Shareholders approve bank’s conversion plan
Shareholders have approved one local bank’s offering a stock sale to raise about $22 million in capital. FedFirst Financial Corp., holding company for First Federal Savings Bank, which has an office on Route 40 west, Uniontown, has received conditional approval from the Office of Thrift Supervision to reorganize from the two-tier mutual holding company structure to the stock holding company structure and commence a “second-step” stock offering of new shares of common stock.
FedFirst announced that the company’s plan of conversion and reorganization was approved by the members of FedFirst Financial Mutual Holding Co. and the shareholders of FedFirst Financial Corp. at separate meetings held June 28.
“In essence, what we are doing, is having a stock offering that will raise capital for the bank,” Patrick G. O’Brien, First Federal president and chief executive officer, said.
“And, we are raising capital to continue the growth pattern that our bank has been on the last few years,” O’Brien added. He explained the stock offering will raise “a mid-point level” of about $22 million. The prospectus for the offering lists a low of $19 million and a high of $28 million for the stock sale.
“I believe that there is a lot of value in local banks doing business in their local community,” O’Brien added.
. It’s exemplified in the most recent challenge in a market where big banks had taken on risk that has had a significant impact on the economy. Local banks, like First Federal, focus on the local community and how we can serve businesses and individuals and by bringing in capital we can further invest in those communities where we are.
“That’s our primary objective. But we also know that we are in a market where there may be opportunity for us to buy branches from larger banks that are looking to shed them for one reason or another. We are staying cognizant of that so we can better serve the community,” O’Brien said.
“We also would be looking for an (banking) institution we could buy in our area. That would be an interesting opportunity for us as well,” he said, adding that there are no specific properties First Federal is looking at. “It’s just one of our general objectives.”
First Federal, O’Brien said, also owns a controlling interest in Exchange Underwriters insurance company. “That business has been a good one for us as well and we feel it is complimentary to our banking service. We have been successful in growing that business. The capital could help us to grow that further if an opportunity comes our way,” he said.
In terms of the “two-tier” mutual holding company, O’Brien explained that savings and loans, which is where First Federal’s roots are, “typically were founded as mutual companies where there were no stockholders. The depositors were the owners of those organizations. Those are our roots. We were founded in 1922.
“There were provisions put into our structure over the years that would allow mutual companies like us to convert to stock companies and bring capital into our banks. Some mutuals have chosen to do a full conversion where they went to a full stock company. There is a provision to do that in the two-step fashion,” he said.
First Federal, he added, chose a structure where 100 percent of its shares were issued but a fraction less than 50 percent were sold to the market.
“That’s the structure we chose in 2005 when we first did this. Now, we are converting that so the mutual holding company will sell its shares into the market and it will in essence go away and be left with a 100 percent stock holding company,” O’Brien added.
First Federal Financial Corp. currently has assets of about $353 million and employs 95 people in its banking and insurance businesses. The company has nine banking branch offices and two insurance offices.
The company is offering for sale between 1,912,500 and 2,587,500 shares of common stock (subject to increase to 2,975,625 shares) at a purchase price of $10 per share. The shares of common stock to be offered by the new FedFirst Financial represent approximately 57.5 percent of the company’s common stock that is currently owned by FedFirst Financial Mutual Holding Co. The shares will be offered in a subscription offering first to depositors of First Federal Savings Bank with a qualifying deposit as of Jan. 31, 2009; second to depositors of the bank with a qualifying deposit as of March 31; and finally to depositors of the bank as of May 4, and borrowers of the bank as of Dec. 1, 1990 whose loans continued to be outstanding as of May 4. Concurrently with the subscription offering, new FedFirst Financial is offering any shares of common stock that are not subscribed for in the subscription offering to members of the general public in a community offering, with preference given first to persons residing in Fayette, Washington and Westmoreland counties, and then to public shareholders of the company as of May 4.
For more information, FedFirst Financial will open May 25 a stock information center. Telephone will be 877-892-9472. Hours of operation will be from 10 a.m. to 4 p.m., Monday through Friday. The Stock Information Center will be closed on weekends and bank holidays. The subscription and community offerings are currently scheduled to expire at 2 p.m. June 24.
At the conclusion of the conversion and offering, new FedFirst Financial will be 100 percent owned by public shareholders.
Completion of the conversion and offering is subject to, among other things, the receipt of final regulatory approvals.