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Colonial Federal Savings Bank has received depositor approval to reorganize its company structure as the bank moves ahead with plans to raise capital by partially converting to a publicly traded bank.
The Quincy-based bank, which had $336.67 million in assets as of Sept. 30, began offering shares of common stock in November. The bank said in a statement yesterday that it had received enough orders in the subscription offering and would not conduct any further community offering of stock.
The bank had planned to offer between approximately 1.8 million and 2.4 million shares at $10 per share, according to securities filings. The bank said in yesterday’s statement that it was currently processing the orders it had received and had no further information available regarding the offering.
The bank added that the closing of the offering and company reorganization were still subject to final regulatory approvals and customary closing conditions.
As part of its first-step conversion from a mutual to a stock bank, Colonial Federal plans to organize into a stock holding company called CFSB Bancorp Inc. A federally chartered mutual holding company, called 15 Beach after the bank’s Quincy address, will own 55 percent of the stock.
Another 2 percent of stock will go to a new charitable foundation the bank establishes, the Colonial Federal Savings Bank Charitable Foundation Inc. The bank said in the statement that depositors had approved funding for the new foundation.
The remaining 43 percent of the stock will trade publicly on the NASDAQ stock exchange under the symbol CFSB.
The common stock was offered first to depositors with accounts as of June 30, 2020, and then to the bank’s employee benefit plans. Priority in the offering next went to depositors with accounts as of Sept. 30 and Nov. 1. The final priority, a community offering, was not needed, according to the statement.
Colonial Federal Savings has three full-service branches and one limited-service branch in Quincy, Weymouth and Holbrook. The bank’s net loans as of Sept. 30 were $171 million, according to FDIC data, and total deposits were $287 million.
In securities filings, Colonial Federal Savings said that while the bank had capital in excess of all applicable regulatory requirements, the reorganization would support future growth and profitability.
“The reorganization and the capital raised in the offering are expected to provide us with additional capital to support new loans and higher lending limits, support the growth of our banking franchise, provide an additional cushion against unforeseen risks and expand our asset and deposit base,” the bank said in its prospectus.
Other reasons cited for the first-step conversion included competing more effectively in the financial services marketplace; offering customers, employees, management and directors an equity ownership interest, resulting in an economic interest in the bank’s future success; attracting and retaining qualified personnel by establishing stock-based benefit plans; and increasing its flexibility for structuring and financing an expansion of the bank’s operations, including potential acquisitions of other financial institutions.
The bank said it could also establish or acquire new branches but added that it had no new branches planned.
While the bank said the board of directors had no current plans to take the bank fully public through a second-step conversion, the prospectus does not rule out that possibility.
“We are not undertaking a standard mutual-to-stock conversion at this time since we do not believe we could effectively deploy that amount of additional capital on a short-term or near-term basis,” the bank said. “The reorganization, however, will allow us to raise additional capital in the future because a majority of our common stock will be available for sale in the event of a conversion of 15 Beach, MHC to stock form.”
