Correspondence 0001104659-24-050040 from EWSB Bancorp, Inc. /MD/ (CIK 0002013792) (EWSB)
EWSB Bancorp, Inc. /MD/ (CIK 0002013792)
Date: April 22, 2024 · CIK: 0002013792 · Accession: 0001104659-24-050040
AI Filing Summary & Sentiment
File numbers found in text: 333-277828
Letter
Via EDGAR Securities and Exchange Commission Division of Corporation Finance Office of Finance Re: EWSB Bancorp, Inc. Registration Statement on Form S-1 Filed March 11, 2024 File No. 333-277828
Dear Ms. Mateo:
EWSB Bancorp, Inc. (the “Company”) is in receipt of the correspondence from the Securities and Exchange Commission (the “SEC”) dated April 4, 2024 related to the SEC’s review of the Company’s Registration Statement on Form S-1 (the “Registration Statement”). Our responses to the comments are set forth below. For the convenience of the SEC Staff, we have repeated each comment in bold, followed by our response.
Registration Statement on Form S-1
General
1. Please provide us with supplemental copies of all written communications, as defined in Rule 405 under the Securities Act, that you, or anyone authorized to do so on your behalf, have presented or expect to present to potential investors in reliance on Section 5(d) of the Securities Act, whether or not you retained, or intend to retain, copies of those communications. Please contact Madeleine Mateo at (202) 551-3465 to discuss how to submit the materials, if any, to us for our review.
The Company does not intend to provide any written materials to investors other than the prospectus and the stock order form and the marketing materials that were filed as exhibits to Pre-Effective Amendment No.1 to the Registration Statement.
Securities and Exchange Commission
Division of Corporate Finance
Office of Finance
April 22, 2024
Page 2 of 9
Cover Page
2. We note your disclosure on page 6 and other sections of the prospectus that generally no individual may purchase more than 15,000 shares of common stock. Please disclose the maximum purchase amount on the cover page of the prospectus.
The requested disclosure has been added to the cover page of the prospectus.
Summary, page 1
3. We note that based on your website, you appear to offer insurance products. If material to an understanding of your business, please include disclosure about your insurance products here, in the Management's Discussion and Analysis of Financial Condition and Results of Operations and Business sections, and elsewhere as appropriate or advise. Please refer to Item 101(h) of Regulation S-K.
The insurance products are a very small portion of East Wisconsin Savings Bank’s (the “Bank”) business, accounting for less than 1% of its gross revenue. Furthermore, the insurance is sold on a non-recourse basis, and the Bank has no liability associated with the insurance products sold. As such, the Company does not believe that disclosure regarding the insurance operations is material to an understanding the Bank’s business.
4. Refer to page 110. We note your disclosure that depositors of East Wisconsin Savings Bank are members of, and have voting rights in, Wisconsin Mutual Bancorp, MHC, as to all matters requiring a vote of members. Upon completion of the conversion, depositors will no longer have voting rights. Please disclose this in the summary section or include a cross-reference to this section.
The requested disclosure has been added under “Summary—Our Organizational Structure and the Proposed Conversion” on page 3.
5. Please disclose here that you have incurred losses in the two most recent fiscal years.
Under “Summary—Recent Operating Losses” on page 3, we have included additional disclosure to clarify that Wisconsin Mutual Bancorp, MHC incurred losses in the two most recent fiscal years.
Securities and Exchange
Commission Division of Corporate Finance
Office of Finance
April 22,
Page 3 of 9
Risk Factors, page 15
6. We note your disclosure on page 51 that deposits decreased $18.7 million, or 7.5% from December 31, 2022 to December 31, 2023. Please include risk factor disclosure describing material risks to investors as a result of the past, as well as possible future decreases in deposits.
A new risk factor has been added on page 23 addressing risks related to decreases in deposits, and in particular, low cost deposits.
7. We note your disclosure on page 66 that 9% of your one- to four-family residential real estate loans were jumbo loans. If material, please disclose risks to investors as a result of originating a significant number of jumbo loans or advise.
A new risk factor has been added on page 17 addressing risks related to jumbo loans.
The geographic concentration of our loan portfolio, page 16
8. If your local market area has experienced any material declines in real estate values during the last year or a material increase in the number of foreclosures, please consider revising the risk factor to include this information.
This risk factor on page 16 has been revised to clarify that our local market area has neither experienced a material decline in real estate values during the last year nor has there been a material increase in the number of foreclosures during the period.
Inflationary pressures and rising prices may affect our results of operations, page 18
9. We note your risk factor indicating that inflation can have an adverse impact on your business and on your customers. Please update this risk factor to discuss if recent inflationary pressures have materially impacted your operations. In this regard, if applicable, discuss how your business has been materially affected by the inflationary pressures you are facing.
This risk factor has been revised to clarify that while the direct impact of recent inflationary pressures to our operations has been limited, secondary effects of the recent inflationary pressures, in particular the actions of the Board of Governors of the Federal Reserve System to curb inflation through the increase of its federal funds target rate range, have materially affected our business, as further described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Comparison of Financial Condition at December 31, 2023 and December 31, 2022—2022 Securities Portfolio Restructuring Transaction.”
Securities and Exchange
Commission Division of Corporate Finance
Office of Finance
April 22,
Page 4 of 9
Risks Related to Our Business Strategy and Operational Matters, page 19
10. For each of the practices, conditions, and requirements in the memorandum of understanding, please describe here or elsewhere, as appropriate, the actions you have taken or plan to take to resolve each noted area, including a summary of your progress to date.
The requested disclosure has been added to this risk factor on page 19 and elsewhere throughout the prospectus as appropriate.
Our Policy Regarding Dividends, page 37
11. We note your disclosure in the risk factor on page 20 that your net worth ratio was less than 6% and you may be restricted from paying dividends while this ratio continues to be less than 6%. Please revise this section to describe this limitation on payment of dividends.
The requested disclosure has been added under “Our Policy Regarding Dividends” on page 42.
Provision for Credit Losses, page
12. We note your disclosure that the provision for 2023 was due to your adoption of the CECL methodology. Please enhance your discussion to include the factors that influenced management’s estimate of expected credit losses as of December 31, 2023, under the CECL methodology.
Additional disclosure has been provided under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Comparison of Operating Results for the Years Ended December 31, 2023 and December 31, 2022—Provision for Credit Losses” on page 58.
Securities and Exchange
Commission Division of Corporate Finance
Office of Finance
April 22,
Page 5 of 9
Management of Market Risk, page
13. We note your references to the asset liability committee here. You also state that the committee is "comprised of executive officers and certain other members of senior management, and reports to the full board of directors on at least a quarterly basis." Please disclose if this committee is a sub-committee of your board of directors and who serves on the committee. Disclose if the board or the asset liability committee sets policies and guidelines for managing interest rate risk and if so, whether the changes referenced in the first paragraph below the two tables on page 58 were within the limits of such policies and guidelines.
The requested disclosure has been added under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Management of Market Risk” on page 61.
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations, page 60
14. We note your disclosure on page F-12 that the allowance for credit losses (“ACL”) related to your off-balance sheet credit exposures is estimated at each balance sheet date under the CECL model. Please revise your discussion to include the amount of ACL that relates to your off-balance sheet credit exposures as of each period presented.
We have revised our disclosure under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Off-Balance Sheet Arrangements and Aggregate Contractual Obligations” on page 65, to affirmatively state that, following its evaluation of off-balance sheet credit exposures as of December 31, 2023, management determined that no allowance for credit losses was required for off-balance sheet credit exposures as of such date (the only date presented in the prospectus for which the CECL model methodology applied).
Loan Approval Procedures, Loans to One Borrower Limit and Lending Authority, page 72
15. We note your references to the "loan committee" in this section. Please clarify if the committee is comprised of your officers and directors and disclose who currently serves on the committee.
The requested disclosure has been added and clarified under “Business of East Wisconsin Savings Bank—Loan Approval Procedures, Loans to One Borrower Limit and Lending Authority” on page 77.
Securities and Exchange
Commission Division of Corporate Finance
Office of Finance
April 22,
Page 6 of 9
Allocation of Allowance for Credit Losses, page 78
16. We note your tabular disclosure on page F-26 depicting changes in the allowance for credit losses for the twelve months ended December 31, 2023. This disclosure indicates that while the adoption of the CECL methodology under ASC 326 did not result in a transition adjustment to the overall allowance for credit losses, it did result in adjustments to the allowance associated with different segments and classes of loans receivable. Please revise the discussion on page 78 to disclose how the adoption impacted the comparative allocation of the allowance loan loss table, including noted increases and decreases in allocated amounts, such as those associated with one-to four family real estate loans and consumer loans, etc. Please also ensure that other filing disclosures associated with your CECL adoption are consistent and complete, especially those associated with your different loan segments and classes.
The following additional disclosure has been add under “Business of East Wisconsin Savings Bank—Delinquencies and Non-Performing Assets—Allocation of Allowance for Credit Losses” on page 83, in response to this request:
The CECL allowance for credit losses lifetime loss rates utilized in the allowance for credit losses calculation, net of historical loss experience, were applied to the respective loan portfolio segments as of January 1, 2023. The CECL estimated loss rates for one- to four-family real estate loans were higher than the calculated factor used under the allowance for loan loss methodology. Conversely, the CECL estimated loss rates for consumer loans was lower than the calculated factor used under the allowance for loan loss methodology.
Internal Agreement with Regulators, page 95
17. We note your disclosure here that the MOU "places certain restrictions on [your] operations." Please briefly describe material restrictions placed on your operations by the MOU or advise.
Additional disclosure regarding the MOU and certain restrictions it places on our operations has been added under “Supervision and Regulation—Informal Agreements with Regulators” on page 100.
Securities and Exchange
Commission Division of Corporate Finance
Office of Finance
April 22,
Page 7 of 9
The Business Background of Our Directors and Executive Officers, page 97
18. Please revise the biographical descriptions for Ms. Lisa Cruz, Mr. Ke
Show Raw Text
CORRESP
1
filename1.htm
LUSE GORMAN,
PC
ATTORNEYS AT
LAW
5335 WISCONSIN
AVENUE, N.W., SUITE 780
WASHINGTON, D.C.
20015
TELEPHONE (202)
274-2000
FACSIMILE (202)
362-2902
www.luselaw.com
WRITER’S
DIRECT DIAL NUMBER
WRITER’S
EMAIL
(202) 274-2021
zdavis@luselaw.com
April 22, 2024
Via
EDGAR
Madeleine
Joy Mateo
Securities
and Exchange Commission
Division
of Corporation Finance
Office
of Finance
Washington,
D.C. 20549-3561
Re:
EWSB Bancorp, Inc.
Registration Statement on Form S-1
Filed March 11, 2024
File No. 333-277828
Dear
Ms. Mateo:
EWSB Bancorp,
Inc. (the “Company”) is in receipt of the correspondence from the Securities and Exchange Commission (the “SEC”)
dated April 4, 2024 related to the SEC’s review of the Company’s Registration Statement on Form S-1 (the “Registration
Statement”). Our responses to the comments are set forth below. For the convenience of the SEC Staff, we have repeated each comment
in bold, followed by our response.
Registration
Statement on Form S-1
General
1. Please
provide us with supplemental copies of all written communications, as defined in Rule 405
under the Securities Act, that you, or anyone authorized to do so on your behalf, have presented
or expect to present to potential investors in reliance on Section 5(d) of the Securities
Act, whether or not you retained, or intend to retain, copies of those communications. Please
contact Madeleine Mateo at (202) 551-3465 to discuss how to submit the materials, if any,
to us for our review.
The Company does not intend
to provide any written materials to investors other than the prospectus and the stock order form and the marketing materials that were
filed as exhibits to Pre-Effective Amendment No.1 to the Registration Statement.
Securities and Exchange Commission
Division of Corporate Finance
Office of Finance
April 22, 2024
Page
2 of 9
Cover Page
2. We
note your disclosure on page 6 and other sections of the prospectus that generally no individual
may purchase more than 15,000 shares of common stock. Please disclose the maximum purchase
amount on the cover page of the prospectus.
The requested
disclosure has been added to the cover page of the prospectus.
Summary, page 1
3. We
note that based on your website, you appear to offer insurance products. If material to an
understanding of your business, please include disclosure about your insurance products here,
in the Management's Discussion and Analysis of Financial Condition and Results of Operations
and Business sections, and elsewhere as appropriate or advise. Please refer to Item 101(h)
of Regulation S-K.
The insurance
products are a very small portion of East Wisconsin Savings Bank’s (the “Bank”) business, accounting for less than
1% of its gross revenue. Furthermore, the insurance is sold on a non-recourse basis, and the Bank has no liability associated with the
insurance products sold. As such, the Company does not believe that disclosure regarding the insurance operations is material to an understanding
the Bank’s business.
4. Refer
to page 110. We note your disclosure that depositors of East Wisconsin Savings Bank are members
of, and have voting rights in, Wisconsin Mutual Bancorp, MHC, as to all matters requiring
a vote of members. Upon completion of the conversion, depositors will no longer have voting
rights. Please disclose this in the summary section or include a cross-reference to this
section.
The
requested disclosure has been added under “Summary—Our
Organizational Structure and the Proposed Conversion” on page 3.
5. Please
disclose here that you have incurred losses in the two most recent fiscal years.
Under
“Summary—Recent Operating Losses”
on page 3, we have included additional disclosure to clarify that Wisconsin Mutual Bancorp, MHC incurred losses in the two most recent
fiscal years.
Securities
and Exchange
Commission
Division of Corporate Finance
Office
of Finance
April 22,
2024
Page 3
of 9
Risk Factors, page 15
6. We
note your disclosure on page 51 that deposits decreased $18.7 million, or 7.5% from December
31, 2022 to December 31, 2023. Please include risk factor disclosure describing material
risks to investors as a result of the past, as well as possible future decreases in deposits.
A new
risk factor has been added on page 23 addressing risks related to decreases in deposits, and in particular, low cost deposits.
7. We
note your disclosure on page 66 that 9% of your one- to four-family residential real estate
loans were jumbo loans. If material, please disclose risks to investors as a result of originating
a significant number of jumbo loans or advise.
A new
risk factor has been added on page 17 addressing risks related to jumbo loans.
The geographic concentration of
our loan portfolio, page 16
8. If
your local market area has experienced any material declines in real estate values during
the last year or a material increase in the number of foreclosures, please consider revising
the risk factor to include this information.
This
risk factor on page 16 has been revised to clarify that our local market area has neither experienced a material decline in real
estate values during the last year nor has there been a material increase in the number of foreclosures during the period.
Inflationary pressures and rising
prices may affect our results of operations, page 18
9. We
note your risk factor indicating that inflation can have an adverse impact on your business
and on your customers. Please update this risk factor to discuss if recent inflationary pressures
have materially impacted your operations. In this regard, if applicable, discuss how your
business has been materially affected by the inflationary pressures you are facing.
This
risk factor has been revised to clarify that while the direct impact of recent inflationary pressures to our operations has been limited,
secondary effects of the recent inflationary pressures, in particular the actions of the Board of Governors of the Federal Reserve System
to curb inflation through the increase of its federal funds target rate range, have materially affected our business, as further
described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Comparison of
Financial Condition at December 31, 2023 and December 31, 2022—2022 Securities Portfolio Restructuring Transaction.”
Securities
and Exchange
Commission
Division of Corporate Finance
Office
of Finance
April 22,
2024
Page 4
of 9
Risks Related to Our Business
Strategy and Operational Matters, page 19
10. For
each of the practices, conditions, and requirements in the memorandum of understanding, please
describe here or elsewhere, as appropriate, the actions you have taken or plan to take to
resolve each noted area, including a summary of your progress to date.
The
requested disclosure has been added to this risk factor on page 19 and elsewhere throughout the prospectus as
appropriate.
Our Policy Regarding Dividends,
page 37
11. We
note your disclosure in the risk factor on page 20 that your net worth ratio was less than
6% and you may be restricted from paying dividends while this ratio continues to be less
than 6%. Please revise this section to describe this limitation on payment of dividends.
The requested
disclosure has been added under “Our Policy Regarding Dividends” on page 42.
Provision for Credit Losses, page
53
12. We
note your disclosure that the provision for 2023 was due to your adoption of the CECL methodology.
Please enhance your discussion to include the factors that influenced management’s
estimate of expected credit losses as of December 31, 2023, under the CECL methodology.
Additional
disclosure has been provided under “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Comparison of Operating Results for the Years Ended December 31, 2023 and December 31, 2022—Provision
for Credit Losses” on page 58.
Securities
and Exchange
Commission
Division of Corporate Finance
Office
of Finance
April 22,
2024
Page 5
of 9
Management of Market Risk, page
56
13. We
note your references to the asset liability committee here. You also state that the committee
is "comprised of executive officers and certain other members of senior management,
and reports to the full board of directors on at least a quarterly basis." Please disclose
if this committee is a sub-committee of your board of directors and who serves on the committee.
Disclose if the board or the asset liability committee sets policies and guidelines for managing
interest rate risk and if so, whether the changes referenced in the first paragraph below
the two tables on page 58 were within the limits of such policies and guidelines.
The
requested disclosure has been added under “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Management of Market Risk” on page 61.
Off-Balance Sheet Arrangements
and Aggregate Contractual Obligations, page 60
14. We
note your disclosure on page F-12 that the allowance for credit losses (“ACL”)
related to your off-balance sheet credit exposures is estimated at each balance sheet date
under the CECL model. Please revise your discussion to include the amount of ACL that relates
to your off-balance sheet credit exposures as of each period presented.
We have
revised our disclosure under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Off-Balance
Sheet Arrangements and Aggregate Contractual Obligations” on page 65, to affirmatively state that, following its evaluation of
off-balance sheet credit exposures as of December 31, 2023, management determined that no allowance for credit losses was required for
off-balance sheet credit exposures as of such date (the only date presented in the prospectus for which the CECL model methodology applied).
Loan Approval Procedures, Loans
to One Borrower Limit and Lending Authority, page 72
15. We
note your references to the "loan committee" in this section. Please clarify if
the committee is comprised of your officers and directors and disclose who currently serves
on the committee.
The
requested disclosure has been added and clarified under “Business of East Wisconsin Savings
Bank—Loan Approval Procedures, Loans to One Borrower Limit and Lending Authority” on page 77.
Securities
and Exchange
Commission
Division of Corporate Finance
Office
of Finance
April 22,
2024
Page 6
of 9
Allocation of Allowance for Credit
Losses, page 78
16. We
note your tabular disclosure on page F-26 depicting changes in the allowance for credit losses
for the twelve months ended December 31, 2023. This disclosure indicates that while the adoption
of the CECL methodology under ASC 326 did not result in a transition adjustment to the overall
allowance for credit losses, it did result in adjustments to the allowance associated with
different segments and classes of loans receivable. Please revise the discussion on page
78 to disclose how the adoption impacted the comparative allocation of the allowance loan
loss table, including noted increases and decreases in allocated amounts, such as those associated
with one-to four family real estate loans and consumer loans, etc. Please also ensure that
other filing disclosures associated with your CECL adoption are consistent and complete,
especially those associated with your different loan segments and classes.
The
following additional disclosure has been add under “Business of East Wisconsin Savings Bank—Delinquencies
and Non-Performing Assets—Allocation of Allowance for Credit Losses” on page 83, in response to this request:
The CECL
allowance for credit losses lifetime loss rates utilized in the allowance for credit losses calculation, net of historical loss experience,
were applied to the respective loan portfolio segments as of January 1, 2023. The CECL estimated loss rates for one- to four-family real
estate loans were higher than the calculated factor used under the allowance for loan loss methodology. Conversely, the CECL estimated
loss rates for consumer loans was lower than the calculated factor used under the allowance for loan loss methodology.
Internal Agreement with Regulators,
page 95
17. We
note your disclosure here that the MOU "places certain restrictions on [your] operations."
Please briefly describe material restrictions placed on your operations by the MOU or advise.
Additional
disclosure regarding the MOU and certain restrictions it places on our operations has been added under “Supervision
and Regulation—Informal Agreements with Regulators” on page 100.
Securities
and Exchange
Commission
Division of Corporate Finance
Office
of Finance
April 22,
2024
Page 7
of 9
The Business Background of Our
Directors and Executive Officers, page 97
18. Please
revise the biographical descriptions for Ms. Lisa Cruz, Mr. Ke