Mutual Federal Bank in Chicago is looking to complete a second-step conversion that would end its mutual holding company structure.
Mutual Federal MHC owns 77.4% of Mutual Federal Bancorp. After the conversion, public stockholders would own the $96.6 million-asset bank entirely through the newly formed MFB Bancorp.
MFB Bancorp is selling 765,000 to 1.04 million shares at $10 each, or gross proceeds of at least $7.7 million. The range can be adjusted up to 1.19 million shares, which would increase gross proceeds to about $11.9 million. RP Financial valued the company at $11.5 million at the midpoint.
At least half of the net proceeds will go to the bank. At the midpoint, that would mean $3.6 million going to the bank, lending $720,000 to the employee stock ownership plan and keeping $2.9 million at the holding company. Directors and executive officers plan to buy 14,000 shares and would own 10.39% after the conversion, including exchanged shares and exercisable options.
Founded in 1905, Mutual Federal has one branch. It is a federal savings association that offers checking, savings, money market, and CD accounts, along with residential, home equity, multifamily, and commercial real estate loans.
The prospectus discloses a material weakness in internal control over financial reporting, tied to IT general controls and “super user” access in the bank’s core software. It also points to the bank’s heavy concentration in residential mortgages, including purchased one-to-four-family loans that made up 21.9% of that portfolio at June 30.