Brookfield-based First Federal Bank of Wisconsin will be reorganized to form a holding company, raise capital and create a charitable foundation.
The bank’s board has approved the plan, through which First Federal will become a two-tier mutual holding company. The mid-tier stock holding company, FFBW Inc., will then sell 45 percent of its outstanding common stock at $10 per share to raise capital. An independent appraiser approved by regulators will value the bank and stock holding company, which will determine how many shares constitute 45 percent of the company.
The subscription stock offering will be available to depositors and eligible borrower members as of June 14. First Federal may also complete a community offering for the general public.
First Federal Bank of Wisconsin will become a wholly-owned subsidiary of FFBW. The majority 55 percent of FFBW Inc.’s stock will be owned by another holding company, FFBW MHC.
As part of the reorganization, First Federal will also form a charitable foundation and fund it with $250,000 in cash and 25,000 shares of common stock. The shares will come from the minority stock offering.
First Federal is seeking bank member and regulatory approvals for the plan. It plans to continue operating as normal during the reorganization, which does not affect any existing terms and conditions on its accounts and loans.
“This is an important step in implementing our strategic plan for growth because the capital raised in the stock offering will provide a financial platform for growth and expansion of our community banking franchise,” said Edward Schaefer, president and chief executive officer of First Federal Bank. “We believe this transaction, which includes the formation of a charitable foundation that will be dedicated to charitable activities in the communities we serve, will benefit our customers and the community alike.”
As of March 31, First Federal had $236.2 million in assets, $180.8 million in deposits and $34.2 million in total equity capital. It reported net income of $171,000 in 2016. The bank has about 38 employees at five locations in Waukesha, Brookfield and Milwaukee’s Bay View neighborhood. Schaefer was appointed president and CEO last year when Gary Riley retired. First Federal also has been re-evaluating its office locations.
