EWSB Bancorp (EWSB) S-1IPO registration

As filed with the Securities and Exchange Commission on March 11, 2024

Registration No. 333-

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

EWSB Bancorp, Inc.

(Exact Name of Registrant as Specified in Its Charter)

109 West Second Street

Kaukauna, Wisconsin 02492

(920) 766-4646

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Charles D. Schmalz

President and Chief Executive Officer

EWSB Bancorp, Inc.

109 West Second Street

Kaukauna, Wisconsin 02492

(920) 766-4646

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Copies to:

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: x

If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨

If this Form is a post-effective amendment filed pursuant to Rule 462I under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act: ¨

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

PROSPECTUS

EWSB Bancorp, Inc.

(Proposed Holding Company for East Wisconsin Savings Bank)

Up to 1,006,250 shares of Common Stock

(Subject to increase to up to 1,157,188 shares)

EWSB Bancorp, Inc. (“New EWSB Bancorp” or the “Company”), a newly formed Maryland corporation, and the proposed holding company for East Wisconsin Savings Bank (the “Bank”), is offering shares of common stock for sale in connection with the conversion of Wisconsin Mutual Bancorp, MHC (the “MHC”), from a mutual holding company to a stock holding company form of organization. There is currently no public market for the shares of our common stock. We expect our common stock to be quoted on the OTCQB Market operated by OTC Markets Group upon the completion of the conversion and stock offering. We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings.

We are offering up to 1,006,250 shares of common stock for sale. We must sell a minimum of 743,750 shares in order to complete the offering. We may sell up to 1,157,188 shares of common stock because of demand for the shares or changes in market conditions without resoliciting subscribers.

We are offering the shares of common stock in a subscription offering to eligible members of the MHC (i.e., eligible depositors of the Bank) and the Bank’s tax-qualified employee benefits plan. Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a community offering, with a preference given to residents of the communities served by the Bank. Any shares of common stock not purchased in the subscription offering or community offering may be offered for sale in a syndicated community offering.

The minimum purchase order is 25 shares. All shares of common stock are being offered for sale at a price of $10.00 per share. Purchasers will not pay a commission to purchase shares of common stock in the offering. Stock orders must be received by us before 3:00 p.m., Central Time, on [expiration date]. We may extend the expiration date without notice to you until [extension date], or longer if the Board of Governors of the Federal Reserve System and the Wisconsin Department of Financial Institutions approves a later date. Once submitted, orders are irrevocable unless the subscription and community offerings are terminated or extended beyond [extension date], or the number of shares of common stock to be sold is increased to more than 1,157,188 shares or decreased to less than 743,750 shares. In these instances, we will resolicit subscribers, and all funds delivered to us to purchase shares of common stock will be returned promptly with interest. Funds received in the subscription and the community offerings will be held in a segregated account at the Bank and will earn interest at [interest rate %] per annum until completion or termination of the stock offering.

Performance Trust Capital Partners, LLC (“Performance Trust”) will assist us in selling the shares on a best efforts basis in the subscription and community offerings, and will serve as sole manager for any syndicated community offering. Performance Trust is not required to purchase any shares of common stock that are sold in the stock offering.

This investment involves a degree of risk, including the possible loss of your investment.

Please read “Risk Factors” beginning on page 15.

OFFERING SUMMARY

Price: $10.00 per Share

These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

None of the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, the Wisconsin Department of Financial Institutions, the Federal Deposit Insurance Corporation, nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

For assistance, please call the Stock Information Center at [phone number].

The date of this prospectus is [prospectus date].

TABLE OF CONTENTS

Page

SUMMARY

The following summary explains the significant aspects of the MHC’s mutual-to-stock conversion and the related offering of New EWSB Bancorp common stock. It may not contain all of the information that is important to you. For additional information before making an investment decision, you should read this entire document carefully, including the consolidated financial statements and the notes to the financial statements, and the section entitled “Risk Factors.”

In this prospectus, the terms “we,” “our,” and “us” refer to New EWSB Bancorp, the Bank, the MHC and the current Wisconsin-chartered mid-tier holding company of the Bank, EWSB Bancorp, Inc. (“Old EWSB Bancorp”), unless the context indicates another meaning.

New EWSB Bancorp, Inc.

New EWSB Bancorp, Inc. is a newly formed Maryland corporation that will own all of the outstanding shares of common stock of the Bank upon completion of the conversion and the offering. New EWSB Bancorp has not engaged in any business to date. Our corporate offices are located at 109 West Second Street, Kaukauna, Wisconsin 54130. Our telephone number at this address is (920) 766-4646.

East Wisconsin Savings Bank

The Bank is a Wisconsin-chartered stock savings bank headquartered in Kaukauna, Wisconsin. The Bank was organized in 1887 under the name Kaukauna Savings and Loan Association. In 1972, the Bank changed its name to East Wisconsin Savings and Loan Association and in 1997, the Bank changed its name to East Wisconsin Savings Bank, S.A. In 2017 the Bank reorganized into the no stock mutual holding company form of ownership. The Bank operates through its headquarters in Kaukauna and branches in Appleton, Freedom, Grand Chute and Kimberly, Wisconsin. We consider our primary lending market area to be Outagamie County, Wisconsin, and its adjoining counties.

Our business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations, primarily in one- to four-family residential real estate loans, as well as marine and recreational vehicle loans, home equity loans and lines of credit, and other consumer loans. To a lesser extent, we originate commercial real estate, multifamily, construction and commercial loans. At December 31, 2023, $122.2 million, or 69.7%, of our total loan portfolio was comprised of one- to four-family residential real estate loans, $30.8 million, or 17.6%, of our total loan portfolio was comprised of marine and recreational vehicle loans, $6.2 million, or 3.5%, of our total loan portfolio was comprised of home equity loans and lines of credit, and $4.0 million, or 2.3%, of our total loan portfolio was comprised of other consumer loans. We also invest in securities, consisting primarily of U.S. Treasury and federal agency securities, including agency mortgage-backed securities and corporate bonds. We offer a variety of deposit accounts, including certificates of deposit, money market accounts, savings accounts and interest-bearing and noninterest-bearing demand accounts. We historically have utilized advances from the FHLB to assist in the funding of our operations and we had $18.6 million of FHLB advances at December 31, 2023.

The Bank is subject to regulation, supervision and examination by the Wisconsin Department of Financial Institutions (the “Department”) under Wisconsin law, and the Federal Deposit Insurance Corporation (the “FDIC”) as its primary federal regulator and insurer of its deposits.

Our corporate offices are located at 109 West Second Street, Kaukauna, Wisconsin 54130. Our telephone number at this address is (920) 766-4646. Our website address is www.eastwis.com.

Information on our website is not incorporated into this prospectus and should not be considered part of this prospectus.

Business Strategy

Our current business strategy includes the following:

Our Organizational Structure and the Proposed Conversion

In 2017, the Bank completed a mutual holding company reorganization at which time the Bank became the wholly owned subsidiary of Old EWSB Bancorp, a Wisconsin corporation, which in turn became the wholly owned subsidiary of the MHC, a Wisconsin-chartered mutual holding company. The following diagram shows our organizational structure as of December 31, 2023:

After the conversion and offering are completed, we will be organized as a fully public stock holding company, as follows:

Reasons for the Conversion

Our primary reasons for the conversion and offering are to:

Recent Operating Losses

Our results of operations for fiscal years 2022 and 2023 were materially adversely impacted by a historic spike in general interest rates. As a result, our loan volume declined dramatically while our cost of funds increased more rapidly than the yield on our earning assets. In addition, the market value of our available-for-sale securities declined significantly. In order to reduce our vulnerability to changes in interest rates, improve liquidity and increase our interest rate spread, during fiscal 2022, we sold a significant amount of our available-for-sale securities resulting in a $5.1 million pretax loss upon the sale of those securities. See “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.” Our results for 2023 and 2022 were also negatively affected by expenses related to a proposed acquisition of another mutual institution that was later terminated. These expenses are considered nonrecurring and will not impact our future results of operations.

Our future operating results will be significantly dependent upon our ability to increase our net interest margin as well as our originations of one- to four-family loans, including in particular loans available-for-sale, which drive mortgage banking income. See “—Business Strategy.” In addition, we have taken a number of steps to increase our core deposits and increase our residential loan volume, both of which should enhance our goals of increasing both loan originations and our net interest margin. Although the capital raised in the conversion will support this effort, the conversion will also have an adverse impact on our operating results due to additional expenses to be incurred in connection with and as a result of the conversion. These additional expenses include costs related to becoming a public company, increased non-cash compensation expenses associated with our employee stock ownership plan (the “ESOP”) and the possible implementation of a stock-based benefit plan after the completion of the conversion. See “Risk Factors—Our stock-based benefit plan will increase our expenses and reduce our income;” and “Management—Benefits to be Considered Following Completion of the Conversion.”

There can be no assurances, however, that we will successfully execute our business plan and return to profitability.

Terms of the Offering

We are offering between 743,750 shares and 1,006,250 shares of common stock to eligible members of the MHC (i.e., eligible depositors of the Bank) and our ESOP, and, to the extent shares remain available, to members of our local community and the general public. The number of shares of common stock to be sold may be increased to up to 1,157,188 shares as a result of demand for the shares or changes in the market for financial institution stocks. Unless the number of shares of common stock to be offered is increased to greater than 1,157,188 shares or decreased to fewer than 743,750 shares, or the offering is extended beyond [extension date], subscribers will not have the opportunity to change or cancel their stock orders once submitted.

The purchase price of each share of common stock to be issued in the offering is $10.00. Investors will not be charged a commission to purchase shares of common stock in the offering.

Persons Who May Order Shares of Common Stock in the Offering

We are offering the shares of common stock in a subscription offering in the following descending order of priority:

Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a community offering, with a preference given first to natural persons (including trusts of natural persons) residing in Outagamie, Calumet and Winnebago Counties, Wisconsin. The community offering may begin concurrently with, during or promptly after the subscription offering. We may also offer for sale shares of common stock not purchased in the subscription offering and the community offering in a syndicated community offering. Performance Trust will act as sole manager for the syndicated community offering. We have the right to accept or reject, in our sole discretion, orders received in the community offering or syndicated community offering, and our interpretation of the terms and conditions of the plan of conversion will be final. Any determination to accept or reject stock orders in the community offering or syndicated community offering will be based on the facts and circumstances available to management at the time of the determination.

If we receive orders for more shares than we are offering for sale, we may not be able to fill your order, either fully or partially. A detailed description of the subscription offering, the community offering, if any, and the syndicated community offering, if any, as well as a discussion regarding allocation procedures, can be found in the section of this prospectus entitled “The Conversion and Offering.”

How We Determined the Offering Range

The amount of common stock that we are offering is based on an independent appraisal of the estimated market value of New EWSB Bancorp, assuming the offering is completed. Feldman Financial Advisors, Inc., our independent appraiser, has estimated that, as of February 23, 2024, this market value was $8.8 million. Based on applicable state and federal regulations, this market value forms the midpoint of a valuation range with a minimum of $7.4 million and a maximum of $10.1 million. Based on this valuation range and the $10.00 per share price, the number of shares of common stock being offered for sale by New EWSB Bancorp ranges from 743,750 shares to 1,006,250 shares. The purchase price of $10.00 per share was selected primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions. Feldman Financial Advisors, Inc. will update its appraisal before we complete the conversion and offering. If, as a result of demand for the shares or changes in market conditions, Feldman Financial Advisors, Inc. determines that our estimated pro forma market value has increased, we may sell up to 1,157,188 shares without further notice to you. If our pro forma market value at the time we complete the conversion and offering is either below $7.4 million or above $11.6 million, then, after consulting with the Department and the Federal Reserve Board, we may: terminate the offering and promptly return all funds with interest; set a new offering range and give all subscribers the opportunity to place a new order; or take such other actions as may be permitted by our regulators.

The appraisal is based in part on our financial condition and results of operations, the pro forma effect of the capital raised by the sale of shares of common stock in the offering, and an analysis of a peer group of eleven publicly traded savings and loan and bank holding companies that Feldman Financial Advisors, Inc. considered comparable to us. The appraisal peer group consists of the following companies, all of which are traded on the Nasdaq Stock Market.

The following table presents a summary of our selected pricing ratios (on a pro forma basis) as of and for the twelve months ended December 31, 2023 and for the peer group as of and for the twelve months ended December 31, 2023 (or the last twelve months for which data is available), with stock prices as of February 23, 2024, as reflected in the appraisal report. Compared to the average pricing of the peer group, our pro forma pricing ratios at the midpoint of the offering range indicated a discount of 34.9% on a price-to-book value basis and a discount of 35.6% on a price-to-tangible book value basis. Due to our recent net loss, our calculated price-to-core earnings ratio at the midpoint was not meaningful and, therefore, not subject to comparison with the peer group.

The independent appraisal does not indicate trading market value. Do not assume or expect that our valuation as indicated in the appraisal means that after the conversion and offering the shares of our common stock will trade at or above the $10.00 per share purchase price. Furthermore, the pricing ratios presented in the appraisal were used by Feldman Financial Advisors, Inc. to estimate our pro forma appraised value for regulatory purposes and not to compare the relative value of shares of our common stock with the value of the capital stock of the peer group. The value of the capital stock of a particular company may be affected by a number of factors such as financial performance, asset size and market location.

For a more complete discussion of the amount of common stock we are offering for sale and the independent appraisal, see “The Conversion and Offering—Determination of Share Price and Number of Shares to be Issued.”

Limits on How Much Common Stock You May Purchase

The minimum number of shares of common stock that may be purchased is 25. Generally, no individual, or individuals acting through a single qualifying account held jointly, may purchase more than 15,000 shares ($150,000) of common stock. If any of the following persons purchase shares of common stock, their purchases, in all categories of the offering, when combined with your purchases, cannot exceed 30,000 shares ($300,000) of common stock:

Unless we determine otherwise, persons having a joint account relationship, persons having the same address and persons exercising subscription rights through qualifying accounts registered to the same address will be subject to the overall purchase limitation of 30,000 shares ($300,000).

Subject to regulatory approval, we may increase or decrease the purchase limitations at any time. Please see “The Conversion and Offering—Limitations on Common Stock Purchases.”

How You May Purchase Shares of Common Stock in the Subscription Offering and the Community Offering

In the subscription offering and community offering, you may pay for your shares only by:

You may not use any type of third-party check to pay for shares of common stock. Do not submit cash. Wire transfers will not be accepted. Applicable regulations prohibit the Bank from lending funds or extending credit to any person to purchase shares of common stock in the offering. You may not submit a Bank line of credit check. You may not designate withdrawal from the Bank’s accounts with check-writing privileges; rather, submit a check. If you request a direct withdrawal from an account with check-writing privileges, we reserve the right to interpret that as your authorization to treat those funds as if we had received a check for the designated amount, and will immediately withdraw the amount from your demand account(s). You may not authorize direct withdrawal from a Bank individual retirement account (“IRA”). See “—Using Individual Retirement Account Funds to Purchase Shares of Common Stock.”

You may subscribe for shares of common stock in the subscription and community offerings by delivering a signed and completed original stock order form, together with full payment payable to EWSB Bancorp, Inc. or authorization to withdraw funds from one or more of your Bank deposit accounts, provided that the stock order form is received (not postmarked) before 3:00 p.m., Central Time, on [expiration date], which is the expiration of the subscription offering period. You may return your stock order form and payment by (1) overnight delivery to the address indicated on the stock order form for this purpose; (2) in-person delivery to the Bank’s corporate office located at 109 West Second Street, Kaukauna, Wisconsin; or (3) regular mail using the stock order reply envelope provided. In-person delivery of stock order forms will be accepted only at the Bank’s corporate offices. Do not deliver your stock order form to any other of the Bank's offices. The Bank is open Monday through Friday between 10:00 a.m. and 3:00 p.m., Central Time, excluding bank holidays.

For a complete description of how to purchase shares in the offering, see “The Conversion and Offering—Procedure for Purchasing Shares.”

Using Retirement Account Funds to Purchase Shares of Common Stock in the Subscription and Community Offerings

You may be able to subscribe for shares of common stock using funds in your IRA or other retirement account. If you wish to use some or all of the funds in your Bank IRA or other retirement account, the applicable funds must be transferred to a self-directed account maintained by an independent custodian or trustee, such as a brokerage firm, and the purchase must be made through that account. If you do not have such an account, you will need to establish one before placing your stock order. An annual administrative fee may be payable to the independent custodian or trustee. Because individual circumstances differ and the processing of retirement fund orders takes additional time, we recommend that you contact our Stock Information Center promptly, preferably at least two weeks before the [expiration date] offering deadline, for assistance with purchases using funds in your IRA or other retirement account you may have at the Bank or elsewhere. Whether you may use such funds to purchase shares in the offering may depend on timing constraints and, possibly, limitations imposed by the institution where the funds are held.

See “The Conversion and Offering—Procedure for Purchasing Shares in the Subscription and Community Offerings—Payment for Shares” and “—Using Retirement Account Funds” for a complete description of how to use IRA funds to purchase shares of common stock in the offering.

Purchases by Executive Officers and Directors and Ownership by Benefit Plans

We expect our directors and executive officers, together with their associates, to subscribe for 117,500 shares ($1,175,000) of common stock in the offering, or 15.8% of the shares to be sold at the minimum of the offering range. Our directors and executive officers will pay the same $10.00 per share price for the common stock as all other subscribers in the offering. Purchases of the common stock by our directors and executive officers are for investment purposes for these individuals and not with a view towards resale, and pursuant to applicable conversion regulations, our directors and executive officers generally will not be permitted to sell any shares of the common stock that they purchase in the offering for a period of at least one year from the closing of the conversion and offering. See “Subscriptions by Directors and Executive Officers.”

Additionally, we expect our ESOP to purchase 7% of the total number of shares of common stock that we issue in the offering, and also expect, following completion of the conversion, and subject to stockholder approval, to adopt and implement a stock-based benefit plan. The shares owned by these plans will increase the ownership of our officers and directors. See “—Benefits to Management and Potential Dilution to Stockholders Following the Conversion.”

How We Intend to Use the Proceeds From the Offering

Pursuant to the plan of conversion, we must contribute at least 50% of the net proceeds from the offering to the Bank. We intend to retain $100,000 of the net conversion proceeds at New EWSB Bancorp and enough of the net proceeds to fund the loan to the ESOP. The remainder of the net conversion proceeds will be contributed to the Bank. Assuming we sell 875,000 shares of common stock in the offering, the midpoint of the offering range, and we have net proceeds of approximately $7.1 million, we intend to distribute the net proceeds as follows:

New EWSB Bancorp may use the funds it retains to invest in securities or for other general corporate purposes. The Bank expects to use the proceeds from the offering it receives from New EWSB Bancorp to increase its capital position and to support increased lending.

We do not anticipate the number of shares we sell in the offering will result in significant changes in the respective uses of proceeds by the Bank and New EWSB Bancorp. Please see the section of this prospectus entitled “How We Intend to Use the Proceeds From the Offering” for more information on the proposed use of the proceeds from the offering, including a table showing the distribution of net proceeds at different points in the offering range.

You May Not Sell or Transfer Your Subscription Rights

Applicable regulations prohibit you from transferring your subscription rights. If you order shares of common stock in the subscription offering, you will be required to state that you are purchasing the shares of common stock for yourself and that you have no agreement or understanding to sell or transfer your subscription rights. We intend to take legal action, including reporting persons to federal and/or state regulatory agencies, against anyone who we believe has sold or given away his or her subscription rights. We will not accept your order if we have reason to believe that you have sold or transferred your subscription rights.

When registering your stock purchase on the stock order form, you cannot add the name(s) of others for joint stock registration unless they are also named on your qualifying deposit account. In addition, the stock order form requires that you list all qualifying accounts, giving all names on each account and the account number at the applicable eligibility date. Failure to provide this information, or providing incomplete or incorrect information, may result in a loss of part or all of your share allocation if there is an oversubscription.

Deadline for Orders of Shares of Common Stock in the Subscription and Community Offerings

If you wish to purchase shares of common stock in the offering, we must receive a properly signed and completed original stock order form, together with full payment for the shares of common stock, no later than 3:00 p.m., Central Time, on [expiration date], unless we extend the subscription offering and/or the community offering. Orders received after 3:00 p.m., Central Time, on [expiration date] will be rejected unless we extend the offering. If you wish to purchase shares of common stock, a properly completed and signed original stock order form, together with full payment, must be received (not postmarked) by this time.

Although we will make reasonable attempts to provide this prospectus and offering materials to holders of subscription rights, the subscription offering and all subscription rights will expire at 3:00 p.m., Central Time, on [expiration date], whether or not we have been able to locate each person entitled to subscription rights.

For a complete description of the deadline for purchasing shares in the offering, see “The Conversion and Offering—Procedure for Purchasing Shares—Expiration Date.”

Steps We May Take If We Do Not Receive Orders for the Minimum Number of Shares

If we do not receive orders for at least 743,750 shares of common stock, we may take additional steps to complete the offering. Specifically, we may:

If we extend the offering past [extension date], we will resolicit subscribers. You will have the opportunity to confirm, change or cancel your order within a specified period of time. If you do not respond during that period of time, your stock order will be cancelled and your deposit account withdrawal authorizations will be cancelled or your funds submitted will be returned promptly with interest at [interest rate %] from the date the stock order was processed. If one or more purchase limitations are increased, subscribers in the subscription offering who ordered the maximum amount will be given the opportunity to increase their subscriptions up to the newly applicable limit.

Possible Change in the Offering Range

Feldman Financial Advisors, Inc. will update its appraisal before we complete the offering. If, as a result of demand for the shares, changes in market conditions or changes to our financial condition, operating results or other aspects of our business, Feldman Financial Advisors, Inc. determines that our pro forma market value has increased, we may sell up to 1,157,188 shares in the offering without further notice to you. If our pro forma market value at that time is either below $7.4 million or above $11.6 million (the minimum and adjusted maximum pro forma market value, respectively, based on the appraised value of New EWSB Bancorp as of February 23, 2024), then, after consulting with the Federal Reserve Board and the Department, we may:

If we set a new offering range, we will promptly return funds, with interest at [interest rate %] for funds received in the offering, cancel deposit account withdrawal authorizations and commence a resolicitation. In connection with the resolicitation, we will notify subscribers of their right to place a new stock order for a specified period of time.

Possible Termination of the Offering

We may terminate the offering at any time with the approval, to the extent such approval is required, of the Department and the Federal Reserve Board.

We must sell a minimum of 743,750 shares to complete the offering. If we terminate the offering because we fail to sell the minimum number of shares or for any other reason, we will promptly return your funds with interest at [interest rate %], and we will cancel deposit account withdrawal authorizations.

Conditions to Completion of the Conversion and the Offering

We cannot complete the conversion and the offering unless:

Benefits to Management and Potential Dilution to Stockholders Following the Conversion

We expect our ESOP to purchase 7% of the total number of shares of common stock that we issue in the offering, or 70,437 shares of common stock, assuming we sell the maximum of the number of shares proposed to be sold. If market conditions warrant, in the judgment of its trustees, the ESOP’s subscription order will not be filled and the ESOP may elect to purchase shares in the open market following the completion of the conversion, subject to the approval of the Federal Reserve Board and the Department.

We intend to implement a stock-based benefit plan no earlier than six months after completion of the conversion. Stockholder approval of the plan would be required. We have not determined whether we would adopt the plan within or after 12 months following the completion of the conversion. If we implement a stock-based benefit plan within 12 months following the completion of the conversion, the stock-based benefit plan would be limited to reserving a number of shares (i) up to 3% of the shares of common stock outstanding following the stock offering for awards of restricted stock to key employees and directors, at no cost to the recipients, and (ii) up to 10% of the shares of common stock outstanding following the stock offering for issuance of stock options to key employees and directors. If the stock-based benefit plan is adopted more than 12 months after the completion of the conversion, it would not be subject to the percentage limitations set forth above. We have not yet determined the number of shares that would be reserved for issuance under the plan. See “Management of New EWSB Bancorp—Benefits to be Considered Following Completion of the Offering.”

In connection with the conversion, we expect to enter into employment and change in control agreements with certain of our other executive officers. See “Management of New EWSB Bancorp—Executive Compensation” for a further discussion of these agreements, including their terms and potential costs, as well as a description of other benefits arrangements.

The following table summarizes the number of shares of common stock and aggregate dollar value of grants (valuing each share granted at the offering price of $10.00) that will be available under our ESOP and a stock-based benefit plan if such plan is adopted within one year following the completion of the conversion and the offering. The table shows the dilution to stockholders if all these shares are issued from authorized but unissued shares, instead of shares purchased in the open market. The table also sets forth the number of shares of common stock to be acquired by the ESOP for allocation to all employees. A portion of the stock awards and stock option grants shown in the table below may be made to non-management employees.

Market for Common Stock

The Company has never issued capital stock and there is no established market for our common stock. We expect that our common stock will be quoted on the OTCQB Market operated by the OTC Markets Group upon conclusion of the stock offering. See “Market for the Common Stock.”

Our Policy Regarding Dividends

We do not currently intend to pay cash dividends to our stockholders, and no assurances can be given that any such dividends will be paid in the future. The payment and amount of any dividend payments will be subject to statutory and regulatory limitation, and will depend upon a number of factors, including the following: regulatory capital requirements; restrictions in a confidential memorandum of understanding (the “MOU”) entered into with the FDIC and the Department, described below; compliance with Wisconsin law; our financial condition and results of operations; our other uses of funds for the long-term value of stockholders and general economic conditions. See “Our Policy Regarding Dividends” for additional information regarding our dividend policy.

Material Income Tax Consequences

The conversion qualifies as a tax-free reorganization. None of the MHC, Old EWSB Bancorp, New EWSB Bancorp, the Bank, nor persons eligible to subscribe in the subscription offering will recognize any gain or loss as a result of the conversion. See “The Conversion and Offering—Material Income Tax Consequences” for a complete discussion of the income tax consequences of the transaction.

Delivery of Shares of Common Stock

All shares of common stock of New EWSB Bancorp sold in the subscription offering and community offering will be issued in book entry form and held electronically on the books of our transfer agent. Stock certificates will not be issued. A statement reflecting ownership of shares of common stock sold in the offering will be mailed by our transfer agent to the persons entitled thereto at the address noted by them on their stock order form as soon as practicable following consummation of the conversion. Shares of common stock sold in the syndicated community offering may be delivered electronically through the services of The Depository Trust Company. We expect trading in the stock to begin on the business day immediately following the completion of the conversion and offering. It is possible that until a statement reflecting ownership of shares of common stock is available and delivered to purchasers, purchasers might not be able to sell the shares of common stock that they ordered, even though the common stock will have begun trading. Your ability to sell the shares of common stock before receiving your statement will depend on arrangements you may make with a brokerage firm.

Emerging Growth Company Status

We qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as we are an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies. See “Risk Factors—Risks Related to the Offering—We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors” and “Regulation and Supervision—Emerging Growth Company Status.”

We may remain an emerging growth company for up to five years from the closing of the offering, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.24 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the “Exchange Act,” which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

An emerging growth company may elect to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, but must make such election when the company is first required to file a registration statement. Such an election is irrevocable during the period a company is an emerging growth company. We have elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

Important Risks in Owning New EWSB Bancorp’s Common Stock

An investment in our common stock involves substantial risks and uncertainties, including risks related to our business and this offering. Investors should carefully consider all of the information in this prospectus, including the detailed discussion of these and other risks under “Risk Factors” beginning on page 15, before investing in our common stock.

How You Can Obtain Additional Information – Stock Information Center

Our banking personnel may not, by law, assist with investment-related questions about the offering. If you have questions regarding the conversion or offering, please call our Stock Information Center at [phone number]. The Stock Information Center is open Monday through Friday, between 10:00 a.m. and 3:00 p.m., Central Time, except for bank holidays.

TO ENSURE THAT EACH PERSON IN THE OFFERING RECEIVES A PROSPECTUS AT LEAST 48 HOURS PRIOR TO THE EXPIRATION DATE OF [expiration date] AND IN ACCORDANCE WITH FEDERAL LAW, NO PROSPECTUS WILL BE MAILED OR HAND-DELIVERED ANY LATER THAN FIVE DAYS OR TWO DAYS, RESPECTIVELY, PRIOR TO [expiration date].

RISK FACTORS

You should carefully consider the following risk factors that may affect our business, future operating results and financial condition, as well as the other information set forth in this prospectus, before making a decision to invest in our common stock. If any of the following risks actually occur, our business, financial condition or results of operations would likely be materially adversely affected. In such case, the trading price of our common stock would likely decline due to any of these risks, and you may lose all or part of your investment. The following risks are not the only risks we face. Additional risks that are not presently known or that we presently deem to be immaterial also could have a material adverse effect on our financial condition, results of operations and business.

Risks Related to our Lending Activities

Our results of operations are significantly impacted by our one- to four-family residential lending.

Our one- to four-family residential lending provides a significant portion of our interest and noninterest income. Longer term, fixed-rate one- to four-family residential real estate loans that we originate are generally sold in the secondary market on a servicing retained basis and we generally retain shorter term and adjustable-rate one- to four-family residential real estate loans. The income that we generate from these activities, including, in particular, from loan sales, is significantly dependent upon mortgage volume, which in turn is dependent in large part on general interest rates. In large part due to the Federal Reserve Board’s increase in interest rates to address inflationary pressures, market mortgage rates increased dramatically beginning in the first half of 2022. As a result, mortgage loan demand decreased both nationally and in the Bank’s primary market area. Although national and local mortgage loan demand has recovered somewhat from its recent low point, it remains well below the levels of the recent past. In addition, our ability to sell loans in the secondary market is also subject to investor demand and increased investor yield requirements for these loans. These conditions may fluctuate or worsen in the future and a prolonged period of elevated interest rates and/or secondary market illiquidity may reduce our loan production volumes and could have a significant adverse effect on our results of operations.

Our emphasis on one- to four-family residential mortgage lending exposes us to credit risks.

At December 31, 2023, $122.2 million, or 69.7%, of our loan portfolio was secured by one- to four-family real estate and we intend to continue to make loans of this type in the future. One- to four-family residential mortgage lending is generally sensitive to regional and local economic conditions that significantly impact the ability of borrowers to meet their loan payment obligations, making loss levels difficult to predict. Declines in real estate values could cause some of our residential mortgages to be inadequately collateralized, which would expose us to a greater risk of loss if we seek to recover on defaulted loans by selling the real estate collateral.

If our allowance for credit losses is not sufficient to cover actual credit losses, our earnings could decrease.

We maintain an allowance for credit losses, which is established through a provision for credit losses that represents management’s best estimate of the current expected losses within the loan portfolio. We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the amount of the allowance for credit losses, we review our loans and our loss and delinquency experience, and we evaluate economic conditions. If our assumptions or the results of our analyses are incorrect, our allowance for credit losses may not be sufficient to cover losses inherent in our loan portfolio, resulting in additions to our allowance. In addition, any future credit deterioration or changes in economic conditions could require us to increase our allowance for credit losses in the future. At December 31, 2023, our allowance for credit losses was 0.60% of total loans and 5,872.2% of total non-performing loans. Material additions to our allowance would materially decrease our net income.

The implementation of the Current Expected Credit Loss, referred to as “CECL” throughout this prospectus, standard became effective for the Bank on January 1, 2023. CECL requires financial institutions to determine periodic estimates of lifetime expected credit losses on loans, and recognize the expected credit losses as allowances for credit losses. Accordingly, we changed our method of providing allowances for loan losses that are incurred or probable, which required us to increase the types of data we must collect and review to determine the appropriate level of the allowance for credit losses.

In addition, bank regulators periodically review our allowance for credit losses and, as a result of such reviews, may recommend that we increase our provision for credit losses or recognize further loan charge-offs. However, regulatory agencies are not directly involved in the process of establishing the allowance for credit losses, as the process is our responsibility and any adjustment of the allowance is the responsibility of our management. Any increase in our allowance for credit losses or loan charge-offs as a result of such review or otherwise may have a material adverse effect on our financial condition and results of operations.

The geographic concentration of our loan portfolio and lending activities makes us vulnerable to a downturn in the local economy.

We primarily serve individuals and businesses located in Outagamie County, Wisconsin, and its adjoining counties. At December 31, 2023, approximately $133.2 million, or 76.0%, of our total loan portfolio was primarily secured by real estate in these market areas. Therefore, our success is largely dependent on the economic conditions, including employment levels, population growth, income levels, savings trends and government policies, in these market areas. Weaker economic conditions caused by recessions, unemployment, inflation, a decline in real estate values or other factors beyond our control may adversely affect the ability of our borrowers to service their debt obligations and could result in higher loan and lease losses and lower net income for us.

Although there is not a single employer or industry in our market areas on which a significant number of our customers are dependent, we are still vulnerable to a downturn in the local economy and real estate markets. Decreases in local real estate values caused by economic conditions or other events could adversely affect the value of the property used as collateral for our loans, which could cause us to realize a loss in the event of a foreclosure.

A worsening of business and economic conditions generally or specifically in the principal markets in which we conduct business could have adverse effects on our business, including the following:

Moreover, a significant decline in general economic conditions, caused by inflation, recession, acts of terrorism, an outbreak of hostilities or other international or domestic calamities, unemployment, public health crises or other factors beyond our control could further impact these local economic conditions and could further negatively affect the financial results of our banking operations. In the event of severely adverse business and economic conditions generally, or specifically in the principal markets in which we conduct business, there can be no assurance that the federal government and the Federal Reserve Board would intervene. If economic conditions worsen or volatility increases, our business, financial condition and results of operations could be materially adversely affected. For more information about our market area, please see the section of this prospectus titled “Business of East Wisconsin Savings Bank—Market Area.”

Risks Related to Market Interest Rates

Our securities portfolio impairment in difficult market conditions could have adverse effects on our results of operations.

Unrealized losses on investment securities available-for-sale result from changes in credit spreads and liquidity issues in the marketplace, along with changes in the credit profile of individual securities issuers. Under U.S. generally accepted accounting principles (“GAAP”), we are required to review our investment portfolio periodically for the presence of credit losses of our securities, taking into consideration current and future market conditions, the extent and nature of changes in fair value, issuer rating changes and trends, volatility of earnings, current analysts’ evaluations, our ability and intent to hold investments until a recovery of fair value, as well as other factors. Adverse developments with respect to one or more of the foregoing factors may require us to deem particular securities to be impaired, with the credit-related portion of the reduction in the value recognized as a charge to our earnings through an allowance. Subsequent valuations, in light of factors prevailing at that time, may result in significant changes in the values of these securities in future periods. Any of these factors could require us to recognize further impairments in the value of our securities portfolio, which may have an adverse effect on our results of operations in future periods.

Future changes in interest rates could reduce our profits and asset values.

Net income is the amount by which net interest income and noninterest income exceed noninterest expense and the provision for credit losses. Net interest income makes up a majority of our income and is based on the difference between:

A majority of our loans are fixed-rate loans. Furthermore, the rates we earn on our other interest-earning assets and the rates we pay on our interest-bearing liabilities are generally fixed for a contractual period of time. Like many savings banks, our interest-bearing liabilities generally have shorter contractual maturities than our interest-earning assets. This imbalance can create significant earnings volatility because market interest rates change over time. In a period of rising interest rates, the interest income we earn on our assets may not increase as rapidly as the interest we pay on our liabilities. In a period of declining interest rates, the interest income we earn on our assets may decrease more rapidly than the interest we pay on our liabilities, as borrowers prepay mortgage loans, and mortgage-backed securities and callable investment securities are called, requiring us to reinvest those cash flows at lower, current interest rates.

Interest rates also affect how much money we lend. For example, when interest rates rise, the cost of borrowing increases and loan originations tend to decrease. A rising rate environment can also negatively impact us if the higher debt service costs on adjustable-rate loans due to increases in interest rates on such loans lead to borrowers’ inability to pay contractual obligations. In addition, changes in interest rates can affect the average life of loans and securities. A decline in interest rates results in increased prepayments of loans and mortgage-backed and related securities as borrowers refinance their debt to reduce their borrowing costs. This creates reinvestment risk, which is the risk that we may not be able to reinvest prepayments at rates that are comparable to the rates we earned on the prepaid loans or securities. Furthermore, an inverted interest rate yield curve, where short-term interest rates (which are usually the rates at which financial institutions borrow funds) are higher than long-term interest rates (which are usually the rates at which financial institutions lend funds for fixed-rate loans) can reduce a financial institution’s net interest margin and create financial risk for financial institutions that primarily originate longer term, fixed-rate mortgage loans.

Any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition, liquidity and results of operations. Changes in the level of interest rates also may negatively affect the value of our assets and ultimately affect our earnings. At December 31, 2023 and 2022, we had accumulated other comprehensive losses of $7.7 million and $9.2 million, respectively. Our accumulated other comprehensive loss at the end of these periods was primarily related to unrealized losses on investment securities in 2022 and the restructuring of our investment securities portfolio, 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.”

We monitor interest rate risk through the use of simulation models, including estimates of the amounts by which the fair value of our assets and liabilities (our economic value of equity or “EVE”) and our net interest income would change in the event of a range of assumed changes in market interest rates. With regard to EVE, as of December 31, 2023, we would have experienced a 33.13% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 27.04% increase in EVE in the event of an instantaneous 200 basis point decrease in market interest rates. With regard to net interest income, at December 31, 2023, we would have experienced a 0.62% increase in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 3.63% increase in net interest income in the event of an instantaneous parallel 200 basis point decrease in market interest rates. For further discussion of how changes in interest rates could impact us, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Management of Market Risk.”

Inflationary pressures and rising prices may affect our results of operations and financial condition.

Inflation rose sharply at the end of 2021 and remained at an elevated level throughout 2022 and 2023. Small to medium-sized businesses may be impacted more during periods of high inflation as they are not able to leverage economies of scale to mitigate cost pressures compared to larger businesses. Consequently, the ability of our business customers to repay their loans may deteriorate, and in some cases this deterioration may occur quickly, which would adversely impact our results of operations and financial condition. Furthermore, a prolonged period of inflation could cause wages and other costs to the Company to increase, which could adversely affect our results of operations and financial condition.

Risks Related to Our Business Strategy and Operational Matters

The Bank has entered into a confidential memorandum of understanding (the “MOU”) with the Department and the FDIC. The MOU places certain restrictions on our operations and imposes certain requirements, and the failure to adequately address the issues identified in the MOU or comply with its terms could result in additional regulatory or enforcement actions by the FDIC and/or the Department. Restrictions on our operations and expenses associated with the MOU may also have adverse effects on our operations and financial condition.

In July 2023, the Bank entered into a confidential MOU with the FDIC and the Department, the Bank’s primary banking regulators. The MOU requires that the Bank address certain practices and conditions identified during regulatory examinations, including, among other things, the level of its capital, earnings, liquidity, investments, and information technology. The MOU also requires enhancements to board oversight, asset/liability management, and risk management.

The Bank is in the process of putting into place policies and processes to address each of these noted areas. The failure to adequately address the issues identified in the MOU or comply with its terms could result in additional regulatory or enforcement actions by the FDIC and/or the Department. The Bank has expended significant resources in connection with the MOU, and our continued efforts to comply with the MOU may restrict our operations or result in the continued expenditure of significant resources, which could have adverse effects on our operations and financial condition. For additional information regarding the MOU, see “Regulation and Supervision—Informal Agreements with Regulators.”

As a Wisconsin-chartered savings bank, we are subject to a 6% net worth ratio requirement. If our net worth ratio continues to be less than 6%, we may be subject to restrictions on our operations imposed by the Department.

As a Wisconsin-chartered savings bank, we must maintain a net worth ratio of 6% (with “net worth ratio” defined under Wisconsin law as the Bank’s liabilities subtracted from its assets, plus unallocated general loan loss reserves, all divided by the Bank’s total assets). At December 31, 2023 we had a net worth ratio of 4.50%. If our net worth ratio continues to be less than 6%, the Department may direct us to adhere to a specific written plan established by the Department to correct the deficiency, as well as a number of other restrictions on our operations, including a prohibition on the payment of dividends. Our pro forma regulatory capital ratios, including the net worth ratio, after giving effect to the sale of shares of common stock in the offering, are set forth under “Historical and Pro Forma Regulatory Capital Compliance.”

We have experienced net losses in recent periods, and we may not return to sustained profitability in the future.

Our results of operations for fiscal years 2022 and 2023 were materially adversely impacted by a historic spike in general interest rates. As a result, our loan volume declined dramatically while our cost of funds increased more rapidly than the yield on our earning assets. In addition, the market value of our available-for-sale securities declined significantly. In order to reduce our vulnerability to changes in interest rates and strengthen our balance sheet, during fiscal 2022, we sold a significant amount of our available-for-sale securities resulting in a $5.1 million pretax loss upon the sale of those securities. See “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.” Our results of operations will continue to be negatively impacted until we are able to increase our interest income and noninterest income relative to our expenses. To improve our results of operations we have focused on controlling our expenses and have adopted a plan to enhance our results of operations, particularly through increasing our originations of one- to four-family loans, including, in particular, loans held-for-sale, which drive mortgage banking income. Although the capital raised in the conversion will support this effort, the conversion will also have an adverse impact on our operating results due to additional expenses to be incurred in connection with and as a result of the conversion. These additional expenses include costs related to becoming a public company, increased non-cash compensation expenses associated with our ESOP and the possible implementation of a stock-based benefit plan after the completion of the conversion. See “—Our stock-based benefit plan will increase our expenses and reduce our income;” and “Management—Benefits to be Considered Following Completion of the Conversion.”

We may be unsuccessful, however, in executing on our business plan and may not be able to return to profitability in the timeframe we expect, or at all. A number of factors may inhibit us from executing on our business plan or impair our ability to achieve profitability as expected, or at all, including adverse economic conditions, regulatory risks, the level of competition from other financial institutions, adverse changes in the interest rate environment and the securities markets and other risks and uncertainties outlined in this “Risk Factors” section. Continued net losses after the completion of our mutual-to-stock conversion could adversely affect our capital levels and would be expected to negatively impact our stock price.

The Company may not be able to realize the value of its deferred tax assets.

Due to losses in prior years, at December 31, 2023 the Bank had a net deferred tax asset of $4.9 million, including a net operating loss carry-forward of $1.9 million. In order to realize the benefit of these tax losses, credits, and deductions, the Company must generate substantial taxable income in future periods. Deferred tax assets are calculated using a federal corporate tax rate of 21% and a state corporate tax rate of 7.9%. Changes in tax laws and rates may affect deferred tax assets in the future. If higher federal corporate tax rates are enacted, net deferred tax assets would be increased commensurate with the rate increase. Wisconsin state net operating loss carryforwards begin to expire in 2042. Additionally, should the Company need to raise additional capital by issuing new common shares or securities convertible into common shares, then depending on the number of common share equivalents issued, it could trigger a “change in control,” as defined by Section 382 of the Internal Revenue Code. Such an event could negatively impact or limit the ability to utilize net operating loss carry-forwards, credit loss carry-forwards, and other net deferred tax assets, and result in an impairment of these deferred tax assets for financial reporting purposes.

We face significant operational risks because of our reliance on technology. Our information technology systems may be subject to failure, interruption or security breaches.

Information technology systems are critical to our business. Our business requires us to collect, process, transmit and store significant amounts of confidential information regarding our customers, employees, business, operations, plans and business strategies. We use various technology systems to manage our customer relationships, general ledger, securities investments, deposits, and loans. Our computer systems, data management and internal processes, as well as those of third parties, are integral to our performance. Our operational risks include the risk of malfeasance by employees or persons outside the Bank, errors relating to transaction processing and technology, systems failures or interruptions, breaches of our internal control systems and compliance requirements, and business continuation and disaster recovery. There have been increasing efforts by third parties to breach data security at financial institutions. Such attacks include computer viruses, malicious or destructive code, phishing attacks, denial of service or information or other security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of confidential, proprietary, personal and other information, damages to systems, or other material disruptions to network access or business operations. Although we take protective measures and believe that we have not experienced any of the data breaches described above, the security of our computer systems, software, and networks may be vulnerable to breaches, unauthorized access, misuse, computer viruses, or other malicious code or cyber-attacks that could have an impact on information security. Because the techniques used to cause security breaches change frequently, we may be unable to proactively address these techniques or to implement adequate preventative measures.

If there is a breakdown in our internal control systems, improper operation of systems or improper employee actions, or a breach of our security systems, including if confidential, personal or proprietary information were to be mishandled, misused or lost, we could suffer financial loss, loss of customers and damage to our reputation, and face regulatory action or civil litigation. Any of these events could have a material adverse effect on our financial condition and results of operations. Insurance coverage may not be available for such losses, or where available, such losses may exceed insurance limits.

We outsource critical operations to third-party service providers.

We outsource a majority of our data processing requirements to third-party providers. Accordingly, our operations are exposed to the risk that these vendors will not perform in accordance with our contractual agreements with them, or we also could be adversely affected if such an agreement is not renewed by the third-party vendor or is renewed on terms less favorable to us. If our third-party providers encounter difficulties, or if we have difficulty communicating with those service providers, our ability to adequately process and account for transactions could be affected, and our business operations could be adversely affected, which could have a material adverse effect on our financial condition and results of operations. Threats to information security also exist in the processing of customer information through various other vendors and their personnel, and our third-party service providers may be vulnerable to unauthorized access, computer viruses, phishing schemes and other security breaches. We may have to expend additional resources to protect against the threat of such security breaches and computer viruses, or to alleviate problems caused by such security breaches or viruses. To the extent that the activities of our third-party service providers or the activities of our customers involve the storage and transmission of confidential information, security breaches and viruses could expose us to claims, regulatory scrutiny, litigation costs and other possible liabilities. To our knowledge, the services and programs provided to us by third parties have not experienced any material security breaches. However, the existence of cyber-attacks or security breaches at third parties with access to our data, such as vendors, may not be disclosed to us in a timely manner.

While our Board of Directors takes an active role in cybersecurity risk tolerance, we rely to a large degree on management and outside consultants in overseeing cybersecurity risk management.

Our Board of Directors takes an active role in our cybersecurity risk tolerance and all members receive cybersecurity training annually. The Board reviews the annual risk assessments and approves information technology policies, which include cybersecurity. Furthermore, our Audit Committee is responsible for reviewing all audit findings related to information technology general controls, internal and external vulnerability, and penetration testing. We also engage outside consultants to support our cybersecurity efforts. However, our directors do not have significant experience in cybersecurity risk management outside of the Bank and therefore, the Board’s ability to fulfill its oversight function remains dependent on the input it receives from management and outside consultants.

Our business may be adversely affected by an increasing prevalence of fraud and other financial crimes.

Our loans to businesses and individuals and our deposit relationships and related transactions are subject to exposure to the risk of loss due to fraud and other financial crimes. Nationally, reported incidents of fraud and other financial crimes have increased. To our knowledge, we have not experienced material losses due to apparent fraud or other financial crimes.  While we have policies and procedures designed to prevent such losses, losses may still occur.

We depend on our management team to implement our business strategy and execute successful operations and we could be harmed by the loss of their services.

We depend on the services of the members of our senior management team who direct our strategy and operations. Our executive officers and lending personnel possess substantial expertise, extensive knowledge of our markets, and key business relationships. Our loss of these persons, or our inability to hire additional qualified personnel, could impact our ability to implement our business strategy and could have a material adverse effect on our results of operations and our ability to compete in our markets. See “Management.”

We are a community bank and our ability to maintain our reputation is critical to the success of our business. The failure to do so may materially adversely affect our performance.

We are a community bank, and our reputation is one of the most valuable components of our business. A key factor in implementing our business strategy is our reputation for customer service and knowledge of local markets to expand our presence by capturing new business opportunities from existing and prospective customers in our market areas and contiguous areas. Threats to our reputation can come from many sources, including adverse sentiment about financial institutions generally, unethical practices, employee misconduct, failure to deliver minimum standards of service or quality, compliance deficiencies, cybersecurity incidents and questionable or fraudulent activities of our customers. Negative publicity regarding our business, employees, or customers, with or without merit, may result in the loss of customers and employees, costly litigation and increased governmental regulation, all of which could adversely affect our business and operating results.

Risks Related to Our Funding

Recently we have relied on certificates of deposit, which has significantly increased our cost of funds and could continue to do so in the future.

At December 31, 2023, certificates of deposit comprised 45.3% of our total deposits. Our reliance on certificates of deposit to help fund our operations has resulted in a higher cost of funds than would otherwise be the case if we had a higher percentage of demand deposits, savings deposits and money market accounts. In addition, if our certificates of deposit do not remain with us, we may be required to access other sources of funds, including loan sales, other types of deposits, advances from the FHLB and other borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on our certificates of deposits.

Our funding sources may prove insufficient to replace deposits at maturity and support our future operations.

We must maintain sufficient funds to respond to the needs of depositors and borrowers. As a part of our liquidity management, we use a number of funding sources in addition to core deposits and repayments and maturities of loans and investments. Adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional funding sources. Our financial flexibility may be constrained if we are unable to maintain our access to funding or if adequate financing or other sources of funds are not available. If we are required to rely more heavily on more expensive funding sources, our revenues may not increase proportionately to cover our costs. In this case, our operating margins and profitability would be adversely affected.

Risks Related to Laws and Regulations

Changes in laws and regulations and the cost of regulatory compliance with new laws and regulations may adversely affect our operations and/or increase our costs of operations.

The Bank is subject to extensive regulation, supervision and examination by the Department and the FDIC. The Company will be subject to extensive regulation, supervision and examination by the Federal Reserve Board. Such regulation and supervision govern the activities in which an institution and its holding company may engage and are intended primarily for the protection of the federal deposit insurance fund and the depositors of the Bank, rather than for our stockholders. Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets, and determination of the adequacy of the level of our allowance for credit losses. These regulations, along with existing tax, accounting, securities, insurance and monetary laws, rules, standards, policies, and interpretations, control the methods by which financial institutions conduct business, implement strategic initiatives and tax compliance, and govern financial reporting and disclosures. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations. Further, changes in accounting standards can be both difficult to predict and involve judgment and discretion in their interpretation by us and our independent registered public accounting firm. These changes could materially impact, potentially even retroactively, how we report our financial condition and results of operations.

Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions.

The USA PATRIOT and Bank Secrecy Acts require financial institutions to develop programs to prevent financial institutions from being used for money laundering and terrorist activities. If such activities are suspected, financial institutions are obligated to file suspicious activity reports with the U.S. Treasury’s Office of Financial Crimes Enforcement Network. These rules require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts. Failure to comply with these regulations could result in fines or sanctions, including restrictions on pursuing acquisitions or establishing new branches. The policies and procedures we have adopted that are designed to assist in compliance with these laws and regulations may not be effective in preventing violations of these laws and regulations. Furthermore, these rules and regulations continue to evolve and expand. We have not been subject to fines or other penalties or suffered business or reputational harm as a result of money laundering or terrorist activities in the past.

Monetary policies and regulations of the Federal Reserve Board could adversely affect our business, financial condition and results of operations.

In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the Federal Reserve Board. An important function of the Federal Reserve Board is to regulate money supply and credit conditions. Among the instruments used by the Federal Reserve Board to implement these objectives are open market purchases and sales of U.S. government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits.

The monetary policies and regulations of the Federal Reserve Board have had a significant effect on the operating results of financial institutions in the past and are expected to continue to do so in the future. The effects of such policies upon our business, financial condition and results of operations cannot be predicted.

We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.

The Company qualifies as an “emerging growth company” under the JOBS Act. For as long as we continue to be an emerging growth company, we plan to take advantage of exemptions from various reporting requirements applicable to public companies that are not to emerging growth companies, including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation. As an emerging growth company, the Company also will not be subject to Section 404(b) of the Sarbanes-Oxley Act of 2002, which would require that our independent auditors audit our internal control over financial reporting. In addition, as an emerging growth company, we have elected to take advantage of the extended transition periods for adopting new or revised financial accounting standards until the date they are required to be adopted by private companies (however, if any new or revised financial accounting standards would not apply to private companies, we would not be able to delay their adoption). Accordingly, our financial statements may not be comparable to those of public companies that adopt new or revised financial accounting standards as of an earlier date. Investors may find our common stock less attractive since we have chosen to rely on these exemptions. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.

Risks Related to Competitive Matters

Strong competition within our market areas may limit our profitability.

Competition in the banking and financial services industry is intense. We compete with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, brokerage and investment banking firms and unregulated or less regulated non-banking entities. Many of these competitors are substantially larger than us and have substantially greater resources and higher lending limits than we have and offer certain services that we do not or cannot provide. In addition, some of our competitors offer loans with lower interest rates and/or more attractive terms than loans we offer. Competition also makes it increasingly difficult and costly to attract and retain qualified employees. We expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry. Our profitability will depend upon our continued ability to successfully compete for business and qualified employees in our market areas. The greater resources and deposit and loan products offered by some of our competitors may limit our ability to increase our interest-earning assets. See “Business of East Wisconsin Savings Bank — Competition.”

Our size makes it more difficult for us to compete.

Our asset size makes it more difficult to compete with other financial institutions that are larger and can more easily afford to invest in the marketing and technologies needed to attract and retain customers. Because our principal source of income is the net interest income we earn on our loans and investments after deducting interest paid on deposits and other sources of funds, our ability to generate the revenues needed to cover our expenses and finance such investments is limited by the size of our loan and investment portfolios. Accordingly, we are not always able to offer new products and services as quickly as our competitors. Our lower earnings may also make it more difficult to offer competitive salaries and benefits. In addition, our smaller customer base may make it difficult to generate meaningful noninterest income from such activities as securities and insurance brokerage. Finally, as a smaller institution, we are disproportionately affected by the continually increasing costs of compliance with new banking and other regulations.

Risks Related to Accounting Matters

Changes in management’s estimates and assumptions may have a material impact on our consolidated financial statements and our financial condition or operating results.

In preparing this prospectus, as well as periodic reports we will be required to file under the Exchange Act, upon the completion of the conversion and stock offering, including the Company’s consolidated financial statements, our management is and will be required under applicable rules and regulations to make estimates and assumptions as of a specified date. These estimates and assumptions are based on management’s best estimates and experience as of that date and are subject to substantial risk and uncertainty. Materially different results may occur as circumstances change and additional information becomes known. Areas requiring significant estimates and assumptions by management include our evaluation of the adequacy of our allowance for credit losses, the utilization of deferred tax assets, determinations with respect to amounts owed for income taxes and the fair value of debt securities.

Changes in accounting standards could affect reported earnings.

The bodies responsible for establishing accounting standards, including the Financial Accounting Standards Board, the Securities and Exchange Commission and other regulatory bodies, periodically change the financial accounting and reporting guidance that governs the preparation of our financial statements. These changes can be hard to predict and can materially impact how we record and report our consolidated financial condition and results of operations. In some cases, we could be required to apply new or revised guidance retroactively.

Other Risks Related to Our Business

Our future net income will be dependent in part on secondary market revenues, which are highly dependent on macroeconomic factors and United States real estate market, mortgage market and financial market conditions.

The success of our business strategies and our results of operations are materially affected by current or future conditions in the real estate market, mortgage markets, financial markets and the economy generally. Factors such as changes in policies employed by government sponsored entities, including the FHLB, related to the purchase of mortgage loans, the costs and impact of inflation, deflation, unemployment, personal and business income taxes, healthcare, energy costs, domestic political issues, government shutdowns, and climate change, and the availability and cost of credit may contribute to increased volatility and unclear expectations for the economy in general and the real estate, mortgage market and financial markets in particular going forward. Volatility in the real estate market, mortgage market and financial markets or deterioration in these markets also could reduce our loan production volume or adversely affect our ability to sell mortgage loans that we originate, either at a profit or at all. Any of the foregoing could materially and adversely affect our business, financial condition, liquidity and results of operations.

Legal and regulatory proceedings could adversely affect us.

We have been and may in the future become involved in legal and regulatory proceedings. We consider most of the proceedings to be in the normal course of our business or typical for the industry; however, it is inherently difficult to assess the outcome of these matters, and we may not prevail in any proceedings or litigation. There could be substantial costs and management diversion in such litigation and proceedings, and any adverse determination could have a materially adverse effect on our business, reputation, or our financial condition and results of our operations. We are not currently involved in any litigation or administrative proceedings anticipated to have a material adverse effect.

Risks Related to the Stock Offering

The future price of our shares of common stock may be less than the $10.00 purchase price per share in the stock offering.

If you purchase shares of common stock in the stock offering, you may not be able to sell them later at or above the $10.00 purchase price. In some cases, shares of common stock issued by newly converted savings institutions or mutual holding companies have traded below the initial offering price. The aggregate purchase price of the shares of common stock sold in the stock offering will be based on an independent appraisal. The independent appraisal is not intended, and should not be construed, as a recommendation of any kind as to the advisability of purchasing shares of common stock. The independent appraisal is based on certain estimates, assumptions and projections, all of which are subject to change from time to time. After the shares begin trading, the trading price of our common stock will be determined by the marketplace, and may be influenced by many factors, including prevailing interest rates, the overall performance of the economy, changes in federal tax laws, new regulations, investor perceptions of the Company and the outlook for the financial services industry in general. Price fluctuations in our common stock may be unrelated to our operating performance.

There will be a limited trading market in our common stock, which would hinder your ability to sell our common stock and may lower the market price of the stock.

We have never issued capital stock and there is no established market for our common stock. We expect that our common stock will be quoted on the OTCQB Market operated by the OTC Markets Group upon conclusion of the stock offering, subject to completion of the stock offering. The development of an active trading market depends on the existence of willing buyers and sellers, the presence of which is not within our control, or that of any market maker. The number of active buyers and sellers of the shares of common stock at any particular time may be limited. Under such circumstances, you could have difficulty selling your shares of common stock on short notice, and, therefore, you should not view the shares of common stock as a short-term investment. As a result, it is unlikely that an active trading market for the common stock will develop or that, if it develops, it will continue. If you purchase shares of common stock, you may not be able to sell them at or above $10.00 per share. Purchasers of common stock in this stock offering should have long-term investment intent and should recognize that there will be a limited trading market in the common stock. This may make it difficult to sell the common stock after the stock offering and may have an adverse impact on the price at which the common stock can be sold.

A significant percentage of our common stock will be held by our directors and executive officers and benefit plans.

We expect that our directors and executive officers, together with their associates, will subscribe for 117,500 shares in the stock offering. In addition, we intend to establish an ESOP that will purchase an amount of shares equal to 7.0% of the total number of shares sold in the stock offering. As a result, upon consummation of the conversion and stock offering, an aggregate up to 169,562 shares, or 22.8%, and 198,503 shares, or 17.2%, of our outstanding common stock would be held by our directors and executive officers and their associates and by our ESOP at the minimum and adjusted maximum of the offering range, respectively. Further, additional shares would be held by management following the implementation of an equity incentive plan, which we intend to implement no earlier than six months following the completion of the conversion and stock offering following the receipt of stockholder approval.

Our failure to effectively deploy the net proceeds may have an adverse effect on our financial performance.

We intend to contribute between $5.1 million and $7.6 million of the net proceeds of the stock offering at the minimum and the maximum of the offering range (or $9.0 million at the adjusted maximum of the offering range) to the Bank. We expect to use a portion of the net proceeds we retain to fund a loan to our ESOP to purchase shares of common stock in the stock offering. We may use the remaining net proceeds to invest in short-term investments and for general corporate purposes. The Bank may use the net proceeds it receives to fund new loans or for other general corporate purposes. However, except for funding the loan to the ESOP, we have not allocated specific amounts of the net proceeds for any of these purposes, and we will have broad discretion in determining the amount of the net proceeds we apply to different uses and when we apply or reinvest such proceeds. We have not established a timetable for investing the net proceeds, and we cannot predict how long we will require to invest the net proceeds. Our failure to reinvest these funds effectively could adversely affect our results of operations and may adversely affect the value of our common stock.

The cost of additional finance and accounting systems, procedures, compliance and controls in order to satisfy our new public company reporting requirements will increase our expenses.

As a result of the completion of the conversion and stock offering, we will become a public reporting company. We expect that the obligations of being a public company, including the substantial public reporting obligations, will require significant expenditures and place additional demands on our management team. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a stand-alone public company. However, the measures we take may not be sufficient to satisfy our obligations as a public company. The Sarbanes-Oxley Act of 2002 requires annual management assessments of the effectiveness of our internal control over financial reporting, starting with the second annual report that we would expect to file with the Securities and Exchange Commission. Any failure to achieve and maintain an effective internal control environment could have a material adverse effect on our business and stock price. In addition, we may need to hire additional compliance, accounting, and financial staff with appropriate public company experience and technical knowledge, and we may not be able to do so in a timely fashion. As a result, we may need to rely on outside consultants to provide these services for us until qualified personnel are hired. These obligations will increase our operating expenses and could divert our management’s attention from our operations.

Our stock-based benefit plan will increase our expenses and reduce our income.

We intend to a new stock-based benefit plan after the conversion, subject to stockholder approval, which will increase our annual compensation and benefit expenses related to the stock options and stock awards granted to participants under the new stock-based benefit plan. The actual amount of the new stock-related compensation and benefit expenses will depend on the number of options and stock awards granted under the plan, the fair market value of our stock or options on the date of grant, the vesting period, and other factors which we cannot predict at this time. If we adopt a stock-based benefit plan within 12 months following the conversion, the shares of common stock reserved for issuance pursuant to awards of restricted stock and grants of options under such plan would be limited to 3% and 10%, respectively, of the total number of shares of our common stock sold in the stock offering. If we adopt a stock-based benefit plan more than 12 months after the completion of the conversion, we may adopt plans that allow for greater amounts of awards and options and, therefore, we could award restricted shares of common stock or grant options in excess of these amounts, which would further increase costs.

In addition, we will recognize expense for our ESOP when shares are committed to be released to participants’ accounts, and we will recognize expense for restricted stock awards and stock options over the vesting period of awards made to recipients. The expense in the first year following the conversion and stock offering for our ESOP and for our new stock-based benefit plan, assuming both of such plans had been implemented at the beginning of the year, is estimated to be approximately $178,000 at the adjusted maximum of the offering range as set forth in the pro forma financial information under “Pro Forma Data,” assuming the $10.00 per share purchase price as fair market value. Actual expenses, however, may be higher or lower, depending on the price of our common stock. For further discussion of our proposed stock-based plans, see “Management—Benefits to be Considered Following Completion of the Conversion and Stock Offering.”

The implementation of a stock-based benefit plan may dilute your ownership interest. Historically, stockholders have approved these stock-based benefit plans.

We intend to adopt a new stock-based benefit plan following the stock offering. The plan may be funded either through open market purchases of our common stock or from the issuance of authorized but unissued shares of common stock. Our ability to repurchase shares of our common stock to fund the plan will be subject to many factors, including applicable regulatory restrictions on stock repurchases, the availability of stock in the market, the trading price of our stock, our capital levels, alternative uses for our capital and our financial performance. While our intention is to fund the new stock-based benefit plan through open market purchases, stockholders would experience a 9.1% dilution in ownership interest if newly issued shares of our common stock are used to fund stock options in an amount equal to 10% of the total number of shares sold in the stock offering, and all such stock options are exercised, and a 2.9% dilution in ownership interest if newly issued shares of our common stock are used to fund shares of restricted common stock in an amount equal to 3% of the total number of shares sold in the stock offering. Such dilution would also reduce earnings per share. If we adopt the plan more than 12 months following the conversion, the new stock-based benefit plan would not be subject to these size limitations and stockholders could experience even greater dilution.

Although the implementation of a new stock-based benefit plan would be subject to stockholder approval, historically, the overwhelming majority of stock-based benefit plans adopted by savings institutions and their holding companies following mutual-to-stock conversions have been approved by stockholders.

We have not determined when we will adopt a new stock-based benefit plan. A stock-based benefit plan adopted more than 12 months following the completion of the conversion may exceed regulatory restrictions on the size of stock-based benefit plans adopted within 12 months, which would further increase our costs.

If we adopt a stock-based benefit plan more than 12 months following the completion of the conversion, then grants of shares of common stock or stock options under our proposed stock-based benefit plans may exceed 3% and 10%, respectively, of the total number of shares of common stock sold in the stock offering. A stock-based benefit plan that provides for awards in excess of these amounts would increase our costs beyond the amounts estimated in “—Our stock-based benefit plan will increase our expenses and reduce our income.” A stock-based benefit plan that provides for awards in excess of these amounts could also result in dilution to stockholders in excess of that described in “—The implementation of a stock-based benefit plan may dilute your ownership interest. Historically, stockholders have approved these stock-based benefit plans.” Although the implementation of stock-based benefit plans would be subject to stockholder approval, the timing of the implementation of such plans will be at the discretion of our board of directors.

Our stock value may be negatively affected by applicable regulations that restrict stock repurchases.

Applicable regulations generally restrict us from repurchasing our shares of common stock during the first year following the completion of the conversion and stock offering. Stock repurchases are a capital management tool that can enhance the value of a company’s stock, and our inability to repurchase our shares of common stock during the first year following the stock offering may negatively affect our stock price.

Various factors may make takeover attempts more difficult to achieve.

Certain provisions of our articles of incorporation and bylaws coupled with federal banking laws and regulatory approval requirements could make it more difficult for a third party to acquire control of the Company without our board of directors’ approval. Under regulations applicable to the conversion, for a period of three years following completion of the conversion, no person may offer to acquire or acquire beneficial ownership of more than 10% of our common stock without prior approval of the Federal Reserve Board. Under federal law, subject to certain exemptions, a person, entity or group must notify the Federal Reserve Board and receive the Federal Reserve Board’s non-objection before acquiring control of a bank holding company. There also are provisions in our articles of incorporation and bylaws that we may use to delay or block a takeover attempt, including a provision that prohibits any person from voting more than 10% of our outstanding shares of common stock. Furthermore, shares of restricted stock and stock options that we may grant to employees and directors, stock ownership by our management and directors, stock held by the ESOP and other factors may make it more difficult for companies or persons to acquire control of the Company without the consent of our board of directors, and may increase the cost of an acquisition. Taken as a whole, these statutory or regulatory provisions and provisions in our articles of incorporation and bylaws could result in our being less attractive to a potential acquirer and therefore could adversely affect the market price of our common stock. For additional information, see “Management—Benefits to be Considered Following Completion of the Conversion and Stock Offering.”

Our articles of incorporation provide that, subject to limited exceptions, state and federal courts in the State of Maryland are the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, and other employees.

The articles of incorporation of the Company provide that, unless the Company consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or its stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Maryland General Corporation Law, or (iv) any action asserting a claim governed by the internal affairs doctrine will be conducted in a state or federal court located within the State of Maryland, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. This exclusive forum provision does not apply to claims arising under the federal securities laws. This exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum it finds favorable for disputes with the Company and its directors, officers, and other employees or may cause a stockholder to incur additional expense by having to bring a claim in a judicial forum that is distant from where the stockholder resides, or both. In addition, if a court were to find this exclusive forum provision to be inapplicable or unenforceable in a particular action, we may incur additional costs associated with resolving the action in another jurisdiction, which could have a material adverse effect on our financial condition and results of operations.

You may not revoke your decision to purchase the Company common stock in the subscription offering or in any community offering after you send us your order.

Funds submitted or automatic withdrawals authorized in connection with the purchase of shares of common stock in the subscription offering and in any community offering will be held by us until the completion or termination of the conversion and stock offering, including any extension of the expiration date and consummation of a syndicated community offering. Because completion of the conversion and stock offering will be subject to regulatory approvals and an update of the independent appraisal, among other factors, there may be one or more delays in completing the conversion and stock offering. Orders submitted in the subscription offering and in any community offering are irrevocable, and purchasers will have no access to their funds unless the stock offering is terminated, or extended beyond [extension date], or the number of shares to be sold in the stock offering is increased to more than 1,157,188 shares or decreased to fewer than 743,750 shares.

The distribution of subscription rights could have adverse income tax consequences.

If the subscription rights granted in connection with the stock offering are deemed to have an ascertainable value, receipt of such rights may be taxable in an amount equal to such value. Whether subscription rights are considered to have ascertainable value is an inherently factual determination. We have received an opinion of counsel that it is more likely than not that such rights have no value; however, such opinion is not binding on the Internal Revenue Service.

SELECTED FINANCIAL AND OTHER DATA

The following tables set forth selected consolidated historical financial and other data of the MHC for the years and at the dates indicated. This information is derived in part from, and should be read together with, the audited consolidated financial statements and notes thereto of the MHC beginning at page F-1 of this prospectus. The following information is only a summary, and should be read in conjunction with our consolidated financial statements and notes beginning on page F-1 of this prospectus.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “could,” “indicate,” “would,” “believe,” “contemplate,” “continue,” “intend,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not undertake any obligation to update any forward-looking statements after the date of this prospectus.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Please see “Risk Factors” beginning on page 15.

HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING

Although we cannot determine what the actual net proceeds from the sale of the shares of common stock in the offering will be until the offering is completed, we anticipate that the net proceeds will be between approximately $5.1 million and $7.6 million, or $9.9 million if the offering range is increased to the adjusted maximum. Please see “Pro Forma Data” for additional information.

We intend to distribute the net proceeds from the offering as follows:

Payments for shares of common stock made through withdrawals from existing deposit accounts will not result in the receipt of new funds for investment but will result in a reduction of the Bank’s deposits. The net proceeds may vary because the total expenses relating to the offering may be more or less than our estimates. For example, our expenses would increase if a syndicated community offering were used to sell shares of common stock not purchased in the subscription and community offerings.

New EWSB Bancorp intends to fund a loan to the ESOP to purchase shares of common stock in the stock offering. New EWSB Bancorp may also use the proceeds it retains from the offering:

With the exception of the funding of the loan to the ESOP, New EWSB Bancorp has not quantified its plans for use of the offering proceeds for each of the foregoing purposes.

The Bank expects to use the net proceeds it receives from the offering:

The Bank has not quantified its plans for use of the offering proceeds for any of the foregoing purposes. Initially, we intend to invest a substantial portion of the net proceeds in shorter term liquidity prior to deploying the proceeds into new investments and loans. The use of the proceeds outlined above may change based on many factors, including, but not limited to, changes in interest rates, equity markets, laws and regulations affecting the financial services industry, our relative position in the financial services industry, the attractiveness of opportunities to expand our operations through establishing or acquiring new branches, our ability to receive regulatory approval for any such expansion activities, and overall market conditions.

OUR POLICY REGARDING DIVIDENDS

We do not currently intend to pay cash dividends to our stockholders, and no assurances can be given that any such dividends will be paid in the future. The payment and amount of any dividend payments will be subject to statutory and regulatory limitations and restrictions, and will depend upon a number of factors, including the following: regulatory capital requirements; restrictions in our confidential MOU; compliance with Wisconsin law, our financial condition and results of operations; our other uses of funds for the long-term value of stockholders; tax considerations; and general economic conditions.

Special cash dividends, stock dividends or returns of capital, to the extent permitted by regulations and policies of the Federal Reserve Board, the Department and the FDIC, may be paid in addition to, or in lieu of, regular cash dividends.

We will be subject to state law limitations and federal bank regulatory policy on any future payment of dividends. Maryland law generally limits dividends if the corporation would not be able to pay its debts in the usual course of business after giving effect to the dividend or if the corporation’s total assets would be less than the corporation’s total liabilities plus the amount needed to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the distribution.

The Federal Reserve Board has issued a policy statement providing that dividends should be paid only out of current earnings and only if our prospective rate of earnings retention is consistent with our capital needs, asset quality and overall financial condition. Regulatory guidance also provides for prior regulatory consultation with respect to capital distributions in certain circumstances such as where the holding company’s net income for the past four quarters, net of dividends previously paid over that period, is insufficient to fully fund the dividend or the holding company’s overall rate of earnings retention is inconsistent with its capital needs and overall financial condition. In addition, the Bank’s ability to pay dividends to the Company will be limited if the Bank does not meet regulatory requirements under Wisconsin law, as described below or if the Bank does not have the capital conservation buffer required by regulatory capital rules, which may limit our ability to pay dividends to stockholders. See “Regulation and Supervision—Dividends.”

We will file a consolidated federal tax return with the Bank. Accordingly, it is anticipated that any cash distributions that we make to our stockholders would be treated as cash dividends and not as a non-taxable return of capital for federal and state tax purposes. Additionally, pursuant to applicable regulations, during the three-year period following the stock offering, we will not take any action to declare an extraordinary dividend to stockholders that would be treated by recipients as a tax-free return of capital for federal income tax purposes.

Pursuant to our articles of incorporation, we are authorized to issue preferred stock. If we issue preferred stock, the holders thereof may have a priority over the holders of our shares of common stock with respect to the payment of dividends. For a further discussion concerning the payment of dividends on our shares of common stock, see “Description of Capital Stock of New EWSB Bancorp.”

Any future dividends we can declare and pay will depend, in part, upon receipt of dividends from the Bank, because initially we will have no source of income other than dividends from the Bank and earnings from the investment of the net proceeds from the sale of shares of common stock retained by the Company. Applicable regulations impose limitations on “capital distributions” by savings institutions. Specifically, the Bank will not be permitted to make a capital distribution if, after making such distribution, it would be undercapitalized. The Bank must file an application with the FDIC for approval of a capital distribution if the total capital distributions for the applicable calendar year exceed the sum of the Bank’s net income for that year to date plus its retained net income for the preceding two years, or the Bank would not be at least adequately capitalized following the distribution. Under Wisconsin law and applicable regulations, the Bank may declare dividends on capital stock based upon net profits, provided that its paid-in surplus equals its capital stock and that it meets its regulatory capital requirements. If the Bank’s paid-in surplus does not equal its capital stock, the board of directors may not declare a dividend unless at least 10% of the net profits of the preceding half year, in the case of quarterly or semi-annual dividends, or 10% of the net profits of the preceding year, in the case of annual dividends, has been transferred to paid-in surplus. In addition, prior Department approval will be required before the Bank declares any dividends exceeding 50% of profits for any calendar year and before a stock dividend may be declared out of retained earnings.

Any payment of dividends by the Bank to the Company that would be deemed to be drawn out of the Bank’s bad debt reserves, if any, would require a payment of taxes at the then-current tax rate by the Bank on the amount of earnings deemed to be removed from the reserves for such distribution. The Bank does not intend to make any distribution to us that would create such a federal tax liability. See “Taxation.”

MARKET FOR THE COMMON STOCK

New EWSB Bancorp is a newly formed company which has never publicly issued capital stock, and there is no established market for our shares of common stock. We expect that our common stock will be quoted on the OTCQB Market operated by the OTC Markets Group upon completion of the conversion and offering.

The development of an active trading market depends on the existence of willing buyers and sellers, the presence of which is not within our control, or that of any market maker. The number of active buyers and sellers of the shares of common stock at any particular time is likely to be limited. Under such circumstances, you could have difficulty selling your shares of common stock on short notice, and, therefore, you should not view the shares of common stock as a short-term investment. Furthermore, we cannot assure you that, if you purchase shares of common stock, you will be able to sell them at or above $10.00 per share. Purchasers of common stock in this stock offering should have long-term investment intent and should recognize that there is likely to be a limited trading market in the common stock. This may make it difficult to sell the common stock after the stock offering and may have an adverse impact on the price at which the common stock can be sold.

HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE

The table below sets forth the historical equity capital, regulatory capital and net worth (under Wisconsin law) of the Bank at December 31, 2023, and the pro forma equity capital and regulatory capital of the Bank, after giving effect to the sale of shares of common stock at a $10.00 per share purchase price. The table assumes the receipt by the Bank of approximately $5.1 million, $6.3 million, $7.6 million, or $9.0 of the net offering proceeds at the minimum, midpoint, maximum and adjustment maximum of the offering rage, respectively. See “How We Intend to Use the Proceeds from the Offering.”

CAPITALIZATION

The following table presents the historical consolidated capitalization of the MHC at December 31, 2023 and the pro forma consolidated capitalization of New EWSB Bancorp, after giving effect to the conversion and the offering, based upon the assumptions set forth in the “Pro Forma Data” section.

PRO FORMA DATA

The following table summarizes historical data of the MHC and pro forma data of New EWSB Bancorp at and for the year ended December 31, 2023. This information is based on assumptions set forth below and in the footnotes to the table, and should not be used as a basis for projections of the market value of the shares of common stock following the conversion and stock offering.

The net proceeds in the table are based upon the following assumptions:

Pro forma earnings on net proceeds have been calculated assuming the stock has been sold at the beginning of the period and the net proceeds have been invested at a yield of 3.84% for the year ended December 31, 2023, which is the yield on the five-year U.S. Treasury Note rate at December 31, 2023. In light of current market interest rates, we consider this rate to reflect the pro forma reinvestment rate more accurately than the arithmetic average of the weighted average yield earned on our interest-earning assets and the weighted average rate paid on our deposits, which is the reinvestment rate generally required by federal regulations. The pro forma after-tax yield on the net offering proceeds is assumed to be 3.03% for the year ended December 31, 2023, based on an effective tax rate of 21.0%.

We calculated historical and pro forma per share amounts by dividing historical and pro forma amounts of consolidated net income and stockholders’ equity by the indicated number of shares of common stock. We adjusted the earnings figures to give effect to the shares of common stock purchased by the ESOP. We computed per share amounts for the year as if the shares of common stock were outstanding at the beginning of the year, but we did not adjust per share historical or pro forma stockholders’ equity to reflect the earnings on the estimated net proceeds.

The pro forma tables give effect to the implementation of a stock-based benefit plan. Subject to the receipt of stockholder approval, which we have assumed for purposes of preparing the table below, we have assumed that the stock-based benefit plan will acquire for restricted stock awards a number of shares of common stock equal to 3% of our outstanding shares of common stock at the same price for which they were sold in the stock offering. We assume that shares of common stock are granted under the plan in awards that vest over a five-year period.

We have also assumed that the stock-based benefit plan will grant options to acquire shares of common stock equal to 10% of our outstanding shares of common stock. In preparing the table below, we assumed that stockholder approval was obtained, that the exercise price of the stock options and the market price of the stock at the date of grant were $10.00 per share and that the stock options have a term of ten years and vested over five years. We applied the Black-Scholes option pricing model to estimate a grant-date fair value of $4.16 for each option. In addition to the terms of the options described above, the Black-Scholes option pricing model assumed an estimated volatility rate of 21.29% for the shares of common stock, no dividend yield, an expected option life of 10 years and a risk-free interest rate of 3.88%. Finally, we assumed that 25% of the stock options were non-qualified options granted to directors, resulting in a tax benefit (at an assumed tax rate of 21.0%) for a deduction equal to the grant date fair value of the options.

We may reserve shares for the exercise of stock options and the grant of stock awards under a stock-based benefit plan in excess of 10% and 3%, respectively, of our total outstanding shares if the stock-based benefit plan is adopted more than one year following the stock offering. In addition, we may grant options and award shares that vest more rapidly than over a five-year period if the stock-based benefit plan is adopted more than one year following the stock offering.

The pro forma table does not give effect to: (i) withdrawals from deposit accounts at East Wisconsin Savings Bank to purchase shares of common stock in the stock offering; (ii) New EWSB Bancorp’s results of operations after the conversion and stock offering; or (iii) changes in the market price of the shares of common stock after the conversion and stock offering.

The following pro forma information may not represent the financial effects of the stock offering at the date on which the stock offering actually occurs, and you should not use the table to indicate future results of operations. Pro forma stockholders’ equity represents the difference between the stated amount of our assets and liabilities, computed according to GAAP. We did not increase or decrease stockholders’ equity to reflect the difference between the carrying value of loans and other assets and their market value. Pro forma stockholders’ equity is not intended to represent the fair market value of the shares of common stock and may be different than the amounts that would be available for distribution to stockholders if we liquidated. Pro forma stockholders’ equity does not give effect to the impact of intangible assets, bad debt reserve, or the liquidation accounts we will establish in the conversion in the unlikely event we are liquidated.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis reflects our consolidated financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial condition and results of operations. The information in this section has been derived from the consolidated financial statements that appear beginning on page F-1 of this prospectus. You should read the information in this section in conjunction with the business and financial information regarding the Bank and the consolidated financial statements provided in this prospectus for the MHC. New EWSB Bancorp had not engaged in any activities at December 31, 2023.

Overview

Our business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations, primarily in one- to four-family residential real estate loans, as well as marine and recreational vehicle loans, home equity loans and lines of credit, and other consumer loans. To a lesser extent, we originate commercial real estate, multifamily, construction and commercial loans. At December 31, 2023, $122.2 million, or 69.7%, of our total loan portfolio was comprised of one- to four-family residential real estate loans, $30.8 million, or 17.6%, of our total loan portfolio was comprised of marine and recreational vehicle loans, $6.2 million, or 3.5%, of our total loan portfolio was comprised of home equity loans and lines of credit, and $4.0 million, or 2.3%, of our total loan portfolio was comprised of other consumer loans. We also invest in securities, consisting primarily of U.S. Treasury and federal agency securities, including agency mortgage-backed securities and corporate bonds. We offer a variety of deposit accounts, including certificates of deposit, money market accounts, savings accounts and interest-bearing and noninterest-bearing demand accounts. We historically have utilized advances from the FHLB to assist in the funding of our operations and we had $18.6 million of FHLB advances at December 31, 2023.

For the years ended December 31, 2023 and 2022, we recorded net losses of $935,000 and $4.2 million, respectively. The reduction in our net loss year over year resulted primarily from an increase in our noninterest income and a decrease in our noninterest expense, partially offset by a decrease in our net interest income. Our net loss for the year ended December 31, 2022 was primarily due to a loss on the sale of available-for-sale securities of $5.1 million in connection with the restructuring of our securities portfolio in the third quarter of 2022. See “—Comparison of Financial Condition at December 1, 2023 and December 31, 2022—2022 Securities Portfolio Restructuring Transaction.”

Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities. Our results of operations also are affected by our provision for credit losses, noninterest income and noninterest expense. Noninterest income currently consists primarily of mortgage banking income, customer service fees, and the increase in the cash value of bank-owned life insurance. Noninterest expense currently consists primarily of expenses related to salary and related benefits, data processing, net occupancy, and other general and administrative expenses.

Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

Business Strategy

Our current business strategy includes the following:

We expect these strategies to guide our investment of the net proceeds of the stock offering. We intend to continue to pursue these business strategies after the conversion and stock offering, subject to changes necessitated by future market conditions, regulatory restrictions and other factors.

Summary of Critical Accounting Policies and Critical Accounting Estimates

The discussion and analysis of the financial condition and results of operations are based on our consolidated financial statements, which are prepared in conformity with U.S. GAAP. The preparation of these consolidated financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policies discussed below to be critical accounting policies. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company,” we have elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our consolidated financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

The following represent our critical accounting policies:

Allowance for Credit Losses on Loans. The allowance for credit losses (“ACL”) is an estimate of expected credit losses on the loans held for investment, and unfunded loan commitments. The ACL is calculated according to GAAP standards and is maintained by management at a level believed adequate to absorb estimated credit losses that are expected to occur within the existing loan portfolio through their contractual terms. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on loans. The determination of our allowance for credit losses is considered a critical accounting estimate by management because of the high degree of judgment involved in determining qualitative loss factors, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes to the amount of the recorded allowance for credit losses. While management utilizes its best judgment and information available, the ultimate adequacy of the ACL is dependent upon a variety of factors beyond the Company’s direct control, including, but not limited to, the performance of the loan portfolio, consideration of current economic trends, changes in interest rates and property values, estimated losses on pools of homogeneous loans based on an analysis that uses historical loss experience for prior periods that are determined to have like characteristics with the current period such as pre-recessionary, recessionary, or recovery periods, portfolio growth and concentration risk, management and staffing changes, the interpretation of loan risk classifications by regulatory authorities and other credit market factors. While each component of the ACL is determined separately, the entire balance is available for the entire loan portfolio.

The ACL methodology consists of measuring loans on a collective (pool) basis when similar risk characteristics exist. The Company has identified three loan portfolios and measures the ACL using the Scaled CECL Allowance for Losses Estimator (“SCALE”) method. The loan portfolios are commercial and commercial real estate; residential real estate; and consumer. The SCALE method uses publicly available data from call reports to derive the initial proxy expected lifetime loss rates. This proxy expected lifetime loss rates are then adjusted for bank-specific facts and circumstances to arrive at the final ACL estimate that adequately reflects the Company’s loss history and credit risk within our portfolio.

The qualitative factors considered for each loan portfolio consist of the impact of other internal and external qualitative and credit market factors as assessed by management through a detailed loan review, ACL analysis and credit discussions. These internal and external qualitative and credit market factors include:

The impact of the above-listed internal and external qualitative and credit market risk factors is assessed within predetermined ranges to adjust the ACL totals calculated.

In addition to the pooled analysis performed for the majority of our loan and commitment balances, we also review those loans that have collateral dependency or nonperforming status which requires a specific review of that loan, per our individually analyzed CECL calculations.

Loans are charged off against the ACL when management believes the uncollectibility of a loan balance is confirmed, while recoveries of amounts previously charged-off are credited to the ACL. Approved releases from previously established ACL reserves authorized under our ACL methodology also reduce the ACL. Additions to the ACL are established through the provision for credit losses on loans, which is charged to expense.

Our ACL methodology is intended to reflect all loan portfolio risk, but management recognizes the inability to accurately depict all future credit losses in a current ACL estimate, as the impact of various factors cannot be fully known. Accrued interest receivable on loans is excluded from the amortized cost basis of financing receivables for the purpose of determining the allowance for credit losses.

As noted above, we consider a number of variables in our evaluation of the adequacy of the allowance for credit losses, with one of the more significant variables being growth trends in the various segments of our loan portfolio. Based on our model, if all segments of our loan portfolio grew by 5% on a year-over-year basis, our allowance for credit losses as of December 31, 2023 would have increased by $52,000 to $1.1 million, holding all other variables constant. Conversely, if all segments of our loan portfolio contracted by 5% on a year-over-year basis, our allowance for credit losses as of December 31, 2023 would have decreased by $67,000 to $990,000, holding all other variables constant. If the portfolio segment with both the highest balance and highest required reserve ratio, one- to four-family residential mortgages, increased by 10%, the required reserve would increase by $78,000 to $1.1 million, holding all other variables constant.

Allowance for Loan Losses (applicable to periods prior to January 1, 2023). The allowance for loan losses is established through a provision for loan losses charged to expense as losses are estimated to have occurred. Loan losses are charged against the allowance when management believes that the collectibility of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance.

Management regularly evaluates the allowance for loan losses using the Company's past loan loss experience, known and inherent risks in the portfolio, composition of the portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral, current economic conditions, and other relevant factors. This evaluation is inherently subjective since it requires material estimates that may be susceptible to significant change.

The allowance for loan losses includes specific allowances related to loans that have been judged to be impaired under these accounting standards. A loan is impaired when, based on current information, it is probable that the Company will not collect all amounts due in accordance with the contractual terms of the loan agreement.  Management determines whether a loan is impaired on a case-by-case basis, taking into consideration the payment status, collateral value, length and reason of any payment delays, the borrower's prior payment record, and any other relevant factors. Large groups of smaller balance homogeneous loans, such as residential mortgage and consumer loans, are collectively evaluated in the allowance for loan losses analysis and are not subject to impairment analysis unless such loans have been subject to a restructuring agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (“TDRs”) and classified as impaired. Specific allowances for impaired loans are based on discounted cash flows of expected future payments using the loan's initial effective interest rate or the fair value of the collateral if the loan is collateral dependent.

TDRs are individually evaluated for impairment and included in the impairment disclosures. TDRs are measured at the present value of estimated future cash flows using the loan's original effective rate. If a TDR is considered to be a collateral-dependent loan, the loan is measured at the fair value of the collateral less applicable estimated selling costs.  For TDRs that subsequently default, the Company determines the amount of the allowance on that loan in accordance with the accounting policy for the allowance for loan losses on loans individually identified as impaired.

Income Taxes. Deferred tax assets and liabilities have been determined using the liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the current enacted tax rates, which will be in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Provision (benefit) for deferred taxes is the result of changes in the deferred tax assets and liabilities.

The Company may also recognize a liability for unrecognized tax benefits from uncertain tax positions. Unrecognized tax benefits represent the differences between a tax position taken or expected to be taken in a tax return and the benefit recognized and measured in the financial statements. Interest and penalties related to unrecognized tax benefits are classified as income taxes.

Debt Securities. Debt securities are classified as held-to-maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities are classified as available-for-sale when they might be sold before maturity. Securities available-for-sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income or loss, net of tax. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives or earliest call date of the debt securities, as applicable. Gains and losses on the sales of debt securities are recorded on the trade date and determined using the specific-identification method.

On January 1, 2023, for held-to-maturity debt securities in an unrealized loss position, the Company began evaluating the securities individually to determine whether the decline in fair value below amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors, such as market interest rate fluctuations.

In evaluating securities held-to-maturity for potential impairment, the Company considers many factors, including the financial condition and near-term prospects of the issuer, which for debt securities considers external credit ratings and recent downgrades; and its ability and intent to hold the security for a period of time sufficient for a recovery in value. The Company also considers the extent to which the securities are issued by the federal government or its agencies, and any guarantee of issued amounts by those agencies.

Accrued interest receivable on securities held-to-maturity is excluded from the amortized cost basis of those securities for the purpose of determining the allowance for credit losses.

As of January 1, 2023, for available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will sell, the security before recovery of its amortized cost basis. If either of the aforementioned criteria exists, the Company will record an ACL related to securities available-for-sale with an offsetting entry to the provision for credit losses on securities on the statements of income. If neither of these criteria exists, the Company will evaluate the securities individually to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors, such as market interest rate fluctuations.

In evaluating securities available-for sale for potential impairment, the Company considers many factors, including the financial condition and near-term prospects of the issuer, which for debt securities considers external credit ratings and recent downgrades; and its ability and intent to hold the security for a period of time sufficient for a recovery in value. The Company also considers the extent to which the securities are issued by the federal government or its agencies, and any guarantee of issued amounts by those agencies. The amount of the impairment related to other factors is recognized in other comprehensive income (loss).

Accrued interest receivable on securities available-for-sale is excluded from the amortized cost basis of those securities for the purpose of determining the allowance for credit losses.

Through December 31, 2022, declines in fair value of debt securities that are deemed to be other than temporary, if applicable, are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers the length of time and the extent to which fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

Comparison of Financial Condition at December 31, 2023 and December 31, 2022

2022 Securities Portfolio Restructuring Transaction. During the rapidly rising interest rate environment experienced in 2022, our equity position decreased materially as a result of accumulated other comprehensive losses of $9.2 million as of December 31, 2022, primarily due to negative adjustments to our investment securities portfolio. In the third quarter of 2022, following extensive modeling and stress testing, we sought to limit further erosion to our capital position and bolster liquidity levels by restructuring our securities portfolio, which included the sale of U.S. Treasury, federal agency, mortgage-backed and municipal securities with a book value of $39.7 million, an average yield of 0.97% (based on book value) and a weighted average term to maturity of 4.7 years. The cash proceeds of approximately $34.6 million were reinvested into cash and short-term investments and redeployed into other investment securities and the retirement of borrowed funds. The sale resulted in a $5.1 million pretax net loss on the sale of available-for-sale securities during the year ended December 31, 2022. Additionally, the Bank transferred securities with a book value of approximately $46.4 million and market value of $38.4 million from available-for-sale to held-to-maturity during 2022. The resulting pretax unrealized loss of $8.0 million, which is included in other comprehensive income, is being amortized over 14 years with $6.5 million remaining to be amortized as of December 31, 2023. For additional information regarding our securities portfolio, see Note 3 to the notes to our consolidated financial statements.

Total Assets. Total assets decreased $8.6 million, or 3.2%, to $262.6 million at December 31, 2023 from $271.2 million at December 31, 2022. The decrease was primarily the result of decreases in available-for-sale securities and cash and due from banks, partially offset by increases in securities held-to-maturity and net loans as we prioritized the preservation of capital.

Cash and Due from Banks and Time Deposits with Other Financial Institutions. Cash and due from banks and time deposits with other financial institutions decreased $1.7 million, or 22.1%, to $6.1 million at December 31, 2023 from $7.8 million at December 31, 2022. The decrease was primarily due to decreases in deposits and cash used to fund loan portfolio growth and principal payments on borrowed funds, partially offset by the proceeds received from maturities and paydowns of securities available-for-sale and the proceeds received from borrowed funds.

Securities Available-for-Sale. Securities available-for-sale decreased $9.9 million, or 29.3%, to $23.9 million at December 31, 2023 from $33.9 million at December 31, 2022. The decrease was primarily due to a decrease of $8.9 million in agency securities resulting from a portion of the portfolio maturing in the first half of 2023. The proceeds from these maturing securities were utilized to manage liquidity and support loan growth.

Securities Held-to-Maturity. Securities held-to-maturity increased $1.3 million, or 3.4%, to $40.1 million at December 31, 2023 from $38.7 million at December 31, 2022. The increase in securities held-to-maturity was due to a $906,000 increase in agency securities and a $418,000 increase in U.S. Treasury securities due to the amortization of unrealized losses from the transfer of available-for-sale securities to held-to-maturity during 2022.

Loans, net. Loans, net increased $1.9 million, or 1.1%, to $174.3 million at December 31, 2023 from $172.4 million at December 31, 2022. Marine and recreational vehicles, construction, and home equity loans and lines of credit increased $4.5 million, $2.6 million and $661,000, respectively, to $30,800 million, $4.0 million and $6.2 million at December 31, 2023 as a result of loan production exceeding payoffs and amortization. These increases were partially offset by decreases to other commercial real estate, one- to four-family, multifamily, commercial and other consumer loans of $1.7 million, $1.5 million, $958,000, $318,000 and $416,000, respectively, to $2.3 million, $122.2 million, $1.5 million, $4.4 million and $4.0 million at December 31, 2023. In addition, to help manage interest rate risk and generate noninterest income, we sell longer term, fixed-rate one- to four-family residential mortgage loans into the secondary market on a servicing retained basis. During the year ended December 31, 2023, we sold $10.7 million of such loans and recognized gains of $188,000.

Deposits. Deposits decreased $18.7 million, or 7.5%, to $230.5 million at December 31, 2023 from $249.2 million at December 31, 2022. The decrease was due to decreases in all deposit types except certificates of deposit as, consistent with general trends across the industry, the Bank experienced a decrease in its core deposit transactional accounts as those funds flowed into interest-bearing time deposits bearing higher interest rates. Interest-bearing deposits, other than certificates of deposit (interest-bearing demand, savings and money market deposits), decreased $23.3 million, or 16.8%, to $115.7 million at December 31, 2023, noninterest-bearing deposits decreased $974,000, or 8.7%, to $10.3 million at December 31, 2023, and certificates of deposit increased $5.5 million, or 5.6%, to $104.5 million at December 31, 2023.

Borrowings. We had $19.0 million of borrowings at December 31, 2023 as compared to $9.1 million at December 31, 2022. The increase was generally related to offsetting deposit outflow and supporting the growth in the loan portfolio. In addition, in 2023, Old EWSB Bancorp issued $400,000 in promissory notes with an annual rate of 7.0% to various directors and officers of Old EWSB Bancorp to support future capital contributions. We expect to retire these notes prior to completing the conversion.

Equity. Total equity increased $617,000, or 5.7%, to $11.5 million at December 31, 2023 from $10.9 million at December 31, 2022, due to a decrease in accumulated other comprehensive loss of $1.6 million, partially offset by a decrease in retained earnings of $935,000 due to the net loss experienced for the fiscal year ended December 31, 2023.

Comparison of Operating Results for the Years Ended December 31, 2023 and December 31, 2022

Net Income. We recorded a net loss of $935,000 for the year ended December 31, 2023, compared to a net loss of $4.2 million for the year ended December 31, 2022, an improvement of $3.2 million, or 77.5%. The reduction in our net loss year over year resulted primarily from the increase in our noninterest income and a decrease in our noninterest expenses, partially offset by a decrease in our net interest income. Our net loss for the year ended December 31, 2022 was primarily due to a loss on the sale of available-for-sale securities of $5.1 million, pretax in connection with the restructuring of our securities portfolio in the third quarter of 2022. See “—Comparison of Financial Condition at December 1, 2023 and December 31, 2022—2022 Securities Portfolio Restructuring Transaction.”

Interest Income. Interest income increased $947,000, or 11.9%, to $8.9 million for the year ended December 31, 2023 from $8.0 million for the year ended December 31, 2022, primarily due to a $1.2 million increase in interest and fees on loans. The increase in interest and fees on loans was primarily due to an increase of 34 basis points in the weighted average yield on the loan portfolio to 4.26% for 2023 from 3.92% for 2022 and an increase of $15.4 million in the average balance of the loan portfolio to $177.9 million for the year ended December 31, 2023 from $162.5 million for the year ended December 31, 2022, reflecting the increasing rate environment year to year as well as the growth in the marine and recreational vehicle and construction portfolios.

Interest Expense. Total interest expense increased $2.5 million, or 137.2%, to $4.4 million for the year ended December 31, 2023 from $1.8 million for the year ended December 31, 2022. Interest expense on deposits increased $2.0 million, or 122.7%, to $3.6 million for the year ended December 31, 2023 from $1.6 million for the year ended December 31, 2022, due primarily to an increase in the weighted average rate paid on certificates of deposit of 182 basis points to 3.08% for the year ended December 31, 2023 from 1.26% for the year ended December 31, 2022 combined with an increase in the average balance of such deposits of $900,000 during 2023.

Interest expense on borrowed funds increased $525,000, or 247.7%, to $737,000 for the year ended December 31, 2023 from $212,000 for the year ended December 31, 2022. The rate paid on borrowed funds increased 119 basis points to 3.60% for the year ended December 31, 2023 from 2.41% for the year ended December 31, 2022 while the average balance of borrowed funds increased $11.7 million, or 132.5%, to $20.5 million for the year ended December 31, 2023 from $8.8 million for the year ended December 31, 2022. The increase in the average balance was generally related to the measured use of borrowings to offset deposit outflows and to support the increase in the loan portfolio.

Net Interest Income. Net interest income decreased $1.6 million, or 25.5%, to $4.6 million for the year ended December 31, 2023 from $6.2 million for the year ended December 31, 2022, primarily due to a decrease in the interest rate spread to 1.79% for the year ended December 31, 2023 from 2.27% for the year ended December 31, 2022 and a decrease in the net interest margin to 1.82% for the year ended December 31, 2023 from 2.29% for the year ended December 31, 2022. The decreases in the interest rate spread and the net interest margin were primarily due to an increase in the rates paid on interest-bearing liabilities in conjunction with an increase in our borrowings from the FHLB, partially offset by an increase in the weighted average yield on our interest earning assets.

Provision for Credit Losses. Based on management’s analysis of the adequacy of allowance for credit losses, a $145,000 provision for credit losses was recorded for the year ended December 31, 2023. No provision was recorded for the year ended December 31, 2022. The provision in 2023 was due to our adoption of the CECL methodology.

Noninterest Income. Noninterest income increased $572,000, or 65.2%, to $1.4 million for the year ended December 31, 2023 from $877,000 for the year ended December 31, 2022. The increase resulted primarily from a $208,000 gain on sale of office properties and equipment in 2023 resulting from the sale of one of our branch offices, an increase in mortgage banking income of $164,000 to $355,000 for the year ended December 31, 2023 and an increase in additional other noninterest income of $114,000 to $302,000 for the same period. The table below sets forth our noninterest income for the years ended December 31, 2023 and 2022:

Noninterest Expense. Noninterest expense decreased $5.5 million, or 43.4%, to $7.2 million for the year ended December 31, 2023 from $12.8 million for the year ended December 31, 2022. Noninterest expense was higher in 2022 primarily due to the $5.1 million pretax loss incurred on the sale of available-for-sale securities in 2022 as part of a restructuring of our investment securities portfolio with no such loss recorded in 2023. See “—Comparison of Financial Condition at December 31, 2023 and December 31, 2022—2022 Securities Portfolio Restructuring Transaction.” Additionally, salaries and related benefits decreased $616,000, or 13.5%, to $3.9 million at December 31, 2023. The decrease in salary and related benefits resulted primarily from the closing of one of our branch offices in the third quarter of 2023 combined with additional operational efficiencies that we implemented in 2023. Partially offsetting these decreases was an increase of $274,000 in other noninterest expense to $1.2 million at December 31, 2023. The increase in other noninterest expense was due in large part to expenses in 2023 of $317,000 related to the proposed mutual-to-stock conversion and offering and $58,822 related to the proposed acquisition of another mutual institution that was later terminated. The merger-related expenses are considered nonrecurring and will not impact our future results of operations. Additionally, FDIC insurance premiums increased $192,000 to $299,000 for the year ended December 31, 2023. The table below sets forth our noninterest expense for the years ended December 31, 2023 and 2022:

Income Tax Expense. Our benefit for income taxes decreased $1.2 million, or 74.6%, to a benefit of $398,000 for the year ended December 31, 2023 from a benefit of $1.6 million for the year ended December 31, 2022 due to the significantly smaller loss before taxes experienced in 2023.

Average Balances and Yields. The following table sets forth average balance sheets, average yields and costs, and certain other information at the dates and for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. Average yields include the effect of net deferred fee income, discounts and premiums that are amortized or accreted to interest income or interest expense. Average balances are calculated using daily average balances. Non-accrual loans are included in the computation of average balances only. Average loan balances exclude any loans held for sale.