Home Savings Bank wants to go public.
The Madison bank has filed a proposal with federal regulators to create a holding company, Home Bancorp Wisconsin, and sell up to about 1.25 million shares of stock at a tentative price of $10 a share, raising as much as $12.5 million. Net proceeds would be up to
Customers with deposits of at least $50 as of Sept. 30, 2011, would have first dibs on the stock, followed by employees, other depositors, and then Dane County residents before shares were offered to the general public.
“Our principal objective is to build long-term value for our stockholders by operating a community-oriented financial institution dedicated to meeting the banking needs of our customers,” the bank said in documents filed June 28 with the U.S. Securities and Exchange Commission.
To do that, Home would have to change from a mutual savings bank to a stock-based savings bank.
Mutual savings banks are largely a legacy from the savings and loan association days, said Michael Mach, administrator of the Wisconsin Department of Financial Institutions’ banking division. Similar to the credit union structure, mutual savings banks are owned by their depositors, Mach said, while a stock-based bank is owned by its shareholders.
Being stock-based “gives institutions the ability to go out and raise capital,” Mach said. “It’s a lot more flexible than the mutual form of ownership.”
Founded in 1895, Home Savings Bank has three Madison offices and one in Stoughton. As of March 31, the bank had $123 million in assets and 35 employees. It had net losses in four of the last five fiscal years, mainly because of “out-of-market construction and land development loans that we did not originate,” the filing said.
The bank said changing structure and raising capital will let it provide more loans and meet rising expenses from tougher federal rules imposed on all banks. It will also let the bank reach higher capitalization levels required by state and federal regulators.
Customers and employees would see no change in services, said Jim Bradley, Home Savings chief executive officer.
Westbury Bank, West Bend, a mutual bank since 1926, completed a similar change in April, raising $51 million. “The world has changed very much in the last three to four years. Capital is king,” said chief executive Ray Lipman.
The process took about nine months, Lipman said, and has been “very positive .”
Home Savings’ proposal will be subject to a vote by depositors as well as the approval of regulators.