repurchase program adopted within one year of the organization’s second step stock conversation, which was completed in January of 2020, according to a press release.
“We are in a period of unprecedented volatility caused by the global pandemic,” said Edward Schaefer, FFBW chief executive officer. “A stock repurchase can provide liquidity to our shareholders while giving us all available capital management tools to enhance the long-term value of our stock. Accordingly, we are making an urgent request to the Federal Reserve to permit us to implement a stock repurchase program.”
There is no guarantee that the Federal Reserve will grant the required approval or non-objection for the proposed stock repurchase program. Even if non-objection is granted, there is no assurance of the timing or any associated condition that may be implemented as a part of the program.
The Federal Reserve has historically expressed strong reluctance to allow institutions to make stock repurchases within one year of stock conversion and investors should not assume that FFBW’s effort to secure approval or non-objection will be successful, according to the company’s press release.