PROSPECTUS OF FIRST SEACOAST BANCORP, INC.

AND

PROXY STATEMENT OF FIRST SEACOAST BANCORP

First Seacoast Bank is converting from the mutual holding company structure to a fully-public stock holding company structure. Currently, First Seacoast Bank is the wholly-owned subsidiary of First Seacoast Bancorp, a federally-chartered corporation, and First Seacoast Bancorp, MHC, a federally-chartered mutual holding company, owns approximately 55.2% of First Seacoast Bancorp’s common stock. The remaining 44.8% of First Seacoast Bancorp’s common stock is owned by public stockholders. As a result of the conversion and stock offering, a newly formed Maryland corporation, named First Seacoast Bancorp, Inc., Inc. will replace First Seacoast Bancorp as the holding company of First Seacoast Bank. Each share of First Seacoast Bancorp common stock owned by the public will be exchanged for between 0.8358 and 1.1308 shares of common stock of First Seacoast Bancorp, Inc., so that immediately after the conversion and stock offering First Seacoast Bancorp’s public stockholders will own the same percentage of First Seacoast Bancorp, Inc. common stock as they owned of First Seacoast Bancorp’s common stock immediately before the conversion and stock offering, excluding any new shares they purchase in the stock offering and their receipt of cash in lieu of fractional exchange shares, and reflecting certain assets held by First Seacoast Bancorp, MHC. The actual number of shares that you will receive will depend on the percentage of First Seacoast Bancorp common stock owned by the public at the completion of the conversion and stock offering, certain assets held by First Seacoast Bancorp, MHC, the final independent appraisal of First Seacoast Bancorp, Inc. and the number of shares of First Seacoast Bancorp, Inc. common stock sold in the stock offering described in the following paragraph. It will not depend on the market price of First Seacoast Bancorp common stock. See “Proposal 1 – Approval of the Plan of Conversion and Reorganization – Share Exchange Ratio for Current Stockholders” for a discussion of the exchange ratio. Based on the $10.44 per share closing price of First Seacoast Bancorp common stock as November 14, 2022 (the last practicable date before the printing of this proxy statement/prospectus), the initial value of the First Seacoast Bancorp, Inc. common stock you receive in the share exchange would be less than the market value of the First Seacoast Bancorp common stock you currently own. See “Risk Factors – The market value of First Seacoast Bancorp, Inc. common stock received in the share exchange may be less than the market value of First Seacoast Bancorp common stock exchanged.”

Concurrently with the exchange offer, we are offering for sale up to 3,795,000 shares of common stock of First Seacoast Bancorp, Inc., representing the ownership interest of First Seacoast Bancorp, MHC in First Seacoast Bancorp as well as the value of certain assets owned by First Seacoast Bancorp, MHC. We are offering the shares of common stock to eligible depositors and borrowers of First Seacoast Bank, to First Seacoast Bank’s tax qualified benefit plans and to the public, including First Seacoast Bancorp stockholders, at a price of $10.00 per share. The conversion to stock form of First Seacoast Bancorp, MHC and the offering and exchange of common stock by First Seacoast Bancorp, Inc. is referred to herein as the “conversion and offering.” Once the conversion and stock offering is completed, First Seacoast Bank will be a wholly-owned subsidiary of First Seacoast Bancorp, Inc., and 100% of the common stock of First Seacoast Bancorp, Inc. will be owned by public stockholders. As a result of the conversion and stock offering, First Seacoast Bancorp and First Seacoast Bancorp, MHC will cease to exist.

First Seacoast Bancorp’s common stock is currently listed on the Nasdaq Capital Market under the symbol “FSEA.” We have applied to list the shares of First Seacoast Bancorp, Inc. common stock on the Nasdaq Capital Market under the symbol “FSEA.”

The conversion and stock offering cannot be completed unless the stockholders of First Seacoast Bancorp approve First Seacoast Bancorp, MHC’s Amended and Restated Plan of Conversion and Reorganization, which may be referred to herein as the “plan of conversion.” First Seacoast Bancorp is holding a special meeting of stockholders at the main office of First Seacoast Bank, located at 633 Central Avenue, Dover, New Hampshire, on December 29, 2022, at 2:00 p.m., Eastern time, to consider and vote upon the plan of conversion. We must obtain the affirmative vote of the holders of (i) two-thirds of the total number of votes entitled to be cast at the special meeting by First Seacoast Bancorp stockholders, including shares owned by First Seacoast Bancorp, MHC, and (ii) a majority of the total number of votes entitled to be cast at the special meeting by First Seacoast Bancorp stockholders other than First Seacoast Bancorp, MHC. First Seacoast Bancorp’s board of directors unanimously recommends that stockholders vote “FOR” approval of the plan of conversion.

This document serves as the proxy statement for the special meeting of stockholders of First Seacoast Bancorp and the prospectus for the shares of First Seacoast Bancorp, Inc. common stock to be issued in exchange for shares of First Seacoast Bancorp common stock. We urge you to read this entire document carefully. You can also obtain information about us from documents that we have filed with the Securities and Exchange Commission and the Board of Governors of the Federal Reserve System. This document does not serve as the prospectus relating to the offering by First Seacoast Bancorp, Inc. of its shares of common stock in the stock offering, which offering is being made pursuant to a separate prospectus. Stockholders of First Seacoast Bancorp are not required to participate in the stock offering.

This proxy statement/prospectus contains information that you should consider in evaluating the plan of conversion. In particular, you should carefully read the section captioned “Risk Factors” beginning on page 20 for a discussion of certain risk factors relating to the conversion and stock offering.

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.

Neither the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency nor any state securities regulator has approved or disapproved of these securities or determined if this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

For answers to your questions, read this proxy statement/prospectus, including the Questions and Answers section, beginning on page 1. Questions about voting on the plan of conversion may be directed to Laurel Hill Advisory Group, LLC, Monday through Friday from 9:00 a.m. to 5:00 p.m., Eastern time. Banks and brokers may call (516) 933-3100, and all others may call 1-(888) 742-1305 (toll-free).

The date of this proxy statement/prospectus is November 14, 2022, and it is first being mailed to stockholders of First Seacoast Bancorp on or about November 21, 2022.

FIRST SEACOAST BANCORP

633 Central Avenue

Dover, New Hampshire 03820

(603) 742-4680

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

On December 29, 2022, First Seacoast Bancorp will hold a special meeting of stockholders at the above address. The meeting will begin at 2:00 p.m., Eastern time. At the meeting, stockholders will consider and act on the following:

 

1.

The approval of an amended and restated plan of conversion and reorganization, whereby First Seacoast Bancorp, MHC and First Seacoast Bancorp will convert and reorganize from the mutual holding company structure to the stock holding company structure, as more fully described in the attached proxy statement;

 

2.

The approval of the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the plan of conversion and reorganization;

The following informational proposals:

 

3.

Approval of a provision in First Seacoast Bancorp, Inc.’s articles of incorporation requiring a super-majority vote of stockholders to approve certain amendments to First Seacoast Bancorp, Inc.’s articles of incorporation;

 

4.

Approval of a provision in First Seacoast Bancorp, Inc.’s articles of incorporation requiring a super-majority vote of stockholders to approve stockholder-proposed amendments to First Seacoast Bancorp, Inc.’s bylaws;

 

5.

Approval of a provision in First Seacoast Bancorp, Inc.’s articles of incorporation to limit the voting rights of shares beneficially owned in excess of 10% of First Seacoast Bancorp, Inc.’s outstanding voting stock; and

Such other business that may properly come before the meeting. Note: The board of directors is not aware of any other business to come before the meeting.

The provisions of First Seacoast Bancorp, Inc.’s articles of incorporation that are summarized as informational proposals 3 through 5 were approved as part of the process in which our board of directors approved the amended and restated plan of conversion and reorganization (the “plan of conversion”). These proposals are informational in nature only because the Board of Governors of the Federal Reserve System’s regulations governing mutual-to-stock conversions do not provide for votes on matters other than the plan of conversion. While we are asking you to vote with respect to each of the informational proposals listed above, the proposed provisions for which an informational vote is requested will become effective if stockholders approve the plan of conversion, regardless of whether stockholders vote to approve any or all of the informational proposals.

The board of directors has fixed the close of business on November 3, 2022, as the record date for the determination of stockholders entitled to notice of and to vote at the special meeting and at any adjournment or postponement thereof.

Upon written request addressed to the Corporate Secretary of First Seacoast Bancorp at the above address, stockholders may obtain an additional copy of this proxy statement/prospectus and/or a copy of the plan of conversion. In order to assure timely receipt of these materials, First Seacoast Bancorp must receive the written request by December 22, 2022.

Please complete, sign and date the enclosed proxy card, which is solicited by the board of directors, and mail it in the enclosed envelope today. The proxy will not be used if you attend the meeting and vote in person.

BY ORDER OF THE BOARD OF DIRECTORS

Michael J. Bolduc

Corporate Secretary

Dover, New Hampshire

November 21, 2022

TABLE OF CONTENTS

 

SUMMARY			6
RISK FACTORS			20
INFORMATION ABOUT THE SPECIAL MEETING			33
PROPOSAL 1 — APPROVAL OF THE PLAN OF CONVERSION AND REORGANIZATION			36
PROPOSAL 2 — ADJOURNMENT OF THE SPECIAL MEETING			62
PROPOSALS 3 THROUGH 5 — INFORMATIONAL PROPOSALS RELATING TO ARTICLES OF INCORPORATION OF FIRST SEACOAST BANCORP, INC.			62
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA			65
RECENT DEVELOPMENTS			67
FORWARD-LOOKING STATEMENTS			77
HOW WE INTEND TO USE THE PROCEEDS FROM THE STOCK OFFERING			79
OUR DIVIDEND POLICY			80
MARKET FOR THE COMMON STOCK			81
HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE			82
CAPITALIZATION			83
PRO FORMA DATA			85
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			90
BUSINESS OF FIRST SEACOAST BANCORP, INC. AND FIRST SEACOAST BANCORP			108
BUSINESS OF FIRST SEACOAST BANK			109
SUPERVISION AND REGULATION			129
TAXATION			139
MANAGEMENT			140
BENEFICIAL OWNERSHIP OF COMMON STOCK			150
SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS			151
COMPARISON OF STOCKHOLDERS’ RIGHTS FOR EXISTING STOCKHOLDERS OF FIRST SEACOAST BANCORP			152
RESTRICTIONS ON ACQUISITION OF FIRST SEACOAST BANCORP, INC.			159
DESCRIPTION OF CAPITAL STOCK OF FIRST SEACOAST BANCORP, INC. FOLLOWING THE CONVERSION AND STOCK OFFERING			162
TRANSFER AGENT			164
EXPERTS			164
LEGAL MATTERS			164
WHERE YOU CAN FIND ADDITIONAL INFORMATION			164
STOCKHOLDER PROPOSALS			165
ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING			165
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING			166
OTHER MATTERS			166
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			F-1

 

QUESTIONS AND ANSWERS

FOR STOCKHOLDERS OF FIRST SEACOAST BANCORP

REGARDING THE PLAN OF CONVERSION AND REORGANIZATION

You should read this document for more information about the conversion and stock offering. We have filed applications with the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) with respect to the conversion and stock offering and with respect to First Seacoast Bancorp, Inc. becoming the holding company for First Seacoast Bank. The approval of the Federal Reserve Board is required before we can consummate the conversion and stock offering. We have also filed an application with the Office of the Comptroller of the Currency with respect to an amendment to First Seacoast Bank’s charter. The approval of the Office of the Comptroller of the Currency is required before we can consummate the conversion and stock offering. Any approval by the Federal Reserve Board or the Office of the Comptroller of the Currency does not constitute a recommendation or endorsement of the plan of conversion. Consummation of the conversion and stock offering is also subject to approval of the plan of conversion by First Seacoast Bancorp’s stockholders, and to the satisfaction of certain other conditions.

 

Q.	WHAT ARE STOCKHOLDERS BEING ASKED TO APPROVE?

 

A.

First Seacoast Bancorp stockholders as of the close of business on November 3, 2022 are being asked to vote on the amended and restated plan of conversion (the “plan of conversion”) pursuant to which First Seacoast Bancorp, MHC will convert from the mutual to the stock form of organization. As part of the conversion and stock offering, a newly formed Maryland corporation, named First Seacoast Bancorp, Inc., is offering its common stock to eligible depositors and borrowers of First Seacoast Bank, to First Seacoast Bank’s tax qualified benefit plans, to stockholders of First Seacoast Bancorp as of the close of business on November 3, 2022, and to the public. The shares offered for sale represent First Seacoast Bancorp, MHC’s current ownership interest in First Seacoast Bancorp, adjusted for the value of certain assets owned by First Seacoast Bancorp, MHC. Your vote is very important. Without sufficient votes “FOR” approval of the plan of conversion, we cannot implement the plan of conversion and complete the stock offering.

In addition, First Seacoast Bancorp stockholders are being asked to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the plan of conversion.

Stockholders also are asked to vote on the following informational proposals with respect to the articles of incorporation of First Seacoast Bancorp, Inc.:

 

•

Approval of a provision requiring a super-majority vote to approve certain amendments to First Seacoast Bancorp, Inc.’s articles of incorporation;

 

•

Approval of a provision requiring a super-majority vote of stockholders to approve stockholder-proposed amendments to First Seacoast Bancorp, Inc.’s bylaws; and

 

•

Approval of a provision to limit the voting rights of shares beneficially owned in excess of 10% of First Seacoast Bancorp, Inc.’s outstanding voting stock.

The provisions of First Seacoast Bancorp, Inc.’s articles of incorporation that are the subject of the informational proposals were approved as part of the process in which our board of directors approved the plan of conversion. These proposals are informational in nature only because the Federal Reserve Board’s regulations governing mutual-to-stock conversions of mutual holding companies do not provide for votes on matters other than the plan of conversion. While we are asking you to vote with respect to each of the informational proposals listed above, the proposed provisions for which an informational vote is requested will become effective if stockholders approve the plan of conversion, regardless of whether stockholders vote to approve any or all of the informational proposals. The provisions of First Seacoast Bancorp, Inc.’s articles of incorporation that are summarized above as informational proposals may have the effect of deterring, or rendering more difficult, attempts by third parties to obtain control of First Seacoast Bancorp, Inc. if such attempts are not approved by the board of directors, or may make the removal of the board of directors or management, or the appointment of new directors, more difficult.

 

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Q.	WHAT ARE THE REASONS FOR THE CONVERSION AND STOCK OFFERING?

A. The primary reasons for the conversion and stock offering are to:

 

•

support our planned growth and strengthen our regulatory capital position with the additional capital we will raise in the stock offering;

 

•

facilitate our stock holding company’s ability to pay dividends to our public stockholders;

 

•

transition our organization to a stock holding company structure, which gives us greater flexibility to access the capital markets compared to our existing mutual holding company structure;

 

•

improve the liquidity of our shares of common stock; and

 

•

facilitate future expansion by branching or acquisitions.

As a fully converted stock holding company, we will have greater flexibility in structuring mergers and acquisitions, including the form of consideration that we can use to pay for an acquisition. Our current mutual holding company structure limits our ability to offer shares of our common stock as consideration in a merger or acquisition since First Seacoast Bancorp, MHC is required to own a majority of First Seacoast Bancorp’s outstanding shares of common stock. Potential sellers often want stock for at least part of the purchase price. Our new stock holding company structure will enable us to offer stock or cash consideration, or a combination of stock and cash, and therefore will enhance our ability to compete with other bidders when acquisition opportunities arise. We currently have no arrangements or understandings regarding any specific acquisition. See “Proposal 1 – Approval of the Plan of Conversion and Reorganization – Reasons for the Conversion and Stock Offering” for a more complete discussion.

 

Q.	WHAT WILL STOCKHOLDERS RECEIVE FOR THEIR EXISTING SHARES OF FIRST SEACOAST BANCORP COMMON STOCK?

 

A.

As more fully described in “Proposal 1 – Approval of the Plan of Conversion and Reorganization – Share Exchange Ratio for Current Stockholders,” depending on the number of shares sold in the stock offering, each share of First Seacoast Bancorp common stock that you own at the time of the completion of the conversion and stock offering will be exchanged for between 0.8358 shares at the minimum and 1.1308 shares at the maximum of the offering range of First Seacoast Bancorp, Inc. common stock (cash will be paid in lieu of any fractional shares). For example, if you own 100 shares of First Seacoast Bancorp common stock, and the exchange ratio is 1.1308 (at the maximum of the offering range), after the conversion and stock offering you will receive 113 shares of First Seacoast Bancorp, Inc. common stock and $0.80 in cash, the value of the fractional share based on the $10.00 per share purchase price of stock in the stock offering.

If you own shares of First Seacoast Bancorp common stock in a brokerage account in “street name,” your shares will be automatically exchanged within your account, and you do not need to take any action to exchange your shares of common stock or receive cash in lieu of fractional shares. If you hold stock certificate(s) evidencing your shares of First Seacoast Bancorp common stock, after the completion of the conversion and stock offering, our exchange agent will mail to you a transmittal form with instructions to surrender your stock certificate(s). A statement reflecting your ownership of shares of common stock of First Seacoast Bancorp, Inc. and a check representing cash in lieu of fractional shares will be mailed to you within five business days after the transfer agent receives a properly executed transmittal form and your existing First Seacoast Bancorp stock certificate(s). First Seacoast Bancorp, Inc. will not issue stock certificates. Do not submit your stock certificate(s) until you receive a transmittal form.

 

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Q.	WHY WILL THE SHARES THAT I RECEIVE BE BASED ON A PRICE OF $10.00 PER SHARE RATHER THAN THE TRADING PRICE OF THE COMMON STOCK BEFORE COMPLETION OF THE CONVERSION AND STOCK OFFERING?

 

A.

The shares will be based on a price of $10.00 per share because that is the price at which First Seacoast Bancorp, Inc. will sell shares in its stock offering. The amount of common stock that First Seacoast Bancorp, Inc. will issue at $10.00 per share in the stock offering and in the exchange is based on an independent appraisal of the estimated pro forma market value of First Seacoast Bancorp, Inc., assuming the conversion and stock offering are completed. Feldman Financial Advisors, Inc., an appraisal firm experienced in the appraisal of financial institutions, has estimated that, as of August 26, 2022, this pro forma market value was $59.7 million. Based on Federal Reserve Board regulations, the pro forma market value forms the midpoint of the range with a minimum of $50.8 million and a maximum of $68.7 million. Based on this valuation and the valuation range, the number of shares of common stock of First Seacoast Bancorp, Inc. that existing public stockholders of First Seacoast Bancorp will receive in exchange for their shares of First Seacoast Bancorp common stock is expected to range from 0.8358 shares to 1.1308 shares, with a midpoint of 0.9833 shares (a value of approximately $22.7 million to $30.7 million, with a midpoint of $26.7 million, based on a price of $10.00 per share). The number of shares received by the existing public stockholders of First Seacoast Bancorp is intended to maintain their existing ownership in our organization (excluding any new shares purchased by them in the stock offering and their receipt of cash in lieu of fractional exchange shares, and as adjusted to reflect certain assets owned by First Seacoast Bancorp, MHC). The independent appraisal is based in part on First Seacoast Bancorp’s financial condition and results of operations, the pro forma impact of the additional capital raised by the sale of shares of common stock in the stock offering, and an analysis of a peer group of ten publicly traded savings and loan and bank holding companies that Feldman Financial Advisors, Inc. considered comparable to First Seacoast Bancorp.

 

Q.	DOES THE EXCHANGE RATIO DEPEND ON THE TRADING PRICE OF FIRST SEACOAST BANCORP COMMON STOCK?

 

A.

No, the exchange ratio will not be based on the trading price of First Seacoast Bancorp common stock. Instead, the exchange ratio will be based on the appraised value of First Seacoast Bancorp, Inc. The purpose of the exchange ratio is to maintain the ownership percentage of public stockholders of First Seacoast Bancorp, as adjusted to reflect certain assets owned by First Seacoast Bancorp, MHC. Therefore, changes in the trading price of First Seacoast Bancorp common stock between now and the completion of the conversion and stock offering will not affect the calculation of the exchange ratio.

 

Q.	SHOULD I SUBMIT MY STOCK CERTIFICATE(S) NOW?

 

A.

No. If you hold stock certificate(s), instructions for exchanging the certificates will be sent to you by our exchange agent after the completion of the conversion and stock offering. If your shares are held in “street name” (e.g., in a brokerage account) rather than in certificate form, the share exchange will be reflected automatically in your account upon completion of the conversion and stock offering.

 

Q.	HOW DO I VOTE?

 

A.

Mark, sign and date each proxy card enclosed, and return the card(s) to us in the enclosed proxy reply envelope. Alternatively, you may vote by Internet or telephone by following the instructions on the proxy card. For information on submitting your proxy, please refer to instructions on the enclosed proxy card. Your vote is very important. Please vote today.

 

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Q.	IF MY SHARES ARE HELD IN STREET NAME, WILL MY BROKER, BANK OR OTHER NOMINEE AUTOMATICALLY VOTE ON THE PLAN ON MY BEHALF?

 

A.	No. Your broker, bank or other nominee will not be able to vote your shares without instructions from you. You should instruct your broker, bank or other nominee to vote your shares, using the directions that they provide to you.

 

Q.	WHY SHOULD I VOTE? WHAT HAPPENS IF I DON’T VOTE?

 

A.

Your vote is very important. We believe the conversion and stock offering are in the best interests of our stockholders. Not voting all the proxy card(s) you receive will have the same effect as voting “against” the approval of the plan of conversion. Without sufficient favorable votes “FOR” approval of the plan of conversion, we cannot complete the conversion and stock offering.

 

Q.	WHAT IF I DO NOT GIVE VOTING INSTRUCTIONS TO MY BROKER, BANK OR OTHER NOMINEE?

 

A.	Your vote is important. If you do not instruct your broker, bank or other nominee to vote your shares, the unvoted proxy will have the same effect as a vote “against” the plan of conversion.

 

Q.	MAY I PLACE AN ORDER TO PURCHASE SHARES IN THE COMMUNITY OFFERING, IN ADDITION TO THE SHARES THAT I WILL RECEIVE IN THE EXCHANGE?

 

A.	Yes. If you would like to receive a prospectus and stock order form, you must call our Stock Information Center at 1-(877) 892-9472 (toll-free), Monday through Friday between 10:00 a.m. and 4:00 p.m., Eastern time. The Stock Information Center is closed bank holidays.

Eligible depositors and borrowers of First Seacoast Bank have priority subscription rights allowing them to purchase common stock in a subscription offering. Shares not purchased in the subscription offering may be available for sale to the public in a community offering, as described in this document. If orders for First Seacoast Bancorp, Inc. common stock in a community offering exceed the number of shares available for sale, shares will be allocated (to the extent shares remain available) as follows: first, to cover orders of natural persons (including trusts of natural persons) residing in the New Hampshire Rockingham and Strafford; second, to cover orders of First Seacoast Bancorp stockholders as of the close of business on November 3, 2022; and thereafter, to cover orders of the general public.

Stockholders of First Seacoast Bancorp are subject to an ownership limitation. Shares of common stock purchased in the stock offering by a stockholder and his or her associates or individuals acting in concert with the stockholder, plus any shares a stockholder and these individuals receive in the exchange for existing shares of First Seacoast Bancorp common stock, may not exceed 9.9% of the total shares of common stock of First Seacoast Bancorp, Inc. to be issued and outstanding after the completion of the conversion and stock offering.

Properly completed and signed stock order forms, with full payment, must be received (not postmarked) no later than 2:00 p.m., Eastern time, on December 16, 2022.

 

Q.	WILL THE CONVERSION AND STOCK OFFERING HAVE ANY EFFECT ON DEPOSIT AND LOAN ACCOUNTS AT FIRST SEACOAST BANK?

 

A.

No. The account number, amount, interest rate and withdrawal rights of deposit accounts will remain unchanged. Deposits will continue to be federally insured by the Federal Deposit Insurance Corporation up to the legal limit. Loans and rights of borrowers will not be affected. Depositors and borrowers will no longer have voting rights in First Seacoast Bancorp, MHC as to matters currently requiring such vote. First Seacoast Bancorp, MHC will cease to exist after the conversion and stock offering. Only stockholders of First Seacoast Bancorp, Inc. will have voting rights after the conversion and stock offering.

 

4

OTHER QUESTIONS?

For answers to other questions, please read this proxy statement/prospectus. Questions about voting on the plan of conversion may be directed to Laurel Hill Advisory Group, LLC, Monday through Friday from 9:00 a.m. to 5:00 p.m., Eastern time. Banks and brokers may call (516) 933-3100, and all others may call 1-(888) 742-1305 (toll-free). Questions about the stock offering may be directed to our Stock Information Center at 1-(877) 892-9472 (toll-free), Monday through Friday between 10:00 a.m. and 4:00 p.m., Eastern time. The Stock Information Center is closed bank holidays.

 

 

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RISK FACTORS

You should carefully consider the following risk factors when deciding how to vote on the conversion and stock offering and before purchasing shares of First Seacoast Bancorp, Inc. common stock.

Risks Related to Our Lending Activities

We have a substantial amount of commercial real estate and commercial and industrial loans, and intend to continue to increase originations of these types of loans. These loans involve credit risks that could adversely affect our financial condition and results of operations.

At June 30, 2022, our portfolio of commercial real estate loans, acquisition, development and land loans secured by commercial real estate, and commercial and industrial loans totaled $119.1 million, or 31.2% of net loans. We intend to increase originations of these types of loans. Given their larger balances and the complexity of the underlying collateral, these loans generally have more risk than the one- to four-family residential real estate loans we originate. Because the repayment of commercial real estate loans and commercial and industrial loans depends on the successful management and operation of the borrower’s properties or related business, their repayment can be affected by adverse conditions in the local, regional and national real estate market or economy. A downturn in the real estate market or the local, regional and national economy could adversely impact the value of collateral properties or the revenues from the borrower’s business, thereby increasing the risk of loss. Further, unlike residential mortgage loans, commercial and industrial loans are typically secured by collateral other than real estate, such as inventory and accounts receivable, the value of which may depreciate over time, may be more difficult to appraise or liquidate, and may be more susceptible to fluctuation in value at default. Because these loans also generally have relatively large balances, any charge-offs may be larger than those incurred with residential real estate loans. In addition, many of these loans have not been subjected to unfavorable economic conditions and, therefore, it is difficult to predict their future performance under such conditions. Accordingly, these loans may experience delinquency or charge-off levels above our historical experience, which could adversely affect our future performance. Furthermore, at June 30, 2022, $22.7 million, or 29.3%, of our commercial real estate loans were secured by non-owner occupied properties. The physical condition of non-owner occupied properties may be below that of owner-occupied properties due to lax property maintenance standards, which have an adverse impact on the value of the collateral properties. As our commercial real estate, commercial and industrial, and acquisition, development and land loans secured by commercial real estate increase, the corresponding risks and potential for loss will also increase.

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

We maintain an allowance for loan losses, which is established through a provision for loan losses, that represents management’s best estimate of probable losses within the existing portfolio of loans. We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of loans. In determining the adequacy of the allowance for loan losses, we rely on our experience and our evaluation of economic conditions. If our assumptions prove to be incorrect, our allowance for loan losses may not be sufficient to cover losses inherent in our loan portfolio and adjustment may be necessary to allow for different economic conditions or adverse developments in our loan portfolio. Consequently, a problem with one or more loans could require us to significantly increase the level of our provision for loan losses. Management also recognizes that significant new growth in our loan portfolio, new loan products and the refinancing of existing loans can result in unseasoned loans that may not perform in a historical or projected manner and will increase the risk that our allowance may be insufficient to absorb losses without significant additional provisions.

The Financial Accounting Standards Board has delayed the effective date of the Current Expected Credit Loss, or CECL, standard. CECL will be effective for First Seacoast Bancorp, Inc. and First Seacoast Bank on January 1, 2023. CECL will require financial institutions to determine periodic estimates of lifetime expected credit losses on loans, and recognize the expected credit losses as allowances for credit losses. This will change the current method of providing allowances for loan losses that are incurred or probable, which would likely require us to increase our allowance for loan losses, and to greatly increase the types of data we would need to collect and review to determine the appropriate level of our allowance for loan losses.

 

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In addition, federal regulators periodically review our allowance for loan losses and as a result of such reviews, we may decide to adjust our allowance for loan losses or recognize further loan charge-offs. However, regulatory agencies are not directly involved in the process of establishing the allowance for loan losses, as the process is our responsibility and any adjustment of the allowance is the responsibility of our management. Material additions to the allowance would materially decrease our net income and may have a material adverse effect on our financial condition, results of operations and capital.

We are subject to environmental liability risk associated with lending activities or properties we own.

A significant portion of our loan portfolio is secured by real estate, and we could become subject to environmental liabilities with respect to one or more of these properties, or with respect to properties that we own in operating our business. During the ordinary course of business, we may foreclose on and take title to properties securing defaulted loans. If, in doing so, hazardous conditions or toxic substances are found on these properties, we may be liable for remediation costs, as well as for personal injury and property damage, civil fines and criminal penalties regardless of when the hazardous conditions or toxic substances first affected any particular property. Environmental laws may require us to incur substantial expenses to address unknown liabilities and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. Our policies, which require us to perform an environmental review before initiating any foreclosure action on non-residential real property, may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on us.

Risks Related to Market Interest Rates

The reversal of the historically low interest rate environment may adversely affect our net interest income and profitability.

The Federal Reserve Board decreased benchmark interest rates significantly, to near zero, in response to the COVID-19 pandemic. The Federal Reserve Board is reversing its policy of near zero interest rates given its concerns over inflation. In recent periods, market interest rates have risen in response to the Federal Reserve Board’s recent rate increases. As discussed below, the increase in market interest rates is expected to have an adverse effect on our net interest income and profitability.

Changes in interest rates could reduce our profits and asset values.

Like most financial institutions, our profitability depends to a large extent upon our net interest income, which is the difference between our interest income on interest-earning assets, such as loans and securities, and our interest expense on interest-bearing liabilities, such as deposits and borrowed funds. Accordingly, our results of operations depend largely on movements in market interest rates and our ability to manage our interest-rate-sensitive assets and liabilities in response to these movements. Factors such as inflation, recession and instability in financial markets, among other factors beyond our control, may affect interest rates.

In a rising interest rate environment, we would expect that the rates on our deposits and borrowings would reprice upwards faster than the rates on our longer-term loans and investments, which would be expected to compress our interest rate spread and have a negative effect on our profitability. In addition, the high percentage (97.1% at June 30, 2022) of fixed rate loans in our one- to four-family residential real estate loan portfolio would also contribute to the negative effect on our profitability in a rising interest rate environment. Furthermore, increases in interest rates may adversely affect the ability of our borrowers to make loan repayments on adjustable-rate loans, as the interest owed on such loans would increase as interest rates increase. Conversely, decreases in interest rates can result in increased prepayments of loans and mortgage-related securities, as borrowers refinance to

 

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reduce their borrowing costs. Under these circumstances, we are subject to reinvestment risk as we may have to redeploy such loan or securities proceeds into lower-yielding assets, which might also negatively impact our income. If interest rates rise, we expect that our net portfolio value of equity would decrease. Net portfolio value of equity represents the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our liabilities. At June 30, 2022, assuming a 400-basis point increase in market interest rates, we estimate that our net portfolio value of equity would decrease by $19.0 million, or 30.3%.

Furthermore, the historically low interest rate environment in recent periods has contributed significantly to our loan growth, particularly in one- to four-family residential mortgage loans where refinance volume has been relatively high. The increase in market interest rates that we are now experiencing is likely to reduce our loan origination volume, particularly refinance volume, and/or reduce our interest rate spread, which would have a material adverse effect on our profitability and results of operations.

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, including the value of our available-for-sale investment securities and interest rate swap derivatives which generally decrease when market interest rates rise, and ultimately affect our earnings. During the six months ended June 30, 2022, we incurred other comprehensive losses of $8.8 million related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio and changes in the fair value of interest rate swap derivatives caused by the increase in market interest rates during the period.

Changes in the level of interest rates also may negatively affect our ability to originate real estate loans, the value of our assets, and our ability to realize gains from the sale of our assets, all of which ultimately affect our earnings. Also, our interest rate risk modeling techniques and assumptions likely may not fully predict or capture the impact of actual interest rate changes on our balance sheet or projected operating results. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Management of Market Risk.”

Risks Related to Economic Conditions

Inflation can have an adverse impact on our business and on our customers.

Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. Recently, there have been market indicators of a pronounced rise in inflation and the Federal Reserve Board has indicated its intention to raise certain benchmark interest rates in an effort to combat inflation. As discussed above under “—Risks Related to Market Interest Rates – Changes in interest rates could reduce our profits and asset values,” as inflation increases and market interest rates rise the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments. In addition, inflation generally increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our noninterest expenses. Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us.    

A worsening of economic conditions in our market area could reduce demand for our products and services and/or result in increases in our level of non-performing loans, which could adversely affect our operations, financial condition and earnings.

Local economic conditions have a significant impact on the ability of our borrowers to repay loans and the value of the collateral securing loans. A deterioration in economic conditions could have the following consequences, any of which could have a material adverse effect on our business, financial condition, liquidity and results of operations:

 

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demand for our products and services may decline;

 

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we may increase our allowance for loan losses;

 

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loan delinquencies, problem assets and foreclosures may increase;

 

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collateral for loans, especially real estate, may decline in value, thereby reducing customers’ future borrowing power, and reducing the value of assets and collateral associated with existing loans; and

 

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the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us.

Moreover, a significant decline in general local, regional or national economic conditions caused by inflation, recession, acts of terrorism, a government shutdown, an outbreak of hostilities or other international or domestic calamities, unemployment 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 addition, deflationary pressures, while possibly lowering our operating costs, could have a significant negative effect on our borrowers, especially our business borrowers, and the values of underlying collateral securing loans, which could negatively affect our financial performance. Further, any decline in local economic conditions may have a greater effect on our earnings and capital than on the earnings and capital of larger financial institutions whose real estate loans are geographically diverse. Many of the loans in our portfolio are secured by real estate. Deterioration in the real estate markets could negatively affect a borrower’s ability to repay their loan and the value of the collateral securing the loan. Real estate values are affected by various factors, including changes in general or regional economic conditions, governmental rules or policies, and natural disasters. If we are required to liquidate a significant amount of collateral during a period of reduced real estate values, our financial condition and profitability could be adversely affected.

We have a high concentration of loans secured by real estate in our market area. Adverse economic conditions, both generally and in our market area, could adversely affect our financial condition and results of operations.

We have relatively few loans outside of our market area and, as a result, we have a greater risk of loan defaults and losses in the event of a further economic downturn in our market area, as adverse economic conditions may have a negative effect on the ability of our borrowers to make timely payments of their loans. A return of recessionary conditions and/or negative developments in the domestic and international credit markets may significantly affect the markets in which we do business, the value of our loans, investments, and collateral securing our loans, and our ongoing operations, costs and profitability. Any of these negative events may result in higher than expected loan delinquencies, increase our levels of nonperforming and classified assets, and reduce demand for our products and services, which may cause us to incur losses and may adversely affect our capital, liquidity and financial condition. According to published data, our market area has not experienced any material declines in real estate values during the last year or any material increase in the number of foreclosure proceedings.

A worsening of economic conditions could reduce demand for our products and services and/or increase our level of non-performing loans, which could adversely affect our financial condition and results of operations.

Unlike larger financial institutions that are more geographically diversified, our profitability depends primarily on the general economic conditions in our primary market area. In addition to local economic conditions, which could have a significant impact on ability of our borrowers to repay their loans and on the value of the collateral securing their loans, deterioration in general economic conditions could result in the following consequences, any of which could have a material adverse effect on our business, financial condition, liquidity and results of operations:

 

•

demand for our products and services may decline;

 

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loan delinquencies, problem assets and foreclosures may increase;

 

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collateral for loans, especially real estate, may decline in value, in turn reducing customers’ future borrowing power, and reducing the value of assets and collateral associated with existing loans;

 

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the value of our securities portfolio may decline; and

 

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the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us.

Moreover, a significant decline in general economic conditions, caused by inflation, recession, tariffs and international trade disputes, acts of terrorism, an outbreak of hostilities or other international or domestic calamities, unemployment 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 addition, deflationary pressures, while possibly lowering our operating costs, could have a significant negative effect on our borrowers, especially our business borrowers, and the values of underlying collateral securing loans, which could negatively affect our financial performance.

Risks Related to the COVID-19 Pandemic

The economic impact of the COVID-19 pandemic could adversely affect our financial condition and results of operations.

The COVID-19 pandemic caused significant economic dislocation in the United States. Although the domestic and global economies have begun to recover from the COVID-19 pandemic as many health and safety restrictions have been lifted and vaccine distribution has increased, certain adverse consequences of the pandemic continue to impact the macroeconomic environment and may persist for some time, including labor shortages and disruptions of global supply chains. The growth in economic activity and in the demand for goods and services, coupled with labor shortages and supply chain disruptions, has also contributed to rising inflationary pressures and the risk of recession. As a result of the COVID-19 pandemic and the related adverse economic consequences, we could be subject to the following risks, among others, any of which individually or in combination with others could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

 

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demand for our products and services may decline, making it difficult to grow assets and income;

 

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if we have high levels of unemployment for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;

 

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collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;

 

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limitations may be placed on our ability to foreclose on properties we hold as collateral;

 

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our allowance for loan losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income;

 

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the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;

 

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our cybersecurity risks are increased if employees work remotely;

 

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we rely on third-party vendors for certain services and the unavailability of a critical service due to the COVID-19 pandemic could have an adverse effect on us; and

 

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Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs.

 

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Moreover, our future success and profitability substantially depends on the management skills of our executive officers and directors, many of whom have held officer and director positions with us for many years. The unanticipated loss or unavailability of key employees due to the pandemic could harm our ability to operate our business or execute our business strategy. We may not be successful in finding and integrating suitable successors in the event of key employee loss or unavailability.

Risks Related to Competitive Matters

Our asset size and strong competition within our market area may limit our growth and profitability.

Our market area has a high concentration of competing financial institutions. Based on Federal Deposit Insurance Corporation data as of June 30, 2021 (the latest date for which published data is available), in addition to us, 26 Federal Deposit Insurance-insured financial institutions operated banking offices in Rockingham County, New Hampshire, and 12 Federal Deposit Insurance-insured financial institutions operated banking offices in Strafford County, New Hampshire. In addition to Federal Deposit Insurance-insured institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, securities brokerage firms and, more recently, financial technology (or “FinTech”) companies also operate in our market area. Some of these entities are unregulated or less regulated non-banking entities, operating locally and elsewhere. Many of these competitors 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 fees on more attractive terms than loans we offer.

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 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. Competition also makes it increasingly difficult and costly to attract and retain qualified employees. 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 non-interest income from activities such as securities brokerage. Finally, institutions of our size are generally disproportionately affected by the continually increasing costs of complying with new banking and other regulations.

Our profitability depends upon our continued ability to successfully compete in our market area. If we must raise interest rates paid on deposits or lower interest rates charged on our loans due to competition, our net interest margin and profitability could be adversely affected.

Risks Related to Operational Matters

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

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 and our own 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 our company, 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 and other information, damages to systems, or other material disruptions to network access or business operations.

 

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In late 2018, our email and antivirus systems failed to detect malware that infiltrated our branch office computer network. Our core processing provider’s firewall prevented the virus from accessing customer information, however, we were unable to access all branch office computer desktops and files for several days. We incurred costs of approximately $160,000 in restoring and rebuilding our network.

We have established policies and procedures to prevent or limit the impact of system failures, interruptions and security breaches, including privacy breaches and cyber-attacks. Further, since this incident, we have taken steps to remediate shortcomings in our cybersecurity systems, including employing a third party security operations center to monitor network traffic continuously. Although we take protective measures, the security of our computer systems, software, and networks may be vulnerable to breaches, unauthorized access, misuse, computer viruses, or other malicious code and 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.

In the event of 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 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.

In addition, we outsource a majority of our data processing requirements to certain third-party providers. Accordingly, our operations are exposed to risk that these vendors will not perform in accordance with the contracted arrangements under service level agreements, 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. To our knowledge, the services and programs provided to us by third parties have not suffered any security breaches. In cases where a third party experienced a security event communicated to First Seacoast Bank, none of our systems or customer data were impacted or at risk. However, the existence of cyber-attacks or security breaches at third parties with access to our systems and customer data may not be disclosed to us by those parties in a timely manner.

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 component of our business strategy is to rely on 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 area 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.

 

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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 upon the services of the members of our senior management team who direct our strategy and operations. Our executive officers and lending personnel possess expertise in our markets and key business relationships, and have been integral in the restructuring of our operations, including the implementation of a more aggressive sales culture within our institution. Any one of them could be difficult to replace. 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.”

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 our 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 loan losses and our determinations with respect to amounts owed for income taxes.

Changes in accounting standards could affect reported earnings.

The regulatory 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 consolidated financial statements. In some cases, we could be required to apply new or revised guidance retroactively. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations.

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.

First Seacoast Bank is subject to extensive regulation, supervision and examination by the Office of the Comptroller of the Currency, and First Seacoast Bancorp, Inc. will be subject to extensive regulation, supervision and examination by the Federal Reserve Board. Such regulation and supervision governs 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 First Seacoast 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 level of our allowance for loan 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 accounting firm. These changes could materially impact, potentially even retroactively, how we report our financial condition and results of operations.

 

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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.

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 the 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.

First Seacoast Bancorp, Inc. qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012. For as long as it continues to be an emerging growth company, it may choose to take advantage of exemptions from various reporting requirements applicable to public companies that are not 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, First Seacoast Bancorp, Inc. 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.

 

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We are also a smaller reporting company, and even if we no longer qualify as an emerging growth company, any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to smaller reporting companies could make our common stock less attractive to investors.

In addition to qualifying as an emerging growth company, First Seacoast Bancorp, Inc. qualifies as a “smaller reporting company” under the federal securities laws. For as long as it continues to be a smaller reporting company, it may choose to take advantage of exemptions from various reporting requirements applicable to public companies that are not available to companies that are not smaller reporting companies, including, but not limited to, reduced financial disclosure obligations and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. 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 the Stock Offering and the Exchange

The market value of First Seacoast Bancorp, Inc. common stock received in the share exchange may be less than the market value of First Seacoast Bancorp common stock exchanged.

The number of shares of First Seacoast Bancorp, Inc. common stock you receive will be based on an exchange ratio that will be determined as of the date of completion of the conversion and stock offering. The exchange ratio will be based on the percentage of First Seacoast Bancorp common stock held by the public before the completion of the conversion and stock offering, the final independent appraisal of First Seacoast Bancorp, Inc. common stock prepared by Feldman Financial Advisors, Inc. and the number of shares of common stock sold in the stock offering. The exchange ratio will ensure that public stockholders of First Seacoast Bancorp common stock will own the same percentage of First Seacoast Bancorp, Inc. common stock after the conversion and stock offering as they owned of First Seacoast Bancorp common stock immediately before completion of the conversion and stock offering (excluding any new shares purchased by them in the stock offering and their receipt of cash in lieu of fractional exchange shares, and adjusted to reflect certain assets held by First Seacoast Bancorp, MHC). The exchange ratio will not depend on the market price of First Seacoast Bancorp common stock.

The exchange ratio ranges from 0.8358 shares at the minimum of the offering range and 1.1308 shares at the maximum of the offering range of First Seacoast Bancorp, Inc. common stock per share of First Seacoast Bancorp common stock. Shares of First Seacoast Bancorp, Inc. common stock issued in the share exchange will have an initial value of $10.00 per share. Depending on the exchange ratio and the market value of First Seacoast Bancorp common stock at the time of the exchange, the initial market value of the First Seacoast Bancorp, Inc. common stock that you receive in the share exchange could be less than the market value of the First Seacoast Bancorp common stock that you currently own. Based on the $10.44 per share closing price of First Seacoast Bancorp common stock as November 14, 2022 (the last practicable date before the printing of this proxy statement/prospectus), the initial value of the First Seacoast Bancorp, Inc. common stock you receive in the share exchange would be less than the market value of the First Seacoast Bancorp common stock you currently own.

There may be a decrease in stockholders’ rights for existing stockholders of First Seacoast Bancorp.

As a result of the conversion and stock offering, existing stockholders of First Seacoast Bancorp will become stockholders of First Seacoast Bancorp, Inc. In addition to the provisions discussed below that may discourage takeover attempts that may be favored by stockholders, some rights of stockholders of First Seacoast Bancorp, Inc. will be reduced compared to the rights stockholders currently have in First Seacoast Bancorp. The reduction in stockholder rights results from differences between the federal and Maryland chartering documents and bylaws, and from differences between federal and Maryland law. Many of the differences in stockholder rights under the articles of incorporation and bylaws of First Seacoast Bancorp, Inc. are not mandated by Maryland law but have been chosen by management as being in the best interests of First Seacoast Bancorp, Inc. and its stockholders. The articles of incorporation and bylaws of First Seacoast Bancorp, Inc. include the following provisions: (i) greater lead time required for stockholders to submit proposals for new business or to nominate directors; (ii) approval by at least 80% of the outstanding shares of capital stock entitled to vote generally is required to amend the bylaws and

 

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certain provisions of the articles of incorporation; (iii) a limit on voting rights of shares beneficially owned in excess of 10% of First Seacoast Bancorp, Inc.’s outstanding voting stock; (iv) director qualifications; and (v) a greater percentage of outstanding shares that is required for stockholders to call a special meeting. See “Comparison of Stockholders’ Rights For Existing Stockholders of First Seacoast Bancorp” for a discussion of these differences.

The future price of the 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 many 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 First Seacoast Bancorp, Inc. and the outlook for the financial services industry in general. Price fluctuations in our common stock may be unrelated to our operating performance.

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

We intend to invest between $13.2 million and $18.1 million of the net proceeds of the stock offering in First Seacoast Bank. We may use the remaining net proceeds to invest in short-term investments and for general corporate purposes, including repurchasing shares of our common stock and paying dividends. We also expect to use a portion of the net proceeds we retain to fund a loan to our employee stock ownership plan to purchase shares of common stock in the stock offering. First Seacoast Bank may use the net proceeds it receives to fund new loans, paydown wholesale borrowings, expand its retail banking franchise by establishing or acquiring new branches or by acquiring other financial institutions or other financial services companies, or for other general corporate purposes. However, with the exception of funding the loan to the employee stock ownership plan, we have not allocated specific amounts of the net proceeds for any of these purposes, and we will have significant flexibility in determining the amount of the net proceeds we apply to different uses and when we apply or reinvest such proceeds. Also, certain of these uses, such as opening new branches or acquiring other financial institutions, may require the approval of the Office of the Comptroller of the Currency or the Federal Reserve Board. 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 would reduce our profitability and may adversely affect the value of our common stock.

We do not have strong earnings and will have a relatively high capital level after the completion of the conversion and stock offering. We expect our return on equity will be low following the stock offering, which could negatively affect the trading price of our shares of common stock.

Net income divided by average stockholders’ equity, known as “return on equity,” is a ratio many investors use to compare the performance of financial institutions. Our return on average equity was 2.02% for the six months ended June 30, 2022, 4.38% for the year ended December 31, 2021, and 1.85% for the year ended December 31, 2020. Our average equity to average assets was 11.36% for the six months ended June 30, 2022, 12.48% for the year ended December 31, 2021, and 12.91% for the year ended December 31, 2020. At June 30, 2022, our total stockholders’ equity was $51.9 million. Assuming the completion of the conversion and stock offering, our pro forma stockholders’ equity at June 30, 2022 is estimated to range from $73.1 million at the minimum of the offering range to $81.7 million at the maximum of the offering range. We expect our return on equity to be lower than our peers unless and until we are able to leverage our capital including the additional capital from the stock offering. Our return on equity also will be negatively affected by added expenses associated with our employee stock ownership plan and the stock-based benefit plans we intend to adopt. Unless and until we can increase our earnings and leverage our capital, including the capital to be raised in the conversion and stock offering, we expect that our return on equity will be low, which may reduce the trading price of our shares of common stock.

 

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

We intend to adopt one or more new stock-based benefit plans after the conversion and stock offering, 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 plans. The actual amount of these new stock-related compensation and benefit expenses will depend on the number of options and stock awards granted under the plans, 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 stock-based benefit plans within 12 months following the conversion and stock offering, the shares of common stock reserved for issuance pursuant to awards of restricted stock and grants of options under such plans would be limited to 4% and 10%, respectively, of the total shares of our common stock sold in the stock offering. If we adopt stock-based benefit plans more than 12 months after the completion of the conversion and stock offering, we may 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 employee stock ownership plan 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 stock offering for our employee stock ownership plan and for our new stock-based benefit plans, assuming such plans had been implemented at the beginning of the year, has been estimated to be approximately $728,000 ($628,000 after tax) 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 stock-based benefit plans may dilute your ownership interest. Historically, stockholders have approved these stock-based benefit plans.

We intend to adopt one or more new stock-based benefit plans following the stock offering. These plans 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 these plans 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 plans through open market purchases, stockholders would experience a 5.24% 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 shares sold in the stock offering, and all such stock options are exercised, and a 2.14% 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 4% of the shares sold in the stock offering. Such dilution would also reduce earnings per share. If we adopt the plans more than 12 months following the conversion and stock offering, new stock-based benefit plans would not be subject to these limitations and stockholders could experience greater dilution.

Although the implementation of new stock-based benefit plans 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.

 

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We have not determined when we will adopt one or more new stock-based benefit plans. Stock-based benefit plans adopted more than 12 months following the completion of the conversion and stock offering 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 stock-based benefit plans more than 12 months following the completion of the conversion and stock offering, then grants of shares of common stock or stock options under our proposed stock-based benefit plans may exceed 4% and 10%, respectively, of shares of common stock sold in the stock offering. Stock-based benefit plans that provide for awards in excess of these amounts would increase our costs beyond the amounts estimated in “—Our stock-based benefit plans will increase our expenses and reduce our income.” Stock-based benefit plans that provide for awards in excess of these amounts could also result in dilution to stockholders in excess of that described in “—The implementation of stock-based benefit plans 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.

Various factors may make takeover attempts more difficult to achieve.

Certain provisions of our articles of incorporation and bylaws and federal banking laws, including regulatory approval requirements, could make it more difficult for a third party to acquire control of First Seacoast Bancorp, Inc. without our board of directors’ approval. Under regulations applicable to the conversion and stock offering, for a period of three years following completion of the conversion and stock offering, 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 savings and loan 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 and other factors may make it more difficult for companies or persons to acquire control of First Seacoast Bancorp, Inc. without the consent of our board of directors. 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 thus could adversely affect the market price of our common stock.

For additional information, see “Restrictions on Acquisition of First Seacoast Bancorp, Inc.” and “Management—Benefits to be Considered Following Completion of the Conversion and Stock Offering.”

Our articles of incorporation provide that, subject to limited exception, 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 First Seacoast Bancorp, Inc. provide that, unless First Seacoast Bancorp, Inc. 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 First Seacoast Bancorp, Inc., (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of First Seacoast Bancorp, Inc. to First Seacoast Bancorp, Inc. or First Seacoast Bancorp, Inc.’s 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 shall be a state or federal court located within the State of Maryland, in all cases subject to the court’s having personal jurisdiction over the indispensible 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 First Seacoast Bancorp, Inc. 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.

 

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

We expect that our common stock will be listed on the Nasdaq Capital Market under the symbol “FSEA” upon the completion of the conversion and 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. Purchasers of common stock in this offering should have long-term investment intent and should recognize that there may be a limited trading market in the common stock. This may make it difficult to sell the common stock after the completion of the conversion and stock offering and may have an adverse impact on the price at which the common stock can be sold.

You may not revoke your decision to purchase First Seacoast Bancorp, Inc. common stock in the subscription offering or 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 any syndicated community offering. Because completion of the conversion and stock offering will be subject to regulatory approvals and an update of the independent appraisal prepared by Feldman Financial Advisors, Inc., 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 January 30, 2023, or the number of shares to be sold in the stock offering is increased to more than 3,795,000 shares or decreased to less than 2,805,000 shares.

INFORMATION ABOUT THE SPECIAL MEETING

General

This proxy statement/prospectus is being furnished to you in connection with the solicitation by the board of directors of First Seacoast Bancorp of proxies to be voted at the special meeting of stockholders to be held at the main office of First Seacoast Bank, located at 633 Central Avenue, Dover, New Hampshire, on December 29, 2022, at 2:00 p.m., Eastern time, and any adjournment or postponement thereof.

The purpose of the special meeting is to consider and vote upon the Amended and Restated Plan of Conversion and Reorganization of First Seacoast Bancorp, MHC (the “plan of conversion”).

In addition, stockholders will vote on a proposal to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the proposal. Stockholders also will vote on informational proposals with respect to the articles of incorporation of First Seacoast Bancorp, Inc.

Voting for or against approval of the plan of conversion includes a vote for or against the conversion of First Seacoast Bancorp, MHC to a stock holding company as contemplated by the plan of conversion. Voting in favor of the plan of conversion will not obligate you to purchase any shares of common stock in the stock offering and will not affect the balance, interest rate or federal deposit insurance of any deposits at First Seacoast Bank.

 

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Who Can Vote at the Meeting

You are entitled to vote your First Seacoast Bancorp common stock if our records show that you held your shares as of the close of business on November 3, 2022. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name and these proxy materials are being forwarded to you by your broker or nominee. As the beneficial owner, you have the right to direct your broker or nominee how to vote.

As of the close of business on November 3, 2022, there were 6,064,891 shares of First Seacoast Bancorp common stock outstanding. Each share of common stock has one vote.

Attending the Meeting

If you are a stockholder as of the close of business on November 3, 2022, you may attend the meeting. However, if you hold your shares in street name, you will need proof of ownership to be admitted to the meeting. A recent brokerage statement or a letter from a bank or broker are examples of proof of ownership. If you want to vote your shares of First Seacoast Bancorp common stock held in street name in person at the meeting, you will have to get a written proxy in your name from the broker, bank or other nominee who holds your shares.

Quorum; Vote Required

The special meeting will be held only if there is a quorum. A quorum exists if a majority of the outstanding shares of common stock entitled to vote, represented in person or by proxy, is present at the meeting. If you return valid proxy instructions or attend the meeting in person, your shares will be counted for purposes of determining whether there is a quorum, even if you abstain from voting. Broker non-votes also will be counted for purposes of determining the existence of a quorum. A broker non-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner.

Proposal 1: Approval of the Plan of Conversion and Reorganization. We must obtain the affirmative vote of the holders of (i) two-thirds of the outstanding common stock of First Seacoast Bancorp entitled to be cast at the special meeting, including shares held by First Seacoast Bancorp, MHC, and (ii) a majority of the outstanding shares of common stock of First Seacoast Bancorp entitled to be cast at the special meeting, other than shares held by First Seacoast Bancorp, MHC.

Proposal 2: Approval of the adjournment of the special meeting. We must obtain the affirmative vote of at least a majority of the votes cast by First Seacoast Bancorp stockholders entitled to vote at the special meeting to adjourn the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the proposal to approve the plan of conversion.

Informational Proposals 3 through 5: Approval of certain provisions in First Seacoast Bancorp, Inc.’s articles of incorporation. The provisions of First Seacoast Bancorp, Inc.’s articles of incorporation that are summarized as informational proposals were approved as part of the process in which the board of directors of First Seacoast Bancorp approved the plan of conversion. These proposals are informational only because the Federal Reserve Board’s regulations governing mutual-to-stock conversions do not provide for votes on matters other than the plan of conversion. While we are asking you to vote with respect to each of the informational proposals, the proposed provisions for which an informational vote is requested will become effective if stockholders approve the plan of conversion, regardless of whether stockholders vote to approve any or all of the informational proposals. The provisions of First Seacoast Bancorp, Inc.’s articles of incorporation that are summarized as informational proposals may have the effect of deterring or rendering more difficult attempts by third parties to obtain control of First Seacoast Bancorp, Inc., if such attempts are not approved by the board of directors, or may make the removal of the board of directors or management, or the appointment of new directors, more difficult.

 

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Other Matters. We must obtain the affirmative vote of the majority of the votes cast by holders of outstanding shares of common stock of First Seacoast Bancorp. At this time, we know of no other matters that may be presented at the special meeting.

Shares Held by First Seacoast Bancorp, MHC and Our Officers and Directors

As of November 3, 2022, First Seacoast Bancorp, MHC beneficially owned 3,345,925 shares of First Seacoast Bancorp common stock, or approximately 55.2% of our outstanding shares. We expect that First Seacoast Bancorp, MHC will vote all of its shares in favor of each of Proposal 1 – Approval of the Plan of Conversion and Reorganization, Proposal 2—Approval of the adjournment of the special meeting, and Informational Proposals 3 through 5.

As of November 3, 2022, our officers and directors beneficially owned 87,462 shares of First Seacoast Bancorp common stock, or approximately 1.4% of our outstanding shares and 3.2% of the outstanding shares held by stockholders other than First Seacoast Bancorp, MHC.

Voting by Proxy

Our board of directors is sending you this proxy statement/prospectus to request that you allow your shares of First Seacoast Bancorp common stock to be represented at the special meeting by the persons named in the enclosed proxy card. All shares of First Seacoast Bancorp common stock represented at the meeting by properly executed and dated proxies will be voted according to the instructions indicated on the proxy card. If you sign, date and return a proxy card without giving voting instructions, your shares will be voted as recommended by our board of directors. Our board of directors recommends that you vote “FOR” approval of the plan of conversion, “FOR” approval of the adjournment of the special meeting, if necessary, and “FOR” approval of each of the Informational Proposals 3 through 5.

If any matters not described in this proxy statement/prospectus are properly presented at the special meeting, the board of directors will use their judgment to determine how to vote your shares. We do not know of any other matters to be presented at the special meeting.

If your First Seacoast Bancorp common stock is held in street name, you will receive instructions from your broker, bank or other nominee that you must follow to have your shares voted. Your broker, bank or other nominee may allow you to deliver your voting instructions via the telephone or the Internet. Refer to the instruction form provided by your broker, bank or other nominee that accompanies this proxy statement/prospectus.

Revocability of Proxies

You may revoke your proxy at any time before the vote is taken at the special meeting. To revoke your proxy, you must advise the corporate secretary of First Seacoast Bancorp in writing before your common stock has been voted at the special meeting, deliver a signed, later-dated proxy or attend the special meeting and vote your shares in person. Attendance at the special meeting will not in itself constitute revocation of your proxy.

Solicitation of Proxies

This proxy statement/prospectus and the accompanying proxy card are being furnished to you in connection with the solicitation of proxies for the special meeting by the board of directors. First Seacoast Bancorp will pay the costs of soliciting proxies from its stockholders. To the extent necessary to permit approval of the plan of conversion and the other proposals being considered, Laurel Hill Advisory Group, LLC, our proxy solicitor, and directors, officers or employees of First Seacoast Bancorp and First Seacoast Bank may solicit proxies by mail, telephone and other forms of communication. We will reimburse such persons for their reasonable out-of-pocket expenses incurred in connection with such solicitation. For its services as information agent and stockholder proxy solicitor, we will pay to Laurel Hill Advisory Group, LLC $4,500 plus out-of-pocket expenses and charges for telephone calls made and received in connection with the solicitation.

 

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We will also reimburse banks, brokers, nominees and other fiduciaries for the expenses they incur in forwarding the proxy materials to you.

Participants in the Employee Stock Ownership Plan and/or the 401(k) Plan

If you participate in First Seacoast Bank Employee Stock Ownership Plan, you will receive a voting instruction form that reflects all shares you may direct the trustees to vote on your behalf under the plan. Under the terms of the Employee Stock Ownership Plan, the Employee Stock Ownership Plan trustee votes all shares held by the Employee Stock Ownership Plan, but each Employee Stock Ownership Plan participant may direct the trustee how to vote the shares of common stock allocated to his or her account. The Employee Stock Ownership Plan trustee, subject to the exercise of its fiduciary duties, will vote all unallocated shares of First Seacoast Bancorp common stock held by the Employee Stock Ownership Plan and allocated shares for which no voting instructions are received in the same proportion as shares for which it has received timely voting instructions. The deadline for returning your voting instructions to the trustee is December 22, 2022.

If you hold shares of First Seacoast Bancorp common stock in the First Seacoast Bank 401(k) Plan, you will receive a voting instruction card that reflects all shares that you may direct the 401(k) Plan trustee to vote on your behalf under the 401(k) Plan. Under the terms of the 401(k) Plan, you may direct the 401(k) Plan trustee how to vote the shares allocated to your account. If the 401(k) Plan trustee does not receive your voting instructions, the 401(k) Plan trustee will be instructed to vote your shares in the same proportion as the voting instructions received from other 401(k) Plan participants. The deadline for returning your voting instructions to the trustee is December 22, 2022.

The board of directors unanimously recommends that you sign, date and mark the enclosed proxy “FOR” approval of each of the above described proposals, including the adoption of the plan of conversion, and return it in the enclosed envelope today. Voting the proxy card will not prevent you from voting in person at the special meeting. For information on submitting your proxy, refer to the instructions on the enclosed proxy card.

Your prompt vote is very important. Failure to vote will have the same effect as voting against the plan of conversion.

PROPOSAL 1 — APPROVAL OF THE PLAN OF CONVERSION AND REORGANIZATION

The boards of directors of First Seacoast Bancorp and First Seacoast Bancorp, MHC have approved the Amended and Restated Plan of Conversion and Reorganization of First Seacoast Bancorp, MHC, referred to herein as the “plan of conversion.” The plan of conversion must also be approved by the members of First Seacoast Bancorp, MHC and the stockholders of First Seacoast Bancorp, and is subject to the satisfaction of certain other conditions. Special meetings of members and stockholders have been called for this purpose. The approval of the Federal Reserve Board is required before we can consummate the conversion and stock offering. We have also filed an application with the Office of the Comptroller of the Currency with respect to an amendment to First Seacoast Bank’s charter, and the approval of the Office of the Comptroller of the Currency is required before we can consummate the conversion and stock offering and issue shares of common stock. Any approval by the Federal Reserve Board or the Office of the Comptroller of the Currency does not constitute a recommendation or endorsement of the plan of conversion.

General

Pursuant to the plan of conversion, our organization will convert from the mutual holding company form of organization to the fully stock form. Currently, First Seacoast Bank is a wholly-owned subsidiary of First Seacoast Bancorp and First Seacoast Bancorp, MHC owns approximately 55.2% of First Seacoast Bancorp’s common stock. The remaining 44.8% of First Seacoast Bancorp’s common stock is owned by public stockholders. As a result of the conversion and stock offering, a newly formed company, known as First Seacoast Bancorp, Inc., will become the holding company of First Seacoast Bank. Each share of First Seacoast Bancorp common stock owned by the public

 

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will be exchanged for between 0.8358 shares (at the minimum of the offering range) and 1.1308 shares (at the maximum of the offering range) of First Seacoast Bancorp, Inc. common stock, so that First Seacoast Bancorp’s existing public stockholders will own the same percentage of First Seacoast Bancorp, Inc. common stock as they owned of First Seacoast Bancorp’s common stock immediately before the conversion and stock offering (excluding any new shares purchased by them in the stock offering and their receipt of cash in lieu of fractional exchange shares, and adjusted to reflect the value of certain assets held by First Seacoast Bancorp, MHC). The actual number of shares that you will receive will depend on the percentage of First Seacoast Bancorp common stock owned by the public immediately before the completion of the conversion and stock offering, the final independent appraisal of First Seacoast Bancorp, Inc. and the number of shares of First Seacoast Bancorp, Inc. common stock sold in the stock offering described in the following paragraph. It will not depend on the market price of First Seacoast Bancorp common stock.

The board of directors considered the possibility that stockholders could receive less than the current market price of First Seacoast Bancorp when they exchange their shares for shares of First Seacoast Bancorp, Inc. common stock depending on the amount of stock sold in the stock offering. However, the board of directors believes that stockholders should vote to approve the plan of conversion because the long-term benefits to stockholders of completing the conversion from the mutual holding company form of organization to the fully stock form of organization outweigh any short-term decline in market price that may occur. The board of directors believes that the completion of the conversion and stock offering will increase our capital and support continued growth and future business activities which will increase long-term stockholder value.

Concurrently with the exchange offer, First Seacoast Bancorp, Inc. is offering up to 3,795,000 shares of common stock for sale, representing the ownership interest of First Seacoast Bancorp, MHC in First Seacoast Bancorp, to eligible depositors and borrowers of First Seacoast bank and to the public at a price of $10.00 per share. After the conversion and stock offering are completed, First Seacoast Bank will be a wholly-owned subsidiary of First Seacoast Bancorp, Inc., and 100% of the common stock of First Seacoast Bancorp, Inc. will be owned by public stockholders. As a result of the conversion and stock offering, First Seacoast Bancorp and First Seacoast Bancorp, MHC will cease to exist.

First Seacoast Bancorp, Inc. intends to contribute between $13.2 million and $18.1 million of the net proceeds to First Seacoast Bank and retain between $11.0 million and $15.1 million of the net proceeds. The conversion and stock offering will be consummated only upon the issuance of at least the minimum number of shares of our common stock offered pursuant to the plan of conversion.

The plan of conversion provides that we will offer shares of common stock in a “subscription offering” in the following descending order of priority:

 

(i)

To depositors with accounts at First Seacoast Bank with aggregate balances of at least $50 at the close of business on June 30, 2021.

 

(ii)

To our tax-qualified employee benefit plans (including First Seacoast Bank’s employee stock ownership plan), which will receive, without payment therefor, nontransferable subscription rights to purchase in the aggregate up to 10% of the shares of common stock sold in the stock offering. We expect our employee stock ownership plan to purchase 8% of the shares of common stock sold in the stock offering, although we reserve the right to have the employee stock ownership plan purchase more than 8% of the shares sold in the stock offering to the extent necessary to complete the stock offering at the minimum of the offering range.

 

(iii)

To depositors with accounts at First Seacoast Bank with aggregate balances of at least $50 at the close of business on September 30, 2022.

 

(iv)

To depositors of First Seacoast Bank at the close of business on November 3, 2022, and to borrowers of First Seacoast Bank as of the close of business on July 16, 2019, whose borrowings remained outstanding as of the close of business on November 3, 2022.

 

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Shares of common stock not purchased in the subscription offering will 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 the New Hampshire counties of Rockingham and Strafford. To the extent shares of common stock remain available, we will also offer the shares to First Seacoast Bancorp’s public stockholders as of the close of business on November 3, 2022. The community offering may begin concurrently with the subscription offering. We also may offer for sale shares of common stock not purchased in the subscription offering or the community offering through a syndicated offering. Keefe, Bruyette & Woods, Inc. will act as sole book-running manager for the syndicated offering. We have the right to accept or reject, in our sole discretion, orders received in the community offering or syndicated offering. Any determination to accept or reject stock orders in the community offering or syndicated offering will be based on the facts and circumstances available to management at the time of the determination.

We determined the number of shares of common stock to be offered for sale in the stock offering based upon an independent valuation of the estimated pro forma market value of First Seacoast Bancorp, Inc. All shares of common stock to be sold in the stock offering will be sold at $10.00 per share. Investors will not be charged a commission to purchase shares of common stock in the stock offering. The independent valuation will be updated and the final number of shares of common stock to be issued in the stock offering will be determined at the completion of the stock offering. See “—Stock Pricing and Number of Shares to be Issued” for more information as to the determination of the estimated pro forma market value of the common stock.

A copy of the plan of conversion is available for inspection at each office of First Seacoast Bank and at the Federal Reserve Bank of Boston. The plan of conversion is also filed as an exhibit to First Seacoast Bancorp, MHC’s application to convert from mutual to stock form of which this proxy statement/prospectus is a part, copies of which may be obtained from the Federal Reserve Board. The plan of conversion is also filed as an exhibit to the registration statement First Seacoast Bancorp, Inc. has filed with the Securities and Exchange Commission, of which this proxy statement/prospectus is a part, copies of which may be obtained from the Securities and Exchange Commission or online at the Securities and Exchange Commission’s website (www.sec.gov). See “Where You Can Find Additional Information.”

The board of directors unanimously recommends that you vote “FOR” approval of the Plan of Conversion and Reorganization of First Seacoast Bancorp, MHC.

Reasons for the Conversion and Stock Offering

Our primary reasons for undertaking the conversion and stock offering are to:

 

•

Support our planned growth and strengthen our regulatory capital position with the additional capital we will raise in the stock offering. While First Seacoast Bank exceeds all regulatory capital requirements to be categorized as “well-capitalized,” the proceeds from the stock offering will significantly augment our capital position and enable us to support our planned growth by increasing our regulatory loans-to-one borrower limit. The augmented capital will be essential to the continued implementation of our business strategy.

 

•

Transition our organization to a stock holding company structure, which gives us greater flexibility to access the capital markets compared to our existing mutual holding company structure. The stock holding company structure is a more flexible form of organization that will give us greater flexibility to access the capital markets through possible future equity and debt offerings, although we have no current plans, agreements or understandings regarding any additional securities offerings.

 

•

Improve the liquidity of our shares of common stock. The larger number of shares that will be outstanding after completion of the conversion and stock offering is expected to result in a more liquid and active market for First Seacoast Bancorp, Inc. common stock. A more liquid and active market will make it easier for our stockholders to buy and sell our common stock and will give us greater flexibility in implementing capital management strategies.

 

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•

Facilitate our stock holding company’s ability to pay dividends to our public stockholders. Current regulations of the Federal Reserve Board substantially restrict the ability of recently formed mutual holding companies, such as First Seacoast Bancorp, MHC, to waive dividends declared by their subsidiaries. Accordingly, because any dividends declared and paid by First Seacoast Bancorp would have to be paid to First Seacoast Bancorp, MHC along with all other stockholders, the amount of dividends available for all other stockholders will be less than if First Seacoast Bancorp, MHC were to waive the receipt of dividends. The conversion and stock offering will eliminate our mutual holding company structure and will facilitate our ability to pay dividends to all stockholders of First Seacoast Bancorp, Inc., subject to legal, regulatory and financial considerations applicable to all financial institutions. See “Our Dividend Policy.”

 

•

• Facilitate future mergers and acquisitions. Although we do not currently have any understandings or agreements regarding any specific acquisition transaction, the stock holding company structure will give us greater flexibility to structure, and make us a more attractive and competitive bidder for, mergers and acquisitions of other financial institutions or business lines as opportunities may arise. The additional capital raised in the stock offering also will enable us to consider larger merger transactions if they may arise. Although we intend to remain an independent financial institution, the stock holding company structure may make us a more attractive acquisition candidate for other institutions. Applicable regulations prohibit the acquisition of First Seacoast Bancorp, Inc. for three years following completion of the conversion and stock offering, and also prohibit anyone from acquiring or offering to acquire more than 10% of our stock without regulatory approval.

Approvals Required

The affirmative vote of a majority of the total votes eligible to be cast by the members of First Seacoast Bancorp, MHC (i.e., depositors and certain borrowers of First Seacoast Bank) is required to approve the plan of conversion. First Seacoast Bancorp, MHC has scheduled a special meeting of members for December 29, 2022, and intends to send a proxy statement to the members of First Seacoast Bancorp, MHC eligible to vote at the special meeting to solicit their votes in favor of the plan of conversion. By their approval of the plan of conversion, the members of First Seacoast Bancorp, MHC will also be approving the merger of First Seacoast Bancorp, MHC with and into First Seacoast Bancorp. The affirmative vote of the holders of at least two-thirds of the outstanding shares of common stock of First Seacoast Bancorp and the affirmative vote of the holders of a majority of the outstanding shares of common stock of First Seacoast Bancorp owned by the public stockholders of First Seacoast Bancorp (i.e., all stockholders other than First Seacoast Bancorp, MHC) also are required to approve the plan of conversion. First Seacoast Bancorp has scheduled a special meeting of stockholders for December 29, 2022, and intends to send a proxy statement to the stockholders of First Seacoast Bancorp eligible to vote at the special meeting to solicit their votes in favor of the plan of conversion. We have filed applications with the Federal Reserve Board with respect to the conversion and stock offering and with respect to First Seacoast Bancorp, Inc. becoming the savings and loan holding company for First Seacoast Bank. The approval of the Federal Reserve Board is required before we can consummate the conversion and stock offering. The Office of the Comptroller of the Currency must also provide its non-objection to an amendment to First Seacoast Bank’s charter to establish a liquidation account. The non-objection of the Office of the Comptroller of the Currency is required before we can consummate the conversion and stock offering.

Share Exchange Ratio for Current Stockholders

At the completion of the conversion and stock offering, each publicly held share of First Seacoast Bancorp common stock will be converted automatically into the right to receive a number of shares of First Seacoast Bancorp, Inc. common stock. The number of shares of common stock will be determined pursuant to the exchange ratio, which ensures that the public stockholders will own the same percentage of common stock in First Seacoast

 

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Bancorp, Inc. after the conversion and stock offering as they held in First Seacoast Bancorp immediately before the conversion and stock offering, exclusive of their purchase of additional shares of common stock in the stock offering and their receipt of cash in lieu of fractional exchange shares, and adjusted downward to reflect certain assets held by First Seacoast Bancorp, MHC. The exchange ratio will not depend on the market value of First Seacoast Bancorp common stock. The exchange ratio will be based on the percentage of First Seacoast Bancorp common stock owned by the public stockholders, the independent valuation of First Seacoast Bancorp, Inc. prepared by Feldman Financial Advisors, Inc., and the number of shares of common stock issued in the stock offering. The exchange ratio is expected to range from 0.8358 shares of First Seacoast Bancorp, Inc. for each publicly held share of First Seacoast Bancorp at the minimum of the offering range to 1.1308 shares of First Seacoast Bancorp, Inc. common stock for each publicly held share of First Seacoast Bancorp at the maximum of the offering range.

The following table shows how the exchange ratio will adjust, based on the appraised value of First Seacoast Bancorp, Inc. as of August 26, 2022, assuming the public stockholders of First Seacoast Bancorp own 55.2% of the outstanding shares of First Seacoast Bancorp common stock and First Seacoast Bancorp, MHC has assets of $100,000 immediately before the completion of the conversion and stock offering. The table also shows how many shares of First Seacoast Bancorp, Inc. a hypothetical owner of First Seacoast Bancorp common stock would receive in the exchange for 100 shares of common stock owned at the completion of the conversion and stock offering, depending on the number of shares issued in the stock offering.

 

		Shares to be Sold in the Stock Offering								Shares of First Seacoast Bancorp, Inc. to be Issued in Exchange for Shares of  First Seacoast Bancorp								Total Shares of Common Stock to be Issued in Exchange and Offering				Exchange Ratio				Equivalent Value of Shares Based Upon Offering Price (1)				Equivalent Pro Forma Tangible Book Value Per Exchanged Share (2)				Whole Shares to be Received for 100 Existing Shares (3)
		Amount				Percent				Amount				Percent
Minimum			2,805,000				55.2	%			2,272,492				44.8	%			5,077,492				0.8358			$	8.36			$	11.98				83
Midpoint			3,300,000				55.2				2,673,520				44.8				5,973,520				0.9833				9.83				12.69				98
Maximum			3,795,000				55.2				3,074,548				44.8				6,869,548				1.1308				11.31				13.40				113

 

(1)	Represents the value of shares of First Seacoast Bancorp, Inc. common stock to be received in the conversion and stock offering by a holder of one share of First Seacoast Bancorp, pursuant to the exchange ratio, based upon the $10.00 per share offering price.

(2)	Represents the pro forma tangible book value per share at each level of the offering range multiplied by the respective exchange ratio. At June 30, 2022, First Seacoast Bancorp’s tangible book value per share was $8.50.

(3)	Cash will be paid in lieu of fractional shares.

Options to purchase shares of First Seacoast Bancorp common stock that are outstanding immediately before the completion of the conversion and stock offering will be converted into options to purchase shares of First Seacoast Bancorp, Inc. common stock, with the number of shares subject to the option and the exercise price per share to be adjusted based upon the exchange ratio. The aggregate exercise price, term and vesting period of the options will remain unchanged.

Effects of the Conversion and Stock Offering

Continuity. The conversion and stock offering will not affect the normal business of First Seacoast Bank of accepting deposits and making loans. First Seacoast Bank will continue to be a federally-chartered savings bank and will continue to be regulated by the Office of the Comptroller of the Currency. After the conversion and stock offering, First Seacoast Bank will continue to offer existing services to depositors, borrowers and other customers. The directors of First Seacoast Bancorp serving at the time of the conversion and stock offering will be the directors of First Seacoast Bancorp, Inc. upon the completion of the conversion and stock offering.

Effect on Deposit Accounts. Pursuant to the plan of conversion, each depositor of First Seacoast Bank at the time of the conversion and stock offering will automatically continue as a depositor after the conversion, and the deposit balance, interest rate and other terms of such deposit accounts will not change as a result of the conversion and stock offering. Each such account will be insured by the Federal Deposit Insurance Corporation to the same extent as before the conversion and stock offering. Depositors will continue to hold their existing certificates, passbooks and other evidences of their accounts.

 

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Effect on Loans. No loan outstanding from First Seacoast Bank will be affected by the conversion and stock offering, and the amount, interest rate, maturity and security for each loan will remain as it was contractually fixed before the conversion and stock offering.

Effect on Voting Rights of Depositors and Borrowers. Depositors and certain borrowers of First Seacoast Bank are members of, and have voting rights in, First Seacoast Bancorp, MHC, as to all matters requiring a vote of members, including the election of directors of First Seacoast Bancorp, MHC, proposed amendments to the charter of First Seacoast Bancorp, MHC, and the vote on the plan of conversion. Upon completion of the conversion and stock offering, depositors and borrowers will no longer have voting rights. All voting rights in First Seacoast Bank will be vested in First Seacoast Bancorp, Inc. as the sole stockholder of First Seacoast Bank. The stockholders of First Seacoast Bancorp, Inc. will possess exclusive voting rights with respect to First Seacoast common stock.

Tax Effects. We have received an opinion of counsel with regard to the federal income tax consequences of the conversion and stock offering and an opinion of our tax advisor with regard to the New Hampshire income tax consequences of the conversion and stock offering to the effect that it will not be a taxable transaction for federal or state income tax purposes to First Seacoast Bancorp, MHC, First Seacoast Bancorp, First Seacoast Bank, the public stockholders of First Seacoast Bancorp (except for cash paid for fractional shares), eligible account holders, supplemental eligible account holders, or other members. See “—Material Income Tax Consequences.”

Effect on Liquidation Rights. Each depositor in First Seacoast Bank has both a deposit account in First Seacoast Bank and a pro rata ownership interest in the net worth of First Seacoast Bancorp, MHC based upon the deposit balance in his or her account. This ownership interest is tied to the depositor’s account and has no tangible market value separate from the deposit account. This ownership interest may only be realized in the event of a complete liquidation of First Seacoast Bancorp, MHC and First Seacoast Bank; however, there has never been a liquidation of a solvent mutual holding company. Any depositor who opens a deposit account receives a pro rata ownership interest in First Seacoast Bancorp, MHC without any additional payment beyond the amount of the deposit. A depositor who reduces or closes his or her account receives a portion or all of the balance in the deposit account but nothing for his or her ownership interest in the net worth of First Seacoast Bancorp, MHC, which is lost to the extent that the balance in the account is reduced or closed.

Consequently, depositors in a stock depository institution that is a subsidiary of a mutual holding company normally have no way of realizing the value of their ownership interest, which would be realizable only in the unlikely event that First Seacoast Bancorp, MHC and First Seacoast Bank are liquidated completely. If this occurs, the depositors of record at that time, as owners, would share pro rata in any residual surplus and reserves of First Seacoast Bancorp, MHC after other claims, including claims of depositors to the amounts of their deposits, are paid.

Under the plan of conversion, Eligible Account Holders (as defined below) and Supplemental Eligible Account Holders (as defined below) will receive an interest in liquidation accounts maintained by First Seacoast Bancorp, Inc. and First Seacoast Bank in an aggregate amount equal to (i) First Seacoast Bancorp, MHC’s ownership interest in First Seacoast Bancorp’s total stockholders’ equity as of the date of the latest statement of financial condition included in this proxy statement/prospectus, plus (ii) the value of the net assets of First Seacoast Bancorp, MHC as of the date of the latest statement of financial condition of First Seacoast Bancorp, MHC before the consummation of the conversion and stock offering (excluding its ownership of First Seacoast Bancorp). First Seacoast Bancorp, Inc. and First Seacoast Bank will maintain the liquidation accounts for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain deposit accounts in First Seacoast Bank after the conversion and stock offering. The liquidation accounts are intended to preserve for Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain their deposit accounts with First Seacoast Bank a liquidation interest in the residual net worth, if any, of First Seacoast Bancorp, Inc. or First Seacoast Bank (after the payment of all creditors, including depositors to the full extent of their deposit accounts) in the event of a liquidation of (a) First Seacoast Bancorp, Inc. and First Seacoast Bank or (b) First Seacoast Bank. See “—Liquidation Rights.”

 

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Under the regulations of the Federal Reserve Board which govern mutual-to-stock conversions of mutual holding companies, non-interest bearing demand deposit accounts do not meet the definition of qualifying deposits, and, therefore, a holder of a non-interest bearing demand deposit account would not qualify as an eligible account holder or as a supplemental eligible account holder for purposes of obtaining a purchase priority in the stock offering or having the right to an interest in the liquidation account which is required to be established in connection with the conversion and stock offering.

However, because we afforded subscription rights to holders of non-interest bearing demand accounts in our 2019 stock offering, we submitted to the Federal Reserve Board a request for a waiver from this regulation and the Federal Reserve Board has granted the request. As a result, a depositor of First Seacoast bank who has an eligible non-interest bearing demand deposit account as of the eligibility record date or the supplemental eligibility record date will be deemed to be an eligible account holder or a supplemental eligible account holder, as applicable, by reason of this account.

The inclusion of depositors with non-interest bearing demand deposits as eligible account holders and supplemental eligible account holders will have a dilutive effect on other qualifying depositors with respect to their stock purchase priorities. It will also have a dilutive effect on the interest of all other eligible account holders and supplemental eligible account holders with respect to the liquidation account that will be established in connection with the conversion and stock offering.

Stock Pricing and Number of Shares to be Issued

The plan of conversion and applicable regulations require that the aggregate purchase price of the common stock sold in the stock offering must be based on the appraised pro forma market value of the common stock, as determined by an independent valuation. We have retained Feldman Financial Advisors, Inc. to prepare an independent valuation appraisal. For its services in preparing the initial valuation and the valuation update required to be prepared before the completion of the conversion and stock offering, Feldman Financial Advisors, Inc. will receive a fee of $51,500, as well as payment for reimbursable expenses up to $5,000. We have paid Feldman Financial Advisors, Inc. no fees during the previous three years. We have agreed to indemnify Feldman Financial Advisors, Inc. and its employees and affiliates for certain costs and expenses in connection with claims or litigation relating to the appraisal and arising out of any misstatement or untrue statement of a material fact in information supplied to Feldman Financial Advisors, Inc. by us or by an intentional omission by us to state a material fact in the information provided, except where Feldman Financial Advisors, Inc. has been negligent or at fault.

The independent valuation was prepared by Feldman Financial Advisors, Inc. in reliance upon the information contained in the prospectus, including the consolidated financial statements of First Seacoast Bancorp. Feldman Financial Advisors, Inc. also considered the following factors, among others:

 

•

the present results and financial condition of First Seacoast Bancorp and the projected results and financial condition of First Seacoast Bancorp, Inc.;

 

•

the economic and demographic conditions in First Seacoast Bancorp’s existing market area;

 

•

certain historical, financial and other information relating to First Seacoast Bancorp;

 

•

a comparative evaluation of the operating and financial characteristics of First Seacoast Bancorp with those of other similarly situated publicly traded savings institutions;

 

•

the effect of the conversion and stock offering on First Seacoast Bancorp, Inc.’s stockholders’ equity and earnings potential;

 

•

the proposed dividend policy of First Seacoast Bancorp, Inc.; and

 

•

the trading market for securities of comparable institutions and general conditions in the market for such securities.

 

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The independent valuation is also based on an analysis of a peer group of publicly traded savings and loan and bank holding companies that Feldman Financial Advisors, Inc. considered comparable to First Seacoast Bancorp, Inc. under regulatory guidelines applicable to the independent valuation. Under these guidelines, a minimum of ten peer group companies are selected from the universe of all publicly traded financial institutions with relatively comparable resources, strategies and financial and other operating characteristics. Such companies must also be traded on a securities exchange (such as Nasdaq or the New York Stock Exchange). The peer group companies selected for First Seacoast Bancorp, Inc. also consisted of fully-converted stock institutions that were not subject to an actual or rumored acquisition and that had been publicly traded for at least one year. In addition, Feldman Financial Advisors, Inc. limited the peer group to companies with assets of less than $1.0 billion, to companies located in all regions of the United States except for the west and southwest, to companies with an equity to assets ratio of at least 7.0%, and to companies with a core return on average assets of less than 1.00%.

The independent valuation appraisal considered the pro forma effect of the stock offering. Consistent with federal appraisal guidelines, the appraisal applied three primary methodologies: (i) the pro forma price-to-book value approach applied to both reported book value and tangible book value; (ii) the pro forma price-to-earnings approach applied to reported and core earnings; and (iii) the pro forma price-to-assets approach. The market value ratios applied in the three methodologies were based on the current market valuations of the peer group companies. Feldman Financial Advisors, Inc. placed the greatest emphasis on the price-to-earnings and price-to-book approaches in estimating pro forma market value. Feldman Financial Advisors, Inc. did not consider a pro forma price-to-assets approach to be meaningful in preparing the appraisal, as this approach is more meaningful when a company has low equity or earnings. The price-to-assets approach is less meaningful for a company like us, as we have equity in excess of regulatory capital requirements and positive reported and core earnings.

In applying each of the valuation methods, Feldman Financial Advisors, Inc. considered adjustments to the pro forma market value based on a comparison of First Seacoast Bancorp, Inc. with the peer group. Feldman Financial Advisors, Inc. made downward adjustments for earnings prospects and marketing of the issue. The downward adjustment for earnings prospects took into consideration the lower, historical, recent and pro forma return on assets and return on equity and uncertainty as to future earnings growth. The downward adjustment for marketing of the issue was based on the risk and uncertainty related to a new offering in the current environment of market volatility. Feldman Financial Advisors, Inc. made an upward adjustment for market area. The upward adjustment for market area reflected the favorable demographic measures of First Seacoast Bank’s primary market area regarding unemployment rates, population growth and household income levels compared to the primary market areas of the peer group companies. Feldman Financial Advisors, Inc. made no adjustments for financial condition, dividend policy, subscription interest, and liquidity of the issue.

Included in Feldman Financial Advisors, Inc.’s independent valuation were certain assumptions as to the pro forma earnings of First Seacoast Bancorp, Inc. after the conversion and stock offering that were used in determining the appraised value. These assumptions included estimated expenses, an assumed after-tax rate of return of 2.41% on the net offering proceeds and purchases in the open market of 4% of the common stock issued in the stock offering by the stock-based benefit plan at the $10.00 per share purchase price. See “Pro Forma Data” for additional information concerning assumptions included in the independent valuation and used in preparing pro forma data. The use of different assumptions may yield different results.

On the basis of the foregoing, Feldman Financial Advisors, Inc.’s independent valuation states that as of August 26, 2022, the estimated pro forma market value of First Seacoast Bancorp, Inc. was $59.7 million. Based on federal regulations, this market value forms the midpoint of a range with a minimum of $50.8 million and a maximum of $68.7 million. The aggregate offering price of the shares will be equal to the valuation range multiplied by the percentage of First Seacoast Bancorp common stock owned by First Seacoast Bancorp, MHC. The number of shares offered will be equal to the aggregate offering price of the shares divided by the price per share. Based on the valuation range, the percentage of First Seacoast Bancorp common stock owned by First Seacoast Bancorp, MHC, certain assets held by First Seacoast Bancorp, MHC and the $10.00 price per share, the minimum of the offering range is 2,805,000 shares, the midpoint of the offering range is 3,300,000 shares and the maximum of the offering range is 3,795,000 shares.

 

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The board of directors of First Seacoast Bancorp, Inc. reviewed the independent valuation and, in particular, considered the following:

 

•

First Seacoast Bancorp’s financial condition and results of operations;

 

•

a comparison of financial performance ratios of First Seacoast Bancorp to those of other financial institutions of similar size;

 

•

market conditions generally and in particular for financial institutions; and

 

•

the historical trading price of the publicly held shares of First Seacoast Bancorp common stock.

All of these factors are set forth in the independent valuation. The board of directors also reviewed the methodology and the assumptions used by Feldman Financial Advisors, Inc. in preparing the independent valuation and believes that such assumptions were reasonable. The offering range may be amended, with the approval of the Federal Reserve Board, as a result of subsequent developments in the financial condition of First Seacoast Bancorp or First Seacoast Bank or market conditions generally. If the independent valuation is updated to amend the pro forma market value of First Seacoast Bancorp, Inc. to less than $50.8 million or more than $68.7 million, the appraisal will be filed with the Securities and Exchange Commission by means of a post-effective amendment to First Seacoast Bancorp, Inc.’s registration statement.

The following table presents a summary of selected pricing ratios for First Seacoast Bancorp, Inc. (on a pro forma basis) at and for the twelve months ended June 30, 2022, and for the peer group companies based on earnings and other information at and for the twelve months ended June 30, 2022, with stock prices as of August 26, 2022, as reflected in the appraisal report. Compared to the average pricing of the peer group, and based upon the information in the following table, our pro forma pricing ratios at the midpoint of the offering range indicated a discount of 16.7% on a price-to-book value basis, a discount of 18.4% on a price-to-tangible book value basis, and a premium of 63.9% on a price-to-earnings basis. Our board of directors, in reviewing and approving the appraisal, considered the range of price-to-earnings multiples and the range of price-to-book value and price-to-tangible book value ratios at the different amounts of shares to be sold in the stock offering. The appraisal did not consider one valuation approach to be more important than the other. The estimated appraised value and the resulting premiums and discounts took into consideration the potential financial effect of the conversion and stock offering as well as the trading price of First Seacoast Bancorp’s common stock. First Seacoast Bancorp’s closing price was $9.75 per share on August 11, 2022, the last trading day immediately preceding the announcement of the conversion and stock offering, and $10.84 per share on August 26, 2022, the effective date of the independent appraisal.

 

		Price-to-earnings multiple (1)				Price-to-book value ratio				Price-to-tangible book value ratio
First Seacoast Bancorp, Inc. (on a pro forma basis, assuming completion of the conversion and stock offering)
Maximum			41.67x				84.03	%			84.39	%
Midpoint			35.71x				77.16	%			77.46	%
Minimum			31.25x				69.44	%			69.78	%
Valuation of peer group companies, all of which are fully converted (on an historical basis)
Averages			21.79x				92.66	%			94.91	%
Medians			19.46x				87.71	%			90.94	%

 

(1)	Price-to-earnings multiples calculated by Feldman Financial Advisors, Inc. in the independent appraisal are based on an estimate of “core” or recurring earnings for the twelve months ended June 30, 2022. These ratios are different than those presented in “Pro Forma Data.”

 

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The independent valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing our shares of common stock. Feldman Financial Advisors, Inc. did not independently verify our consolidated financial statements and other information that we provided to them, nor did Feldman Financial Advisors, Inc. independently value our assets or liabilities. The independent valuation considers First Seacoast Bank as a going concern and should not be considered as an indication of the liquidation value of First Seacoast Bank. Moreover, because the valuation is necessarily based upon estimates and projections of a number of matters, all of which may change from time to time, no assurance can be given that persons purchasing our common stock in the stock offering will thereafter be able to sell their shares at prices at or above $10.00 per share.

We will not decrease the minimum of the valuation range and the minimum of the offering range, or increase the maximum of the valuation range and the maximum of the offering range, without a resolicitation of subscribers. The subscription price of $10.00 per share will remain fixed.

If the update to the independent valuation at the conclusion of the stock offering results in an increase in the maximum of the valuation range to more than $68.7 million and a corresponding increase in the maximum of the offering range to more than 3,795,000 shares, or a decrease in the minimum of the valuation range to less than $50.8 million and a corresponding decrease in the minimum of the offering range to less than 2,805,000 shares, then we will promptly return, with interest at 0.07% per annum, all funds previously delivered to us to purchase shares of common stock in the subscription offering and any community offering and cancel deposit account withdrawal authorizations and, after consulting with the Federal Reserve Board, we may terminate the plan of conversion. Alternatively, we may establish a new offering range, extend the stock offering period and commence a resolicitation of purchasers or take other actions as permitted by the Federal Reserve Board to complete the stock offering. If we extend the stock offering and conduct a resolicitation due to a change in the independent valuation, we will notify subscribers of the extension of time and of the rights of subscribers to place a new stock order for a specified period of time. Any single offering extension will not exceed 90 days; aggregate extensions may not conclude beyond December 29, 2024, which is two years after the special meeting of members to approve the plan of conversion.

An increase in the number of shares to be issued in the stock offering would decrease both a subscriber’s ownership interest and First Seacoast Bancorp, Inc.’s pro forma earnings and stockholders’ equity on a per share basis while increasing stockholders’ equity on an aggregate basis. A decrease in the number of shares to be issued in the stock offering would increase both a subscriber’s ownership interest and First Seacoast Bancorp, Inc.’s pro forma earnings and stockholders’ equity on a per share basis, while decreasing stockholders’ equity on an aggregate basis.

Copies of the independent valuation appraisal report of Feldman Financial Advisors, Inc. and the detailed memorandum setting forth the method and assumptions used in the appraisal report are filed as exhibits to the documents specified under “Where You Can Find Additional Information.”

Subscription Offering and Subscription Rights

In accordance with the plan of conversion, rights to subscribe for shares of common stock in the subscription offering have been granted in the following descending order of priority. The filling of all subscriptions that we receive will depend on the availability of common stock after satisfaction of all subscriptions of all persons having prior rights in the subscription offering and on the purchase and ownership limitations set forth in the plan of conversion and as described below under “—Additional Limitations on Common Stock Purchases.”

Priority 1: Eligible Account Holders. Each depositor of First Seacoast Bank with aggregate deposit account balances of $50.00 or more (a “Qualifying Deposit”) at the close of business on June 30, 2021 (an “Eligible Account Holder”) will receive, without payment therefor, nontransferable subscription rights to purchase, subject to the overall purchase limitations, up to the greater of $400,000 (40,000 shares) of our common stock, 0.10% of the total number of shares of common stock issued in the stock offering, or 15 times the product of the number of subscription shares offered multiplied by a fraction of which the numerator is the aggregate Qualifying Deposit account balances of the Eligible Account Holder and the denominator is the aggregate Qualifying Deposit account balances of all Eligible Account Holders. See “—Additional Limitations on Common Stock Purchases.” If there

 

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are not sufficient shares available to satisfy all subscriptions, shares will first be allocated so as to permit each Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares for which he or she subscribed. Thereafter, any remaining unallocated shares will be allocated to each remaining Eligible Account Holder whose subscription remains unfilled in the same proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed for by any one or more Eligible Account Holders, the excess shall be reallocated among those Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been allocated.

To ensure proper allocation of our shares of common stock, each Eligible Account Holder must list on his or her stock order form all deposit accounts in which he or she has an ownership interest at the close of business on June 30, 2021. In the event of an oversubscription, failure to list all accounts could result in fewer shares being allocated than if all accounts had been disclosed. In the event of an oversubscription, the subscription rights of Eligible Account Holders who are also directors or executive officers of First Seacoast Bancorp or who are associates of such persons will be subordinated to the subscription rights of other Eligible Account Holders to the extent attributable to their increased deposits in the 12 months preceding June 30, 2021.

Priority 2: Tax-Qualified Plans. Our tax-qualified employee plans, including First Seacoast Bank’s employee stock ownership plan, will receive, without payment therefor, nontransferable subscription rights to purchase in the aggregate up to 10% of the shares of common stock sold in the stock offering, although our employee stock ownership plan intends to purchase 8% of the shares of common stock sold in the stock offering. If market conditions warrant, in the judgment of its trustees, the employee stock ownership plan may instead elect to purchase shares in the open market following the completion of the conversion and stock offering, subject to the approval of the Federal Reserve Board.

Priority 3: Supplemental Eligible Account Holders. To the extent that there are sufficient shares of common stock remaining after satisfaction of subscriptions by Eligible Account Holders and by our tax-qualified employee stock benefit plans, each depositor of First Seacoast Bank with a Qualifying Deposit at the close of business on September 30, 2022, who is not an Eligible Account Holder (“Supplemental Eligible Account Holder”), will receive, without payment therefor, nontransferable subscription rights to purchase up to $400,000 (40,000 shares) of common stock, subject to the overall purchase limitations. See “—Additional Limitations on Common Stock Purchases.” If there are not sufficient shares available to satisfy all subscriptions, shares will be allocated so as to permit each Supplemental Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares of common stock or the number of shares for which he or she subscribed. Thereafter, any remaining shares will be allocated to each Supplemental Eligible Account Holder whose subscription remains unfilled in the proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed for by any one or more Supplemental Eligible Account Holders, the excess shall be reallocated among those Supplemental Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been allocated.

To ensure proper allocation of common stock, each Supplemental Eligible Account Holder must list on the stock order form all deposit accounts in which he or she has an ownership interest at the close of business on September 30, 2022. In the event of an oversubscription, failure to list all accounts could result in fewer shares being allocated than if all accounts had been disclosed.

Priority 4: Other Members. To the extent that there are shares of common stock remaining after satisfaction of subscriptions by Eligible Account Holders, by our tax-qualified employee stock benefit plans and by Supplemental Eligible Account Holders, (i) each depositor of First Seacoast Bank at the close of business on November 3, 2022 who is not an Eligible Account Holder or Supplemental Eligible Account Holder, (ii) each borrower of First Seacoast Bank at the close of business on July 16, 2019 whose borrowings remained outstanding at the close of business on November 3, 2022 who is not an Eligible Account Holder or Supplemental Eligible Account Holder (collectively, “Other Members”) will receive, without payment therefor, nontransferable subscription rights to purchase up to $400,000 (40,000 shares) of common stock, subject to the overall purchase limitations. See “—

 

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Additional Limitations on Common Stock Purchases.” If there are not sufficient shares available to satisfy all subscriptions, shares will be allocated so as to permit each Other Member to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares of common stock or the number of shares for which he or she subscribed. Thereafter, any remaining shares will be allocated in the proportion that the amount of the subscription of each Other Member bears to the total amount of the subscriptions of all Other Members whose subscriptions remain unsatisfied.

To ensure proper allocation of common stock, each Other Member Account Holder must list on the stock order form all deposit and applicable loan accounts in which he or she has an ownership interest at November 3, 2022. In the event of an oversubscription, failure to list all accounts could result in fewer shares being allocated than if all accounts had been disclosed.

Expiration Date. The subscription offering will expire at 2:00 p.m., Eastern time, on December 16, 2022, unless extended by us for up to 45 days or such additional periods with the approval of the Federal Reserve Board, if necessary. Subscription rights will expire whether or not each eligible account holder can be located. We may decide to extend the expiration date of the subscription offering for any reason, whether or not subscriptions have been received for shares at the minimum, midpoint, or maximum of the offering range. Subscription rights which have not been exercised before the expiration date will become void.

We will not execute orders until at least the minimum number of shares of common stock has been sold in the stock offering. If at least 2,805,000 shares have not been sold in the stock offering by January 30, 2023 and the Federal Reserve Board has not consented to an extension, all funds delivered to us to purchase shares of common stock in the stock offering will be returned promptly, with interest at 0.07% per annum, for funds received in the subscription offering and any community offering, and all deposit account withdrawal authorizations will be canceled. If the Federal Reserve Board grants an extension beyond January 30, 2023, we will resolicit purchasers in the stock offering as described under “—Procedure for Purchasing Shares in the Subscription and Community Offerings—Expiration Date.”

Community Offering

To the extent that shares of common stock remain available for purchase after satisfaction of all subscriptions of Eligible Account Holders, our tax-qualified employee stock benefit plans, Supplemental Eligible Account Holder and Other Members, we may offer shares pursuant to the plan of conversion to members of the general public in a community offering. Shares would be offered in the community offering with the following preferences:

 

(i)

Natural persons (including trusts of natural persons) residing in the New Hampshire counties of Rockingham and Strafford;

 

(ii)

First Seacoast Bancorp’s public stockholders at the close of business on November 3, 2022; and

 

(iii)

Other members of the general public.

Subscribers in the community offering may purchase up to $400,000 (40,000 shares) of common stock, subject to the overall purchase limitations. See “—Additional Limitations on Common Stock Purchases.” The opportunity to purchase shares of common stock in the community offering category is subject to our right, in our sole discretion, to accept or reject any such orders in whole or in part either at the time of receipt of an order or as soon as practicable following the expiration date of the stock offering.

If we do not have sufficient shares of common stock available to fill the orders of natural persons residing in the New Hampshire counties of Rockingham and Strafford, we will allocate the available shares among those persons in a manner that permits each of them, to the extent possible, to purchase the lesser of 100 shares or the number of shares subscribed for by such person. Thereafter, unallocated shares will be allocated among natural persons (including trusts of natural persons) residing in those counties whose orders remain unsatisfied on an equal

 

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number of shares basis per order. If an oversubscription occurs due to the orders of public stockholders of First Seacoast Bancorp or members of the general public, the allocation procedures described above will apply to the orders of such persons. In connection with the allocation process, orders received for shares of common stock in the community offering will first be filled up to a maximum of 2% of the shares sold in the stock offering, and thereafter any remaining shares will be allocated on an equal number of shares basis per order until all shares have been allocated.

The term “residing” or “resident” as used in the prospectus with respect to the community means any person who occupies a dwelling within the local community, has a present intent to remain within the local community for a period of time, and manifests the genuineness of that intent by establishing an ongoing physical presence within the local community together with an indication that such presence within the local community is something other than merely transitory in nature. We may utilize deposit or loan records or other evidence provided to us to determine whether a person is a resident. In all cases, however, the determination shall be in our sole discretion.

Expiration Date. The community offering may begin concurrently with, during or promptly after the subscription offering, and is currently expected to terminate at the same time as the subscription offering, and must terminate no more than 45 days following the subscription offering, unless extended. We may decide to extend the community offering for any reason and we are not required to give purchasers notice of any such extension unless such period extends beyond January 30, 2023, in which case we will resolicit purchasers.

Syndicated Community Offering

If feasible, our board of directors may decide to offer for sale shares of common stock not subscribed for in the subscription offering or purchased in the community offering in a syndicated community offering, subject to such terms, conditions and procedures as we may determine, in a manner that will achieve a wide distribution of our shares of common stock.

If a syndicated community offering is held, Keefe, Bruyette & Woods, Inc. will serve as sole manager. In such capacity, Keefe, Bruyette & Woods, Inc. may form a syndicate of other brokers-dealers who are member firms of the Financial Industry Regulatory Authority, Inc. Neither Keefe, Bruyette & Woods, Inc. nor any registered broker-dealer will have any obligation to take or purchase any shares of the common stock in the syndicated community offering; however, Keefe, Bruyette & Woods, Inc. has agreed to use its best efforts in the sale of shares in any syndicated community offering. We have not selected any particular broker-dealers to participate in a syndicated community offering and will not do so until before the commencement of the syndicated community offering. The shares of common stock will be sold at the same price per share ($10.00 per share) that the shares are sold in the subscription offering and the community offering.

If there is a syndicated community offering, it is currently expected that investors would follow the same general procedures applicable to purchasing shares in the subscription offering and the community offering (the use of stock order forms and the submission of funds directly to First Seacoast Bancorp, Inc. for the payment of the purchase price of the shares ordered) except that payment must be in immediately available funds from the purchaser (bank checks, money orders, deposit account withdrawals from accounts at First Seacoast Bank or wire transfers). See “—Procedure for Purchasing Shares in the Subscription and Community Offerings.” “Sweep” arrangements and delivery versus payment settlement will only be used in a syndicated community offering to the extent consistent with Rules 10b-9 and 15c2-4 of the Securities Exchange Act of 1934, as amended, and then-existing guidance and interpretations thereof of the Securities and Exchange Commission regarding the conduct of “min/max” offerings.

A syndicated community offering must terminate no more than 45 days following the expiration of the subscription offering, unless extended with the approval of the Federal Reserve Board, if necessary.

If for any reason we cannot effect a syndicated community offering of shares of common stock not subscribed for in the subscription offering or purchased in the community offering, or if there are an insignificant number of shares remaining unsold after such offerings, we will consider a firm commitment public offering, if feasible. The Federal Reserve Board and the Financial Industry Regulatory Authority must approve any such arrangement.

 

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Additional Limitations on Common Stock Purchases

The plan of conversion includes the following additional limitations on the number of shares of common stock that may be purchased in the stock offering:

 

(i)

No person may purchase fewer than 25 shares of common stock, to the extent those shares are available for purchase;

 

(ii)

Tax-qualified employee benefit plans, including our employee stock ownership plan, may purchase in the aggregate up to 10% of the shares of common stock issued in the stock offering;

 

(iii)

Except for the employee stock ownership plan, as described above, no person or entity, together with associates or persons acting in concert with such person or entity, may purchase more than $400,000 (40,000 shares) of common stock in all categories of the stock offering combined;

 

(iv)

The number of shares of common stock that an existing First Seacoast Bancorp public stockholder may purchase in the stock offering, together with associates or persons acting in concert with such stockholder, when combined with the shares that the stockholder and his or her associates will receive in exchange for existing First Seacoast Bancorp common stock, may not exceed 9.9% of the shares of common stock of First Seacoast Bancorp, Inc. to be issued and outstanding at the completion of the conversion and stock offering; and

 

(v)

The maximum number of shares of common stock that may be purchased in all categories of the stock offering by executive officers and directors of First Seacoast Bank and their associates, in the aggregate, when combined with shares of common stock of First Seacoast Bancorp, Inc. issued in exchange for existing shares of First Seacoast Bancorp, may not exceed 25% of the total shares issued in the conversion and stock offering.

Depending upon market or financial conditions, our board of directors, with regulatory approval and without further approval of members of First Seacoast Bancorp, MHC and stockholders of First Seacoast Bancorp, may decrease or increase the purchase limitations. If a purchase limitation is increased, subscribers in the subscription offering who ordered the maximum amount of shares of common stock and who indicated on their stock order forms a desire to be resolicited in the event of an increase will be given the opportunity to increase their orders up to the then applicable limit, and other large subscribers may be given the opportunity to increase their orders up to the then applicable limit. The effect of this type of resolicitation will be an increase in the number of shares of common stock owned by persons who choose to increase their orders. If the maximum purchase limitation is increased to 5% of the shares sold in the stock offering, such limitation may be further increased to 9.99%, provided that orders for shares of common stock exceeding 5% of the shares sold in the stock offering may not exceed in the aggregate 10% of the total shares sold in the stock offering.

The term “associate” of a person means:

 

(i)

any corporation or organization (other than First Seacoast Bank, First Seacoast Bancorp, Inc., First Seacoast Bancorp or First Seacoast Bancorp, MHC or a majority-owned subsidiary of any of those entities) of which the person is a senior officer, partner or, directly or indirectly, 10% beneficial stockholder;

 

(ii)

any trust or other estate in which the person has a substantial beneficial interest or serves as a trustee or in a similar fiduciary capacity; provided, however, it does not include any employee stock benefit plan in which the person has a substantial beneficial interest or serves as trustee or in a similar fiduciary capacity; and

 

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(iii)

any blood or marriage relative of the person, who either has the same home as the person or who is a director or officer of First Seacoast Bancorp or First Seacoast Bank.

The term “acting in concert” means:

 

(i)

knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement; or

 

(ii)

a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise.

A person or company that acts in concert with another person or company (“other party”) will also be deemed to be acting in concert with any person or company who is also acting in concert with that other party, except that any tax-qualified employee stock benefit plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for determining whether common stock held by the trustee and common stock held by the employee stock benefit plan will be aggregated.

We have the sole discretion to determine whether prospective purchasers are “associates” or “acting in concert.” We may presume that certain persons are acting in concert based upon, among other things, joint account relationships or the fact that persons share a common address (whether or not related by blood or marriage) or may have filed joint Schedules 13D or 13G with the Securities and Exchange Commission with respect to First Seacoast Bancorp or other companies. Our directors are not treated as associates of each other solely because of their membership on the board of directors.

Common stock purchased in the stock offering will be freely transferable except for shares purchased by directors and certain officers of First Seacoast Bancorp, Inc. or First Seacoast Bank and except as described below. Any purchases made by any associate of First Seacoast Bancorp, Inc. or First Seacoast Bank for the explicit purpose of meeting the minimum number of shares of common stock required to be sold in order to complete the stock offering shall be made for investment purposes only and not with a view toward redistribution. In addition, under Financial Industry Regulatory Authority guidelines, members of the Financial Industry Regulatory Authority and their associates are subject to certain restrictions on transfer of securities purchased in accordance with subscription rights and to certain reporting requirements upon purchase of these securities. For a further discussion of limitations on purchases of our shares of common stock at the time of conversion and thereafter, see “—Certain Restrictions on Purchase or Transfer of Our Shares after the Conversion and Stock Offering” and “Restrictions on Acquisition of First Seacoast Bancorp, Inc.”

Plan of Distribution; Selling Agent and Underwriter Compensation

Subscription and Community Offerings. To assist in the marketing of our shares of common stock in the subscription and community offerings, we have retained Keefe, Bruyette & Woods, Inc., which is a broker-dealer registered with the Financial Industry Regulatory Authority. Keefe, Bruyette & woods, Inc. will assist us on a best efforts basis in the subscription and community offerings by:

 

•

advising us on the financial and securities market implications of the conversion and stock offering and the plan of conversion;

 

•

assisting us in structuring and marketing the stock offering;

 

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•

reviewing all offering documents, including the prospectus, stock order forms and marketing materials (it being understood that the preparation and filing of any and all such documents will be our responsibility and that of our counsel);

 

•

assisting us in scheduling and preparing meetings with potential investors and broker-dealers, if necessary;

 

•

assisting us in analyzing proposals from outside vendors in connection with the stock offering, as needed;

 

•

assisting us in the drafting and distribution of press releases as required or appropriate in connection with the stock offering;

 

•

meeting with our board of directors and/or our management to discuss any of the above services; and

 

•

providing such other financial advisory and investment banking services as may be reasonably necessary to promote the successful completion of the stock offering.

For these services, Keefe, Bruyette & Woods, Inc. has received a non-refundable management fee of $30,000 and will receive at the closing of the stock offering a success fee equal to 1.0% of the aggregate purchase price of the common stock sold in the subscription offering and 1.5% of the aggregate purchase price of the common stock sold in the community offering, subject to a minimum success fee of $300,000. In addition, if Keefe, Bruyette & Woods, Inc. is required or requested to provide significant services as a result of a resolicitation of subscribers, Keefe, Bruyette & Woods, Inc. will be entitled to additional compensation for such services, not to exceed $30,000.

Syndicated Community Offering. If shares of common stock are sold in a syndicated community offering, we will pay a fee of up to 6.0% of the aggregate dollar amount of common stock sold in the syndicated community offering to Keefe, Bruyette & Woods, Inc. and any other broker-dealers included in the syndicated community offering. The success fee to be paid to Keefe, Bruyette & Woods, Inc. for its services in the subscription and community offerings will be credited against any fee payable for services in the syndicated community offering.

Expenses. Keefe, Bruyette & Woods, Inc. also will be reimbursed for reasonable out-of-pocket expenses, not to exceed $30,000, and fees and expenses of its legal counsel not to exceed $115,000. These expenses may be increased by additional amounts not to exceed $10,000 and $20,000, respectively, if unusual circumstances arise or a delay or resolicitation occurs, including a delay in the stock offering that would require an update to the financial information included in the prospectus. In no event shall out-of-pocket expenses, including fees and expenses of legal counsel, exceed $175,000. If the plan of conversion is terminated or if Keefe, Bruyette & Woods, Inc.’s engagement is terminated in accordance with the provisions of the agency agreement, Keefe, Bruyette & Woods, Inc. will receive reimbursement of its reasonable out-of-pocket expenses. Keefe, Bruyette & Woods, Inc. shall have earned in full, and be entitled to be paid in full, all fees then due and payable at such date of termination. We have separately agreed to pay Keefe, Bruyette & Woods, Inc. fees and expenses for serving as records management agent, as described below.

Records Management

We have also engaged Keefe, Bruyette & Woods, Inc. as conversion and records management agent in connection with the conversion and the subscription offering and any community offering. In its role as conversion and records management agent, Keefe, Bruyette & Woods, Inc. will assist us in the stock offering by:

 

•

reviewing our deposit and loan accounts and create a master file of First Seacoast Bancorp, MHC’s members (i.e., depositors and certain borrowers of First Seacoast Bank) as of the key record dates;

 

51

•

assisting us in designing and preparing proxy forms and stock order forms;

 

•

tabulating proxies from members of First Seacoast Bancorp, MHC;

 

•

acting as or supporting the inspector of election at First Seacoast Bancorp, MHC’s special meeting of members and First Seacoast Bancorp’s special meeting of stockholders;

 

•

operating and managing the Stock Information Center; and

 

•

processing stock order forms.

Keefe, Bruyette & Woods, Inc. will receive fees of $35,000 for these services, of which $10,000 has been paid as of the date of this proxy statement/prospectus. These fees can be increased by an amount of up to $10,000 if there are material changes in regulations or the plan of conversion, or there are delays requiring duplicate or replacement processing. Keefe, Bruyette & Woods, Inc. will also be reimbursed for its reasonable out-of-pocket expenses not to exceed $10,000.

Indemnity

We will indemnify Keefe, Bruyette & Woods, Inc. against liabilities and expenses, including legal fees, incurred in connection with certain claims or litigation arising out of or based upon untrue statements or omissions contained in the stock offering materials for the common stock, including liabilities under the Securities Act of 1933, as well as certain other claims and litigation arising out of Keefe, Bruyette & Woods, Inc.’s engagement with respect to the conversion and stock offering.

Solicitation of Offers by Officers and Directors

Some of our directors and executive officers may participate in the solicitation of offers to purchase common stock in the subscription offering and any community offering. These persons will be reimbursed for their reasonable out-of-pocket expenses incurred in connection with the solicitation. Other regular employees of First Seacoast Bank may assist in the stock offering, but only in ministerial capacities, and may provide clerical work in effecting a sales transaction. No offers or sales may be made by tellers or at the teller counters. Investment-related questions of prospective purchasers will be directed to executive officers or registered representatives of Keefe, Bruyette & Woods, Inc. Our other employees have been instructed not to solicit offers to purchase shares of common stock or provide advice regarding the purchase of common stock. We will rely on Rule 3a4-1 under the Securities Exchange Act of 1934, as amended, and sales of common stock will be conducted within the requirements of Rule 3a4-1, so as to permit officers, directors and employees to participate in the sale of common stock. None of our officers, directors or employees will be compensated in connection with their participation in the stock offering.

Procedure for Purchasing Shares in the Subscription and Community Offerings

Expiration Date. The subscription offering and any community offering will expire at 2:00 p.m., Eastern time, on December 16, 2022, unless we extend one or both for up to 45 days, with the approval of Federal Reserve Board, if required. This extension may be approved by us, in our sole discretion, without notice to purchasers in the stock offering. Any extension of the subscription and/or community offering beyond January 30, 2023 would require the Federal Reserve Board’s approval. If the stock offering is so extended, all subscribers will be notified and given an opportunity to confirm, change or cancel their orders. If you do not respond to the notice of extension, we will promptly return your funds, with interest at 0.07% per annum, or cancel your deposit account withdrawal authorization. If the offering range is decreased below the minimum of the offering range or is increased above the maximum of the offering range, all subscribers’ stock orders will be cancelled, their deposit account withdrawal authorizations will be cancelled, and funds submitted to us will be returned promptly, with interest at 0.07% per annum, for funds received in the subscription and community offerings. We will then resolicit the subscribers, giving them an opportunity to place a new stock order for a period of time.

 

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To ensure each purchaser receives a prospectus at least 48 hours before the December 16, 2022 expiration date of the stock offering, in accordance with Rule 15c2-8 of the Securities Exchange Act of 1934, as amended, no prospectus will be mailed any later than five days before the expiration date or hand delivered any later than two days before the expiration date. Execution of a stock order form will confirm receipt of delivery in accordance with Rule 15c2-8. Stock order forms will be distributed only with a prospectus.

We reserve the right in our sole discretion to terminate the stock offering at any time and for any reason, in which case we will cancel any deposit account withdrawal authorizations and promptly return all funds submitted, with interest at 0.07% per annum, from the date of receipt as described above.

Use of Order Forms in the Subscription and Community Offerings. To purchase shares of common stock in the subscription offering and, if held, the community offering, you must properly complete an original stock order form and remit full payment. We are not required to accept orders submitted on photocopied or facsimiled stock order forms. All stock order forms must be received (not postmarked) on or before 2:00 p.m., Eastern time, on December 16, 2022. We are not required to accept stock order forms that are not received by that time, are not signed or are otherwise executed defectively or are received without full payment or without appropriate deposit account withdrawal instructions. We are not required to notify subscribers of incomplete or improperly executed stock order forms, and we have the right to waive or permit the correction of incomplete or improperly executed stock order forms. We do not represent, however, that we will do so and we have no affirmative duty to notify any prospective subscriber of any such defects. You may submit your stock order form and payment by mail using the stock order reply envelope provided or by paying for overnight delivery to the address listed on the stock order form. You may also hand-deliver stock order forms to First Seacoast Bank’s main office, located at 633 Central Avenue, Dover, New Hampshire. Hand-delivered stock order forms will be accepted only at this location. We will not accept stock order forms at any other office of First Seacoast Bank. Do not mail stock order forms to First Seacoast Bank.

Once tendered, an order form cannot be modified or revoked without our consent. We reserve the absolute right, in our sole discretion, to reject orders received in the community offering, in whole or in part, at the time of receipt or at any time before completion of the stock offering. If you are ordering shares in the stock offering, you must represent that you are purchasing shares for your own account and that you have no agreement or understanding with any person for the sale or transfer of the shares. We have the right to reject any order submitted in the stock offering by a person who we believe is making false representations or who we otherwise believe, either alone or acting in concert with others, is violating, evading, circumventing, or intends to violate, evade or circumvent the terms and conditions of the plan of conversion. Our interpretation of the terms and conditions of the plan of conversion and of the acceptability of the order forms will be final.

By signing the order form, you will be acknowledging that the common stock is not a deposit or savings account and is not federally insured or otherwise guaranteed by First Seacoast Bank, the Federal Deposit Insurance Corporation or the federal government, and that you received a copy of the prospectus. However, signing the order form will not result in you waiving your rights under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

Payment for Shares. Payment for all shares of common stock must accompany all completed order forms for the purchase to be valid. Payment for shares in the subscription and community offerings may be made by:

 

(i)

personal check, bank check or money order, from the purchaser, made payable to First Seacoast Bancorp, Inc.;

 

(ii)

authorization of withdrawal of available funds from your First Seacoast Bank deposit account(s); or

 

(iii)

cash – cash will only be accepted at First Seacoast Bank’s main office and will be converted to a bank check. Please do not remit cash by mail.

 

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Appropriate means for designating withdrawals from deposit account(s) at First Seacoast Bank are provided on the stock order form. The funds designated must be available in the account(s) at the time the stock order form is received. A hold will be placed on these funds, making them unavailable to the depositor. Funds authorized for withdrawal will continue to earn interest within the account at the contractual rate until the stock offering is completed, at which time the designated withdrawal will be made. Interest penalties for early withdrawal applicable to certificate of deposit accounts will not apply to withdrawals authorized for the purchase of shares of common stock; however, if a withdrawal results in a certificate of deposit account with a balance less than the applicable minimum balance requirement, the certificate of deposit will be canceled at the time of withdrawal without penalty and the remaining balance will earn interest at the current passbook rate after the withdrawal. In the case of payments made by personal check, these funds must be available in the account(s). Checks and money orders received in the subscription and community offerings will be immediately cashed and placed in a segregated account at First Seacoast Bank and will earn interest at 0.07% per annum from the date payment is processed until the stock offering is completed or terminated.

You may not remit any type of third-party checks (including those payable to you and endorsed over to First Seacoast Bancorp, Inc.) or a First Seacoast Bank line of credit check. You may not designate on your stock order form direct withdrawal from a retirement account at First Seacoast Bank. See “—Using Individual Retirement Account Funds.” Additionally, you may not designate on your stock order form a direct withdrawal from First Seacoast Bank deposit accounts with check-writing privileges. Instead, a check should be provided. If you request a direct withdrawal, 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 checking account(s). If permitted by the Federal Reserve Board, in the event we resolicit large purchasers, as described above in “—Additional Limitations on Common Stock Purchases,” such purchasers who wish to increase their purchases will not be able to use personal checks to pay for the additional shares, but instead must pay for the additional shares using immediately available funds. Wire transfers will not be accepted.

Once we receive your executed stock order form, it may not be modified, amended or rescinded without our consent, unless the stock offering is not completed by January 30, 2023. If the subscription offering and, if held, the community offering are extended beyond January 30, 2023, all subscribers will be notified and given an opportunity to confirm, change or cancel their orders. If you do not respond to the notice of extension, we will promptly return your funds, with interest at 0.07% per annum, or cancel your deposit account withdrawal authorization. We may resolicit purchasers for a specified period of time.

Applicable regulations prohibit First Seacoast Bank from lending funds or extending credit to any persons to purchase shares of common stock in the stock offering.

We have the right, in our sole discretion, to permit institutional investors to submit irrevocable orders together with the legally binding commitment for payment and to thereafter pay for the shares of common stock for which they subscribe in the community offering at any time before 48 hours before the completion of the conversion and stock offering. This payment may be made by wire transfer.

If our employee stock ownership plan purchases shares in the stock offering, it will not be required to pay for such shares until completion of the stock offering, provided that there is a loan commitment from an unrelated financial institution or First Seacoast Bancorp, Inc. to lend to the employee stock ownership plan the necessary amount to fund the purchase. In addition, if our 401(k) plan purchases shares in the stock offering, it will not be required to pay for such shares until completion of the stock offering.

Using Individual Retirement Account Funds. If you are interested in using funds in your IRA at First Seacoast Bank or other retirement account to purchase shares of common stock in the stock offering, you must do so through an account offered by a custodian that can hold common stock. By regulation, First Seacoast Bank’s IRAs are not capable of holding common stock. Therefore, if you wish to use funds that are currently in an IRA held at First Seacoast Bank, you may not designate on the order form that you wish funds to be withdrawn from the account for the purchase of common stock. The funds you wish to use for the purchase of common stock will instead have to be transferred to an independent trustee or custodian, such as a brokerage firm, which offers the type of retirement

 

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accounts that can hold common stock. The purchase must be made through that account. If you do not have such an account, you will need to establish one before placing a stock order. A one-time and/or annual administrative fee may be payable to the independent trustee or custodian. You may select the custodian of your choice. You may, but are under no obligation to, select Keefe, Bruyette & Woods, Inc. or one of its affiliated broker dealers, Stifel, Nicolaus & Company, Incorporated or Century Securities Associates, as your IRA custodian. If you do purchase shares of First Seacoast Bancorp, Inc. common stock using funds from a Keefe, Bruyette & Woods, Inc., Stifel, Nicolaus & Company, Incorporated, or Century Securities Associates IRA, you acknowledge that Keefe, Bruyette & Woods, Inc., Stifel, Nicolaus & Company, Incorporated, or Century Securities Associates, as applicable, did not recommend or give you advice regarding such purchase. Other than the standard account fees and compensation associated with all IRAs, Keefe, Bruyette & Woods, Inc., Stifel, Nicolaus & Company, Incorporated, or Century Securities Associates do not receive additional fees or compensation as a result of the purchase of First Seacoast Bancorp, Inc. common stock through a Keefe, Bruyette & Woods, Inc., Stifel, Nicolaus & Company, Incorporated, or Century Securities Associates IRA or other retirement account. There will be no early withdrawal or Internal Revenue Service interest penalties for these transfers. Individuals interested in using funds in an individual retirement account or any other retirement account, whether held at First Seacoast Bank or elsewhere, to purchase shares of common stock should contact our Stock Information Center for guidance as soon as possible, preferably at least two weeks before the December 16, 2022 offering deadline. Processing these transactions takes additional time, and whether such funds can be used may depend on limitations imposed by the institutions where such funds are currently held. We cannot guarantee that you will be able to use such funds.

Delivery of Shares of Common Stock. All shares of common stock sold will be issued in book entry form. Stock certificates will not be issued. A book entry statement reflecting ownership of shares of common stock issued in the subscription offering and, if held, the community offering will be mailed by our transfer agent to the persons entitled thereto at the registration address noted by them on their stock order forms as soon as practicable following consummation of the conversion and stock offering. We expect trading in the stock to begin on the day of completion of the conversion and stock offering or the next business day. Until a statement reflecting your ownership of shares of common stock is available and delivered to you, you may not be able to sell the shares of common stock that you purchased, even though the shares of 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.

Other Restrictions. Notwithstanding any other provision of the plan of conversion, no person is entitled to purchase any shares of common stock to the extent the purchase would be illegal under any federal or state law or regulation, including state “blue sky” regulations, or would violate regulations or policies of the Financial Industry Regulatory Authority, particularly those regarding free riding and withholding. We may ask for an acceptable legal opinion from any purchaser as to the legality of his or her purchase and we may refuse to honor any purchase order if an opinion is not timely furnished. In addition, we are not required to offer shares of common stock to any person who resides in a foreign country, or in a state of the United States with respect to which any of the following apply:

 

(i)

a small number of persons otherwise eligible to subscribe for shares under the plan of conversion reside in such state;

 

(ii)

the offer or sale of shares of common stock to such persons would require us or our employees to register, under the securities laws of such state, as a broker or dealer or to register or otherwise qualify our securities for sale in such state; or

 

(iii)

such registration or qualification would be impracticable for reasons of cost or otherwise.

Exchange of Existing Stockholders’ Stock Certificates

The conversion of existing outstanding shares of First Seacoast Bancorp common stock into the right to receive shares of First Seacoast Bancorp, Inc. common stock will occur automatically at the completion of the conversion and stock offering. As soon as practicable after the completion of the conversion and stock offering, our exchange agent will send a transmittal form to each public stockholder of First Seacoast Bancorp who holds physical

 

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stock certificates. The transmittal form will contain instructions on how to surrender certificates evidencing First Seacoast Bancorp common stock in exchange for shares of First Seacoast Bancorp, Inc. common stock in book entry form, to be held electronically on the books of our transfer agent. First Seacoast Bancorp, Inc. will not issue stock certificates. We expect that a statement reflecting your ownership of shares of common stock of First Seacoast Bancorp, Inc. common stock will be distributed within five business days after the exchange agent receives properly executed transmittal forms, First Seacoast Bancorp stock certificates and other required documents. Shares held by public stockholders in street name (such as in a brokerage account) will be exchanged automatically upon the completion of the conversion and stock offering; no transmittal forms will be mailed relating to these shares.

No fractional shares of First Seacoast Bancorp, Inc. common stock will be issued to any public stockholder of First Seacoast Bancorp when the conversion and stock offering is completed. For each fractional share that would otherwise be issued to a stockholder who holds a stock certificate, we will pay by check an amount equal to the product obtained by multiplying the fractional share interest to which the holder would otherwise be entitled by the $10.00 offering purchase price per share. Payment for fractional shares will be made as soon as practicable after the receipt by the exchange agent of the transmittal forms and the surrendered First Seacoast Bancorp stock certificates. If your shares of common stock are held in street name, you will automatically receive cash in lieu of fractional shares in your account.

Do not forward your stock certificates until you have received transmittal forms, which will include forwarding instructions. After the conversion and stock offering, stockholders will not receive shares of First Seacoast Bancorp, Inc. common stock and will not be paid dividends on the shares of First Seacoast Bancorp, Inc. common stock until existing certificates representing shares of First Seacoast Bancorp common stock are surrendered for exchange in compliance with the terms of the transmittal form. When stockholders surrender their certificates, any unpaid dividends will be paid without interest. For all other purposes, however, each certificate that represents shares of First Seacoast Bancorp common stock outstanding at the effective date of the conversion and stock offering will be considered to evidence ownership of shares of First Seacoast Bancorp, Inc. common stock into which those shares have been converted by virtue of the conversion and stock offering.

If a certificate for First Seacoast Bancorp common stock has been lost, stolen or destroyed, our exchange agent will issue a new stock certificate upon receipt of appropriate evidence as to the loss, theft or destruction of the certificate, appropriate evidence as to the ownership of the certificate by the claimant, and appropriate and customary indemnification, which is normally effected by the purchase of a bond from a surety company at the stockholder’s expense.

All shares of First Seacoast Bancorp, Inc. common stock that we issue in exchange for existing shares of First Seacoast Bancorp common stock will be considered to have been issued in full satisfaction of all rights pertaining to such shares of common stock, subject, however, to our obligation to pay any dividends or make any other distributions with a record date before the effective date of the conversion and stock offering that may have been declared by us on or before the effective date, and which remain unpaid at the effective date.

Restrictions on Transfer of Subscription Rights and Shares

Applicable banking regulations prohibit any person with subscription rights, including the Eligible Account Holders, Supplemental Eligible Account Holders and Other Members, from transferring or entering into any agreement or understanding to transfer the legal or beneficial ownership of the subscription rights issued under the plan of conversion or the shares of common stock to be issued upon their exercise. These rights may be exercised only by the person to whom they are granted and only for his or her account. When registering your stock purchase on the stock order form, you cannot add the name(s) of others for joint stock registration who do not have subscription rights or who qualify only in a lower subscription offering priority than you do. Doing so may jeopardize your subscription rights. You may only add those who were eligible to purchase shares of common stock in the subscription offering at your date of eligibility. Each person exercising subscription rights will be required to certify that he or she is purchasing shares solely for his or her own account and that he or she has no agreement or understanding regarding the sale or transfer of such shares. The regulations also prohibit any person from offering or making an announcement of an offer or intent to make an offer to purchase subscription rights or shares of common stock to be issued upon their exercise before completion of the conversion and stock offering.

 

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We will pursue any and all legal and equitable remedies in the event we become aware of the transfer of subscription rights, and we will not honor orders that we believe involve the transfer of subscription rights.

Stock Information Center

Our banking office personnel may not, by law, assist with investment-related questions about the conversion and stock offering. If you have any questions regarding the conversion and stock offering, please call our Stock Information Center at 1-(877) 892-9472 (toll-free). The Stock Information Center is open Monday through Friday between 10:00 a.m. and 4:00 p.m., Eastern time. The Stock Information Center will be closed on bank holidays.

Liquidation Rights

Liquidation Before the Conversion and Stock Offering. In the unlikely event that First Seacoast Bancorp, MHC is liquidated before the conversion and stock offering, all claims of creditors of First Seacoast Bancorp, MHC would be paid first. Thereafter, if there were any assets of First Seacoast Bancorp, MHC remaining, these assets would first be distributed to depositors of First Seacoast Bank pro rata based on the value of their accounts at First Seacoast Bank.

Liquidation Following the Conversion and Stock Offering. The plan of conversion provides for the establishment, upon the completion of the conversion and stock offering, of a liquidation account by First Seacoast Bancorp, Inc. for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders in an amount equal to (i) First Seacoast Bancorp, MHC’s ownership interest in First Seacoast Bancorp’s total stockholders’ equity as of the date of the latest statement of financial condition contained in this proxy statement/prospectus plus (ii) the value of the net assets of First Seacoast Bancorp, MHC as of the date of the latest statement of financial condition of First Seacoast Bancorp, MHC before the consummation of the conversion and stock offering (excluding its ownership of First Seacoast Bancorp). The plan of conversion also provides for the establishment of a parallel liquidation account in First Seacoast Bank to support the First Seacoast Bancorp, Inc. liquidation account in the event First Seacoast Bancorp, Inc. does not have sufficient assets to fund its obligations under the First Seacoast Bancorp, Inc. liquidation account.

In the unlikely event that First Seacoast Bank were to liquidate after the conversion and stock offering, all claims of creditors, including those of depositors, would be paid first. However, except with respect to the liquidation account to be established in First Seacoast Bancorp, a depositor’s claim would be solely for the principal amount of his or her deposit accounts plus accrued interest. Depositors generally would not have an interest in the value of the assets of First Seacoast Bank or First Seacoast Bancorp, Inc. above that amount.

The liquidation account established by First Seacoast Bancorp, Inc. is intended to provide qualifying depositors a liquidation interest (exchanged for the liquidation interests such persons had in First Seacoast Bancorp, MHC) after the conversion and stock offering in the event of a complete liquidation of First Seacoast Bancorp, Inc. and First Seacoast Bank or a liquidation solely of First Seacoast Bank. Specifically, in the unlikely event that either (i) First Seacoast Bank or (ii) First Seacoast Bancorp, Inc. and First Seacoast Bank were to liquidate after the conversion and stock offering, all claims of creditors, including those of depositors, would be paid first, followed by a distribution to depositors as of June 30, 2021 and September 30, 2022 of their interests in the liquidation account maintained by First Seacoast Bancorp, Inc. Also, in a complete liquidation of both entities, or of First Seacoast Bank only, when First Seacoast Bancorp, Inc. has insufficient assets (other than the stock of First Seacoast Bank) to fund the liquidation account distribution owed to Eligible Account Holders, and First Seacoast Bank has positive net worth, then First Seacoast Bank shall immediately make a distribution to fund First Seacoast Bancorp, Inc.’s remaining obligations under the liquidation account. In no event will any Eligible Account Holder be entitled to a distribution that exceeds such holder’s interest in the liquidation account maintained by First Seacoast Bancorp, Inc. as adjusted from time to time pursuant to the plan of conversion and federal regulations. If First Seacoast Bancorp, Inc. is completely liquidated or sold apart from a sale or liquidation of First Seacoast Bank, then the First Seacoast Bancorp, Inc. liquidation account will cease to exist and Eligible Account Holders will receive an equivalent interest in the First Seacoast Bank liquidation account, subject to the same rights and terms as the First Seacoast Bancorp, Inc. liquidation account.

 

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Pursuant to the plan of conversion, after two years from the date of conversion and upon the written request of the Federal Reserve Board, First Seacoast Bancorp, Inc. will transfer, or upon the prior written approval of the Federal Reserve First Seacoast Bancorp, Inc. may transfer, the liquidation account and the depositors’ interests in such account to First Seacoast Bank and the liquidation account shall thereupon be subsumed into the liquidation account of First Seacoast Bank.

Under the rules and regulations of the Federal Reserve Board, a post-conversion merger, consolidation, or similar combination or transaction with another depository institution or depository institution holding company in which First Seacoast Bancorp, Inc. or First Seacoast Bank is not the surviving institution, would not be considered a liquidation. In such a transaction, the liquidation account would be assumed by the surviving institution or company.

Each Eligible Account Holder and Supplemental Eligible Account Holder would have an initial pro-rata interest in the liquidation account for each deposit account, including savings accounts, transaction accounts such as negotiable order of withdrawal accounts, money market deposit accounts, and certificates of deposit, with a balance of $50.00 or more held in First Seacoast Bank on June 30, 2021 or September 30, 2022, respectively, equal to the proportion that the balance of such account holder’s deposit account on June 30, 2021 or September 30, 2022, respectively, bears to the balance of all deposit accounts of all Eligible Account Holders and Supplemental Eligible Account Holders in First Seacoast Bank on such dates.

If, however, on any December 31 annual closing date commencing after the effective date of the conversion and stock offering, the amount in any such deposit account is less than the amount in the deposit account on June 30, 2021 or September 30, 2022, or any other annual closing date, then the liquidation account as well as the interest in the liquidation account relating to such deposit account would be reduced by the proportion of any such reduction, and such interest will cease to exist if such deposit account is closed. In addition, no interest in the liquidation account would ever be increased despite any subsequent increase in the related deposit account. Payment pursuant to liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders would be separate and apart from the payment of any insured deposit accounts to such depositors. Any assets remaining after the above liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders are satisfied would be available for distribution to stockholders.

We have submitted to the Federal Reserve Board a request for a waiver to allow depositors with non-interest bearing demand accounts to be treated as Eligible Account Holders and Supplemental Eligible Account Holders, and the Federal Reserve Board has granted the request. As a result, a depositor of First Seacoast Bank who has an eligible non-interest bearing demand deposit account as of the June 30, 2021 eligibility record date or the September 30, 2022 supplemental eligibility record date will be deemed to be an Eligible Account Holder or a Supplemental Eligible Account Holder, as applicable, by virtue of this account.

The inclusion of depositors with non-interest bearing demand deposits as Eligible Account Holders and Supplemental Eligible Account Holders will have a dilutive effect on other qualifying depositors with respect to their stock purchase priorities. It will also have a dilutive effect on the interest of all other Eligible Account Holders and Supplemental Eligible Account Holders with respect to the liquidation account that is required to be established in connection with the conversion and stock offering.

 

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Material Income Tax Consequences

Completion of the conversion and stock offering is subject to the prior receipt of an opinion of counsel or tax advisor with respect to the federal and state income tax consequences of the conversion and stock offering to First Seacoast Bancorp, MHC, First Seacoast Bancorp, First Seacoast Bank, First Seacoast Bancorp, Inc., Eligible Account Holders, Supplemental Eligible Account Holders, and Other Members. Unlike private letter rulings, an opinion of counsel or a tax advisor is not binding on the Internal Revenue Service or any state taxing authority, and those authorities may disagree with the opinion. In the event of a disagreement, there can be no assurance that First Seacoast Bancorp, Inc., or First Seacoast Bank would prevail in a judicial proceeding.

First Seacoast Bancorp, MHC, First Seacoast Bancorp, First Seacoast Bank and First Seacoast Bancorp, Inc. have received an opinion of counsel, Luse Gorman, PC, regarding the material federal income tax consequences of the conversion and stock offering, as follows:

 

1.

The merger of First Seacoast Bancorp, MHC with and into First Seacoast Bancorp will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code.

 

2.

The constructive exchange of Eligible Account Holders’ and Supplemental Eligible Account Holders’ liquidation interests in First Seacoast Bancorp, MHC for liquidation interests in First Seacoast Bancorp will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Federal Income Tax Regulations.

 

3.

None of First Seacoast Bancorp, MHC, First Seacoast Bancorp, Eligible Account Holders nor Supplemental Eligible Account Holders will recognize any gain or loss on the transfer of the assets of First Seacoast Bancorp, MHC to First Seacoast Bancorp and the assumption by First Seacoast Bancorp of First Seacoast Bancorp, MHC’s liabilities, if any, in constructive exchange for liquidation interests in First Seacoast Bancorp.

 

4.

First Seacoast Bancorp will not recognize any gain or loss on the transfer of its assets to First Seacoast Bancorp, Inc. and First Seacoast Bancorp, Inc.’s assumption of its liabilities in exchange for shares of First Seacoast Bancorp, Inc. stock or the distribution of First Seacoast Bancorp, Inc. stock to stockholders of First Seacoast Bancorp and the constructive distribution of the interests in the Liquidation Account to Eligible Account Holders and Supplemental Eligible Account Holders.

 

5.

The basis of the assets of First Seacoast Bancorp, MHC (other than the stock in First Seacoast Bancorp) and the holding period of the assets to be received by First Seacoast Bancorp will be the same as the basis and holding period of such assets in First Seacoast Bancorp, MHC immediately before the exchange.

 

6.

The merger of First Seacoast Bancorp with and into First Seacoast Bancorp, Inc. will constitute a mere change in identity, form, or place of organization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code and, therefore, will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code. Neither First Seacoast Bancorp nor First Seacoast Bancorp, Inc. will recognize gain or loss as a result of such merger.

 

7.

The basis of the assets of First Seacoast Bancorp and the holding period of such assets to be received by First Seacoast Bancorp, Inc. will be the same as the basis and holding period of such assets in First Seacoast Bancorp immediately before the exchange.

 

8.

Eligible Account Holders and Supplemental Eligible Account Holders will not recognize any gain or loss upon the constructive exchange of their liquidation interests in First Seacoast Bancorp for interests in the liquidation account in First Seacoast Bancorp, Inc.

 

9.

The exchange by the Eligible Account Holders and Supplemental Eligible Account Holders of the liquidation interests that they constructively received in First Seacoast Bancorp for interests in the liquidation account established in First Seacoast Bancorp, Inc. will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Federal Income Tax Regulations.

 

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10.

Each stockholder’s aggregate basis in shares of First Seacoast Bancorp, Inc. common stock received in the exchange will be the same as the aggregate basis of First Seacoast Bancorp common stock surrendered in the exchange.

 

11.

Each stockholder’s holding period in its First Seacoast Bancorp, Inc. common stock received in the exchange will include the period during which the First Seacoast Bancorp common stock surrendered was held, provided that the First Seacoast Bancorp common stock surrendered is a capital asset in the hands of the stockholder on the date of the exchange.

 

12.

Except with respect to cash received in lieu of fractional shares, current stockholders of First Seacoast Bancorp will not recognize any gain or loss upon their exchange of First Seacoast Bancorp common stock for First Seacoast Bancorp, Inc. common stock.

 

13.

Cash received by any current stockholder of First Seacoast Bancorp in lieu of a fractional share interest in shares of First Seacoast Bancorp, Inc. common stock will be treated as having been received as a distribution in full payment in exchange for a fractional share interest of First Seacoast Bancorp, Inc. common stock, which the stockholder would otherwise be entitled to receive. Accordingly, a stockholder will recognize gain or loss equal to the difference between the cash received and the basis of the fractional share. If the common stock is held by the stockholder as a capital asset, the gain or loss will be capital gain or loss.

 

14.

It is more likely than not that the fair market value of the nontransferable subscription rights to purchase First Seacoast Bancorp, Inc. common stock is zero. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders, Supplemental Eligible Account Holders and Other Members upon distribution to them of nontransferable subscription rights to purchase shares of First Seacoast Bancorp, Inc. common stock. Eligible Account Holders, Supplemental Eligible Account Holders and Other Members will not realize any taxable income as the result of the exercise by them of the nontransferable subscriptions rights.

 

15.

It is more likely than not that at the effective date of the conversion and stock offering the fair market value of the benefit provided to Eligible Account Holders and Supplemental Eligible Account Holders by their interest in the liquidation account of First Seacoast Bank is zero. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders and Supplemental Eligible Account Holders upon the constructive distribution to them of such rights in the First Seacoast Bank liquidation account as of the effective date of the conversion and stock offering.

 

16.

It is more likely than not that the basis of the shares of First Seacoast Bancorp, Inc. common stock purchased in the stock offering by the exercise of nontransferable subscription rights will be the purchase price. The holding period of the First Seacoast Bancorp, Inc. common stock purchased pursuant to the exercise of nontransferable subscription rights will commence on the date the right to acquire such stock was exercised (i.e., the effective date of the conversion and stock offering).

 

17.

No gain or loss will be recognized by First Seacoast Bancorp, Inc. on the receipt of money in exchange for First Seacoast Bancorp, Inc. common stock sold in the stock offering.

We believe that the tax opinions summarized above address the material federal income tax consequences that are generally applicable to First Seacoast Bancorp, MHC, First Seacoast Bancorp, First Seacoast Bank, First Seacoast Bancorp, Inc., persons receiving subscription rights, and stockholders of First Seacoast Bancorp. With respect to items 13 and 15 above, Luse Gorman, PC noted that the subscription rights will be granted at no cost to the recipients, are legally nontransferable and of short duration, and will provide the recipient with the right only to purchase shares of common stock at the same price to be paid by members of the general public in any community offering. Luse Gorman, PC further noted that Feldman Financial Advisors, Inc. has issued a letter that the subscription rights have no ascertainable fair market value. Luse Gorman, PC also noted that the Internal Revenue Service has not in the past

 

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concluded that subscription rights have value. Based on the foregoing, Luse Gorman, PC believes that it is more likely than not that the nontransferable subscription rights to purchase shares of common stock have no value. However, the issue of whether the nontransferable subscription rights have value is based on all the facts and circumstances. If the subscription rights granted to Eligible Account Holders, Supplemental Eligible Account Holders and Other Members are deemed to have an ascertainable value, receipt of these rights could result in taxable gain to those Eligible Account Holders, Supplemental Eligible Account Holders, and Other Members in an amount equal to the ascertainable value, and we could recognize gain on the distribution of such rights. Eligible Account Holders, Supplemental Eligible Account Holders and Other Members are encouraged to consult with their own tax advisors as to the tax consequences if subscription rights are deemed to have an ascertainable value.

The opinion as to item 14 above is based on the position that: (i) no holder of an interest in a liquidation account has ever received any payment attributable to liquidation of a solvent bank and/or holding company (other than as set forth below); (ii) the interests in the liquidation accounts are not transferable; (iii) the amounts due under the liquidation account with respect to each Eligible Account Holder and Supplemental Eligible Account Holder will be reduced as their deposits in First Seacoast Bank are reduced; (iv) holders of an interest in a liquidation account have received payments of their interests in very few instances (out of hundreds of transactions involving mergers, acquisitions and the purchase of assets and assumption of liabilities of holding companies and subsidiary banks) and these instances involved the purchase and assumption of a bank’s assets by a credit union; and (v) the First Seacoast Bank liquidation account payment obligation arises only if First Seacoast Bancorp, Inc. lacks sufficient assets to fund the liquidation account or if First Seacoast Bank (or First Seacoast Bank and First Seacoast Bancorp, Inc.) enters into a transaction to transfer First Seacoast Bank’s assets and liabilities to a credit union.

In addition, we have received a letter from Feldman Financial Advisors, Inc. stating its belief that the benefit provided by the First Seacoast Bank liquidation account supporting the payment of the liquidation account if (i) First Seacoast Bancorp, Inc. lacks sufficient net assets or (ii) First Seacoast Bank (or First Seacoast Bank and First Seacoast Bancorp, Inc.) enters into a transaction to transfer First Seacoast Bank’s assets and liabilities to a credit union, does not have any economic value at the time of the conversion and stock offering. Based on the foregoing, Luse Gorman, PC believes it is more likely than not that such rights in the First Seacoast Bank liquidation account have no value. If such rights are subsequently found to have an economic value as of the effective time of the conversion and stock offering, income may be recognized by each Eligible Account Holder or Supplemental Eligible Account Holder in the amount of the fair market value as of the date of the conversion and stock offering.

The opinion of Luse Gorman, PC, unlike a letter ruling issued by the Internal Revenue Service, is not binding on the Internal Revenue Service and the conclusions expressed therein may be challenged at a future date. The Internal Revenue Service has issued favorable rulings for transactions substantially similar to the proposed conversion and stock offering, but those rulings may not be cited as precedent by any taxpayer other than the taxpayer to whom a ruling is addressed. We do not plan to apply for a letter ruling concerning the transactions described herein.

We have also received an opinion from Baker Newman Noyes that the New Hampshire income tax consequences are consistent with the federal income tax consequences.

The federal and state tax opinions have been filed with the Securities and Exchange Commission as exhibits to First Seacoast Bancorp, Inc.’s registration statement.

Certain Restrictions on Purchase or Transfer of Our Shares after Conversion

All shares of common stock purchased in the stock offering by a director or certain officers of First Seacoast Bank, First Seacoast Bancorp, First Seacoast Bancorp, Inc. or First Seacoast Bancorp, MHC generally may not be sold for a period of one year following the closing of the conversion and stock offering, except in the event of the death of the individual. Restricted shares will bear a legend giving notice of this restriction on transfer, and instructions will be issued to the effect that any transfer within this time period of any record ownership of the shares other than as provided above is a violation of the restriction. Any shares of common stock issued at a later date as a stock dividend, stock split, or otherwise, with respect to the restricted stock will be similarly restricted. The directors and executive officers of First Seacoast Bancorp, Inc. also will be restricted by the insider trading rules under the Securities Exchange Act of 1934.

 

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Purchases of shares of our common stock by any of our directors, certain officers and their associates, during the three-year period following the closing of the conversion and stock offering, may be made only through a broker or dealer registered with the Securities and Exchange Commission, except with the prior written approval of the Federal Reserve Board. This restriction does not apply, however, to negotiated transactions involving more than 1% of our outstanding common stock or to purchases of our common stock by our stock option plan or any of our tax-qualified employee stock benefit plans or non-tax-qualified employee stock benefit plans, including any restricted stock plans.

PROPOSAL 2 — ADJOURNMENT OF THE SPECIAL MEETING

If there are not sufficient votes to constitute a quorum or to approve the plan of conversion at the time of the special meeting, the proposals may not be approved unless the special meeting is adjourned to a later date or dates in order to permit further solicitation of proxies. In order to allow proxies that have been received by First Seacoast Bancorp at the time of the special meeting to be voted for an adjournment, if necessary, First Seacoast Bancorp has submitted the question of adjournment to its stockholders as a separate matter for their consideration. The board of directors of First Seacoast Bancorp recommends that stockholders vote “FOR” approval of the adjournment proposal. If it is necessary to adjourn the special meeting, no notice of the adjourned special meeting is required to be given to stockholders (unless the adjournment is for more than 30 days or if a new record date is fixed), other than an announcement at the special meeting of the hour, date and place to which the special meeting is adjourned.

The board of directors unanimously recommends that you vote “FOR” approval of the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the plan of conversion.

PROPOSALS 3 THROUGH 5 — INFORMATIONAL PROPOSALS RELATING TO ARTICLES OF INCORPORATION OF FIRST SEACOAST BANCORP, INC.

By their approval of the plan of conversion as set forth in Proposal 1, the board of directors of First Seacoast Bancorp has approved each of the informational proposals numbered 3 through 5, all of which relate to provisions included in the articles of incorporation of First Seacoast Bancorp, Inc. Each of these informational proposals is discussed in more detail below.

As a result of the conversion and stock offering, the public stockholders of First Seacoast Bancorp, whose rights are presently governed by the charter and bylaws of First Seacoast Bancorp, will become stockholders of First Seacoast Bancorp, Inc., whose rights will be governed by the articles of incorporation and bylaws of First Seacoast Bancorp, Inc. The following informational proposals address the material differences between the governing documents of the two companies. This discussion is qualified in its entirety by reference to the charter and bylaws of First Seacoast Bancorp and the articles of incorporation and bylaws of First Seacoast Bancorp, Inc. See “Where You Can Find Additional Information” for procedures for obtaining a copy of those documents.

The provisions of First Seacoast Bancorp, Inc.’s articles of incorporation that are summarized as informational proposals 3 through 5 were approved as part of the process in which the board of directors of First Seacoast Bancorp approved the plan of conversion. These proposals are informational only because the Federal Reserve Board’s regulations governing mutual-to-stock conversions do not provide for votes on matters other than the plan of conversion. First Seacoast Bancorp’s stockholders are not being asked to approve these informational proposals at the special meeting. While we are asking you to vote with respect to each of the informational proposals set forth below, the proposed provisions for which an informational vote is requested will become effective if stockholders approve the plan of conversion, regardless of whether stockholders vote to approve any or all of the informational proposals. The provisions of First Seacoast Bancorp, Inc.’s articles of incorporation and bylaws that are summarized as informational proposals may have the effect of deterring or rendering more difficult attempts by third parties to obtain control of First Seacoast Bancorp, Inc., if such attempts are not approved by the board of directors, or may make the removal of the board of directors or management, or the appointment of new directors, more difficult.

 

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Informational Proposal 3 – Approval of a Provision in First Seacoast Bancorp, Inc.’s Articles of Incorporation Requiring a Super-Majority Vote to Amend Certain Provisions of the Articles of Incorporation of First Seacoast Bancorp, Inc. No amendment of the charter of First Seacoast Bancorp may be made unless it is first proposed by the board of directors, then preliminarily approved by the Federal Reserve Board, and thereafter approved by the holders of a majority of the total votes eligible to be cast at a legal meeting. The articles of incorporation of First Seacoast Bancorp, Inc. generally may be amended by the holders of a majority of the shares entitled to vote; provided, however, that any amendment of Section C, D, E or F of Article Fifth (Preferred Stock, Restrictions on Voting Rights of the Corporation’s Equity Securities, Majority Vote and Quorum), Article 7 (Directors), Article 8 (Bylaws), Article 9 (Evaluation of Certain Offers), Article 10 (Indemnification, etc. of Directors and Officers), Article 11 (Limitation of Liability), Article 12 (Selection of Forum) and Article 13 (Amendment of the Articles of Incorporation) must be approved by the affirmative vote of the holders of at least 80% of the outstanding shares entitled to vote, except that the board of directors may amend the articles of incorporation without any action by the stockholders to increase or decrease the aggregate number of shares of capital stock.

These limitations on amendments to specified provisions of First Seacoast Bancorp, Inc.’s articles of incorporation are intended to ensure that the referenced provisions are not limited or changed upon a simple majority vote. While this limits the ability of stockholders to amend those provisions, First Seacoast Bancorp, MHC, as a 55.2% stockholder, currently can effectively block any stockholder proposed change to the charter.

The requirement of a super-majority stockholder vote to amend specified provisions of First Seacoast Bancorp, Inc.’s articles of incorporation could have the effect of discouraging a tender offer or other takeover attempt where the ability to make fundamental changes through amendments to the articles of incorporation is an important element of the takeover strategy of the potential acquirer. The board of directors believes that the provisions limiting certain amendments to the articles of incorporation will put the board of directors in a stronger position to negotiate with third parties with respect to transactions potentially affecting the corporate structure of First Seacoast Bancorp, Inc. and the fundamental rights of its stockholders, and to preserve the ability of all stockholders to have an effective voice in the outcome of such matters.

The board of directors recommends that you vote “FOR” approval of a provision in First Seacoast Bancorp, Inc.’s articles of incorporation requiring a super-majority vote to approve certain amendments to First Seacoast Bancorp, Inc.’s articles of incorporation.

Informational Proposal 4 – Approval of a Provision in First Seacoast Bancorp, Inc.’s Articles of Incorporation Requiring a Super-Majority Vote of Stockholders to Approve Stockholder Proposed Amendments to First Seacoast Bancorp, Inc.’s Bylaws. An amendment to First Seacoast Bancorp’s bylaws proposed by stockholders must be approved by the holders of a majority of the total votes eligible to be cast at a legal meeting subject to applicable approval by the Federal Reserve Board. The articles of incorporation of First Seacoast Bancorp, Inc. provides that stockholders may only amend the bylaws if such proposal is approved by the affirmative vote of the holders of at least 80% of the outstanding shares entitled to vote.

The requirement of a super-majority stockholder vote to amend the bylaws of First Seacoast Bancorp, Inc. is intended to ensure that the bylaws are not limited or changed upon a simple majority vote of stockholders. While this limits the ability of stockholders to amend the bylaws, First Seacoast Bancorp, MHC, as a 55.2% stockholder, currently can effectively block any stockholder proposed change to the bylaws. Also, the board of directors of both First Seacoast Bancorp and First Seacoast Bancorp, Inc. may by a majority vote amend either company’s bylaws.

 

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This provision in First Seacoast Bancorp, Inc.’s articles of incorporation could have the effect of discouraging a tender offer or other takeover attempt where the ability to make fundamental changes through amendments to the bylaws is an important element of the takeover strategy of the potential acquirer. The board of directors believes that the provision limiting amendments to the bylaws will put the board of directors in a stronger position to negotiate with third parties with respect to transactions potentially affecting the corporate structure of First Seacoast Bancorp, Inc. and the fundamental rights of its stockholders, and to preserve the ability of all stockholders to have an effective voice in the outcome of such matters.

The board of directors unanimously recommends that you vote “FOR” approval of the provision in First Seacoast Bancorp, Inc.’s articles of incorporation requiring a super-majority vote of stockholders to approve stockholder proposed amendments to First Seacoast Bancorp, Inc.’s bylaws.

Informational Proposal 5 – Approval of a Provision in First Seacoast Bancorp, Inc.’s Articles of Incorporation to Limit the Voting Rights of Shares Beneficially Owned in Excess of 10% of First Seacoast Bancorp, Inc.’s Outstanding Voting Stock. The articles of incorporation of First Seacoast Bancorp, Inc. provide that in no event shall any person, who directly or indirectly beneficially owns in excess of 10% of the then-outstanding shares of common stock as of the record date for the determination of stockholders entitled or permitted to vote on any matter, be entitled or permitted to vote in respect of the shares held in excess of the 10% limit. Beneficial ownership is determined pursuant to the federal securities laws and includes, but is not limited to, shares as to which any person and his or her affiliates (i) have the right to acquire pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options and (ii) have or share investment or voting power (but shall not be deemed the beneficial owner of any voting shares solely by reason of a revocable proxy granted for a particular meeting of stockholders, and that are not otherwise beneficially, or deemed by First Seacoast Bancorp, Inc. to be beneficially, owned by such person and his or her affiliates). The foregoing restriction does not apply to any employee benefit plans of First Seacoast Bancorp, Inc. or any subsidiary or a trustee of a plan.

The provision in First Seacoast Bancorp, Inc.’s articles of incorporation limiting the voting rights of beneficial owners of more than 10% of First Seacoast Bancorp, Inc.’s outstanding voting stock is intended to limit the ability of any person to acquire a significant number of shares of First Seacoast Bancorp, Inc. common stock and thereby gain sufficient voting control so as to cause First Seacoast Bancorp, Inc. to effect a transaction that may not be in the best interests of First Seacoast Bancorp, Inc. and its stockholders generally. This provision will not prevent a stockholder from seeking to acquire a controlling interest in First Seacoast Bancorp, Inc., but it will prevent a stockholder from voting more than 10% of the outstanding shares of common stock unless that stockholder has first persuaded the board of directors of the merits of the course of action proposed by the stockholder. The board of directors of First Seacoast Bancorp, Inc. believes that fundamental transactions generally should be first considered and approved by the board of directors as it generally believes that it is in the best position to make an initial assessment of the merits of any such transactions and that its ability to make the initial assessment could be impeded if a single stockholder could acquire a sufficiently large voting interest so as to control a stockholder vote on any given proposal. This provision in First Seacoast Bancorp, Inc.’s articles of incorporation makes an acquisition, merger or other similar corporate transaction less likely to occur, even if such transaction is supported by most stockholders, because it can prevent a holder of shares in excess of the 10% limit from voting the excess shares in favor of the transaction. Thus, it may be deemed to have an anti-takeover effect.

The board of directors unanimously recommends that you vote “FOR” approval of a provision in First Seacoast Bancorp, Inc.’s articles of incorporation to limit the voting rights of shares beneficially owned in excess of 10% of First Seacoast Bancorp, Inc.’s outstanding voting stock.

 

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The summary information presented below at each date or for each of the periods presented is derived in part from the consolidated financial statements of First Seacoast Bancorp. The financial condition data at December 31, 2021 and 2020 and the operating data for the years ended December 31, 2021 and 2020 were derived from the audited consolidated financial statements of First Seacoast Bancorp included elsewhere in this proxy statement/prospectus. The information at June 30, 2022 and for the six months ended June 30, 2022 and 2021 is unaudited and reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. Such adjustments are the only adjustments included in the interim data. The results of operations for the six months ended June 30, 2022 are not necessarily indicative of the results of operations for the entire year or for any other interim period. The following information is only a summary, and should be read in conjunction with the consolidated financial statements and related notes of First Seacoast Bancorp beginning on page F-1 of this proxy statement/prospectus.

 

		At or For the Six Months Ended June 30,								At or For the Year Ended December 31,
		2022				2021				2021				2020
						(In thousands, except per share data)
Selected Financial Condition Data:
Total assets		$	510,246			$	478,234			$	487,074			$	443,062
Total loans			385,601				376,459				376,641				368,142
Total deposits			387,868				370,371				393,243				327,381
Total borrowings			64,250				43,271				29,462				52,322
Total stockholders’ equity			51,872				59,950				60,468				58,861
Book value per share			8.55				9.97				9.88				9.72
Selected Operating Data:
Interest and dividend income		$	7,922			$	7,813			$	15,495			$	15,850
Interest expense			391				512				1,235				3,174
Net interest and dividend income			7,531				7,301				14,260				12,676
Provision for loan losses			60				85				205				480
Net interest and dividend income after provision for loan losses			7,471				7,216				14,055				12,196
Non-interest income			840				1,379				2,249				2,046
Non-interest expense			7,615				6,425				13,082				13,187
Income before income tax expense (benefit)			696				2,170				3,222				1,055
Income tax expense (benefit)			124				429				601				(24	)
Net income		$	572			$	1,741			$	2,621			$	1,079
Share Data:
Average shares outstanding, basic			5,771,234				5,827,589				5,817,509				5,865,098
Average shares outstanding, diluted			5,790,723				5,827,589				5,817,509				5,865,098
Total shares outstanding			6,064,891				6,016,022				6,123,337				6,058,024
Basic earnings per share		$	0.10			$	0.30			$	0.45			$	0.18
Diluted earnings per share		$	0.10			$	0.30			$	0.45			$	0.18

 

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		At or For the Six Months Ended June 30,												At or For the Year Ended December 31,
		2022								2021				2021				2020
Performance Ratios (1):
Return on average assets (2)			0.23				%				0.75	%			0.55	%			0.24	%
Return on average stockholders’ equity (3)			2.02	%							5.86	%			4.38	%			1.85	%
Interest rate spread (4)			3.03				%				3.13	%			2.94	%			2.65	%
Net interest margin (5)			3.10	%							3.22	%			3.04	%			2.88	%
Non-interest expenses as a percent of average assets			3.05				%				2.76	%			2.73	%			2.91	%
Efficiency ratio (6)			90.97				%				74.02	%			79.24	%			89.57	%
Average interest-earning assets as a percent of average interest-bearing liabilities			141.11				%				135.52	%			139.51	%			131.48	%
Average stockholders’ equity as a percent of average assets (7)			11.36				%				12.74	%			12.48	%			12.91	%
Capital Ratios (First Seacoast Bank Only):
Total capital (to risk-weighted assets)			16.70				%				18.15	%			17.87	%			17.92	%
Tier 1 capital (to risk-weighted assets)			15.56				%				16.94	%			16.63	%			16.72	%
Common equity Tier 1 capital (to risk-weighted assets)			15.56				%				16.94	%			16.63	%			16.72	%
Tier 1 capital (to average assets)			10.01				%				10.46	%			9.92	%			10.59	%
Asset Quality Ratios:
Allowance for loan losses as a percent of total loans			0.95				%				0.92	%			0.95	%			0.91	%
Allowance for loan losses as a percent of non-performing loans			605.32				%				NA				428.91	%			378.05	%
Net recoveries (charge-offs) as a percent of average outstanding loans during the period			—								0.02	%			0.01	%			—
Non-performing loans as a percent of total loans			0.16				%				NA				0.22	%			0.24	%
Non-performing loans as a percent of total assets			0.12				%				NA				0.17	%			0.20	%
Non-performing assets as a percent of total assets			0.12				%				NA				0.17	%			0.20	%
Other Data:
Number of offices			5								5				5				5
Number of full-time equivalent employees			83								77				81				78

 

(1)	Performance ratios for the six months ended June 30, 2022 and 2021 are annualized.

(2)	Represents net income divided by average total assets.

(3)	Represents net income divided by average stockholders’ equity.

(4)	Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of average interest-bearing liabilities.

(5)	Represents net interest income divided by average interest-earning assets.

(6)	Represents non-interest expense divided by the sum of net interest and dividend income and non-interest income.

(7)	Represents average stockholders’ equity divided by average total assets.

 

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RECENT DEVELOPMENTS

The following tables set forth selected consolidated financial and other data of First Seacoast Bancorp at the dates and for the periods indicated. The financial information at September 30, 2022 and for the three months and nine months ended September 30, 2022 and 2021 is not audited but, in the opinion of management, includes all adjustments necessary for a fair presentation. All of these adjustments are normal and recurring. The results of operations for the three months and nine months ended September 30, 2022 are not necessarily indicative of the results of operations that may be expected for the entire year or any other period. The financial information at December 31, 2021 is derived from, and should be read together with, the consolidated financial statements and related notes appearing elsewhere in this proxy statement/prospectus.

 

		At September 30, 2022				At December 31, 2021
		(In thousands, except per share data)
Selected Financial Condition Data:
Total assets		$	523,801			$	487,074
Securities available-for-sale, at fair value			100,800				91,365
Loans, net			392,185				373,051
Total deposits			386,749				393,243
Total borrowings			82,892				29,462
Total stockholders’ equity			47,730				60,468
Book value per share			7.87				9.88

 

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2022				2021				2022				2021
		(In thousands)
Selected Operating Data:
Interest and dividend income		$	4,217			$	3,860			$	12,139			$	11,673
Interest expense			427				235				818				747
Net interest and dividend income			3,790				3,625				11,321				10,926
Provision (credit) for loan losses			(60	)			60				—				145
Net interest and dividend income after provision (credit) for loan losses			3,850				3,565				11,321				10,781
Non-interest income			365				431				1,205				1,810
Non-interest expense			3,708				3,396				11,323				9,821
Income before income tax expense			507				600				1,203				2,770
Income tax expense			39				137				163				566
Net income		$	468			$	463			$	1,040			$	2,204
Share data:
Average shares outstanding, basic			5,752,863				5,807,665				5,765,043				5,820,875
Average shares outstanding, diluted			5,782,289				5,807,665				5,785,862				5,820,875
Total shares outstanding			6,064,891				6,012,559				6,064,891				6,012,559
Basic earnings per share		$	0.08			$	0.08			$	0.18			$	0.38
Diluted earnings per share		$	0.08			$	0.08			$	0.18			$	0.38

 

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		At or For the Three Months Ended September 30,								At or For the Nine Months Ended September 30,
		2022				2021				2022				2021
Performance Ratios (1):
Return on average assets (2)			0.36	%			0.38	%			0.27	%			0.62	%
Return on average stockholders’ equity (3)			3.56	%			3.06	%			2.50	%			4.92	%
Interest rate spread (4)			2.89	%			2.95	%			2.98	%			3.07	%
Net interest margin (5)			3.01	%			3.03	%			3.07	%			3.15	%
Non-interest expenses as a percent of average assets			2.85	%			2.77	%			2.98	%			2.76	%
Efficiency ratio (6)			89.24	%			83.73	%			90.40	%			77.11	%
Average interest-earning assets as a percent of average interest-bearing liabilities			135.04	%			141.90	%			138.95	%			137.68	%
Average stockholders’ equity as a percent of average assets (7)			10.11	%			12.33	%			10.93	%			12.60	%
Capital Ratios (First Seacoast Bank only):
Total capital (to risk-weighted assets)			16.37	%			17.99	%			16.37	%			17.99	%
Tier 1 capital (to risk-weighted assets)			15.28	%			16.77	%			15.28	%			16.77	%
Common equity Tier 1 capital (to risk-weighted assets)			15.28	%			16.77	%			15.28	%			16.77	%
Tier 1 capital (to average assets)			9.81	%			10.07	%			9.81	%			10.07	%
Asset Quality Ratios:
Allowance for loan losses as a percent of total loans			0.91	%			0.95	%			0.91	%			0.95	%
Allowance for loan losses as a percent of non-performing loans			717.00	%			NA				717.00	%			NA
Net recoveries (charge-offs) as a percentage of average outstanding loans during the period			NA				NA				NA				0.01	%
Non-performing loans as a percent of total loans			NA				NA				NA				NA
Non-performing loans as a percent of total assets			NA				NA				NA				NA
Non-performing assets as a percent of total assets			NA				NA				NA				NA
Other Data:
Number of offices			5				5				5				5
Number of full-time equivalent employees			81				79				81				79

 

(1)	Performance ratios are annualized.

(2)	Represents net income divided by average total assets.

(3)	Represents net income divided by average stockholders’ equity.

(4)	Represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(5)	Represents net interest income divided by average interest-earning assets.

(6)	Represents non-interest expense divided by the sum of net interest and dividend income and non-interest income.

(7)	Represents average stockholders’ equity divided by average total assets.

Comparison of Financial Condition at September 30, 2022 (unaudited) and December 31, 2021

Total Assets. Total assets were $523.8 million as of September 30, 2022, an increase of $36.7 million, or 7.5%, compared to total assets of $487.1 million at December 31, 2021. The increase was due primarily to a $19.1 million increase in net loans, a $9.4 million increase in securities available-for-sale and a $6.7 million increase in other assets which resulted from an increase in a deferred tax benefit related to the increase in our net unrealized losses within the available-for-sale securities portfolio.

Cash and Due From Banks. Cash and due from banks increased $211,000, or 3.2%, to $6.8 million at September 30, 2022 from $6.6 million at December 31, 2021. This increase primarily resulted from a $53.4 million increase in borrowings offset by a $6.5 million decrease in total deposits, a $19.1 million increase in net loans and a $9.4 million increase in securities available-for-sale ($28.8 million net of increase in net unrealized losses) during the nine months ended September 30, 2022.

Available-for-Sale Securities. Available-for-sale securities increased by $9.4 million, or 10.3%, to $100.8 million at September 30, 2022 from $91.4 million at December 31, 2021. This increase was primarily due to net investments purchases of $33.6 million offset by $4.1 million of proceeds from sales, maturities and principal received and a $19.4 million increase in net unrealized losses within the portfolio during the nine months ended September 30, 2022.

 

 

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Net Loans. Net loans increased $19.1 million, or 5.1%, to $392.2 million at September 30, 2022 from $373.1 million at December 31, 2021. During the nine months ended September 30, 2022, we originated $72.3 million of loans. We also purchased $1.3 million of one- to four-family residential mortgage loans and $1.7 million of consumer loans secured by manufactured housing properties. As of September 30, 2022 and December 31, 2021, the portfolio of purchased loans had outstanding principal balances of $31.2 million and $29.7 million, respectively, and were performing in accordance with their original repayment terms. Net deferred loan costs increased $601,000, or 36.4%, to $2.3 million at September 30, 2022 from $1.7 million at December 31, 2021 due primarily to the increase in deferred costs on consumer loans and the net decrease in unearned fees received from the SBA for processing PPP loans. SBA fee and interest income recognized during the three and nine months ended September 30, 2022 was $7,000 and $233,000, respectively, as compared to $263,000 and $972,000 during the three and nine months ended September 30, 2021, respectively. SBA fee and interest income is included in interest and fees on loans.

One- to four-family residential mortgage loans increased $11.9 million, or 5.1%, to $246.1 million at September 30, 2022 from $234.2 million at December 31, 2021. Commercial real estate mortgage loans increased $5.9 million, or 8.2%, to $78.0 million at September 30, 2022 from $72.1 million at December 31, 2021. Multi-family loans decreased $434,000, or 4.8%, to $8.6 million at September 30, 2022 from $9.0 million at December 31, 2021. Commercial and industrial loans decreased $1.8 million (net of $5.5 million of PPP loan forgiveness), or 6.6%, to $25.1 million at September 30, 2022 from $26.9 million at December 31, 2021. Acquisition, development, and land loans decreased $1.4 million, or 6.4%, to $20.0 million at September 30, 2022 from $21.4 million at December 31, 2021. Home equity loans and lines of credit increased $2.4 million, or 35.0%, to $9.4 million at September 30, 2022 from $6.9 million at December 31, 2021. Consumer loans increased $1.9 million, or 41.5%, to $6.5 million at September 30, 2022 from $4.6 million at December 31, 2021.

Our strategy to grow the balance sheet continues to be through originations and, to a lesser extent, purchases of one- to four-family residential mortgage loans and consumer loans secured by manufactured housing properties, while also diversifying into higher yielding commercial real estate mortgage loans and commercial and industrial loans to improve net margins and manage interest rate risk. We also continue to sell selected, conforming 15-year and 30-year residential fixed rate mortgage loans to the secondary market on a servicing retained basis, providing us a recurring source of revenue from loan servicing income and gains on the sale of such loans.

Our allowance for loan losses was $3.6 million at September 30, 2022 and December 31, 2021. We measure and record the allowance for loan losses based upon an incurred loss model. Under this approach, loan loss is recognized when it is probable that a loss event was incurred. This approach also considers qualitative adjustments to the quantitative baseline determined by the model. We consider the impact of current environmental factors at the measurement date that did not exist over the period from which historical experience was used. Relevant factors include, but are not limited to, concentrations of credit risk (geographic, large borrower and industry), economic trends and conditions, changes in underwriting standards, experience and depth of lending staff, trends in delinquencies and the level of criticized loans. We made relevant adjustments to the qualitative factors in the measurement of its allowance for loan losses at September 30, 2022 and December 31, 2021 that balanced the need to consider the recognition of a provision during the period while adhering to an incurred loss recognition and measurement principle which prohibits the recognition of future or lifetime losses.

We have limited or no direct exposure to industries that have been significantly impacted by the COVID-19 pandemic, including oil and gas/energy, credit cards, airlines, cruise ships, arts/entertainment/recreation, hotels/motels, casinos and shopping malls. Our exposure to the transportation and hospitality/restaurant industries amounted to less than 5% of our gross loan portfolio at September 30, 2022 and December 31, 2021.

Deposits. Our deposits are generated primarily from residents within our primary market area. We offer a selection of deposit accounts, including non-interest-bearing and interest-bearing checking accounts, savings accounts, money market accounts and time deposits, for both individuals and businesses.

 

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Deposits decreased $6.5 million, or 1.7%, to $386.7 million at September 30, 2022 from $393.2 million at December 31, 2021 primarily as a result of a $4.5 million decrease in commercial deposits and a $2.0 million decrease in retail deposits. Core deposits (defined as deposits other than time deposits) decreased $600,000, or 0.2%, to $334.3 million at September 30, 2022 from $334.9 million at December 31, 2021. As of September 30, 2022, savings deposits increased $4.1 million, money market deposits decreased $7.3 million, NOW and demand deposit accounts increased $2.6 million and time deposits decreased $5.9 million. There were $18.1 of brokered deposits included in time deposits at September 30, 2022 and December 31, 2021.

Borrowings. Total borrowings increased $53.4 million, or 181.4%, to $82.9 million at September 30, 2022 from $29.5 million at December 31, 2021 in support of our investment and loan growth initiatives.

Total Stockholders’ Equity. Total stockholders’ equity decreased $12.8 million, or 21.1%, to $47.7 million at September 30, 2022 from $60.5 million at December 31, 2021. This decrease was due primarily to an other comprehensive loss of $13.5 million related to net changes in unrealized holding losses in the available-for-sale securities portfolio and changes in the fair value of interest rate swap derivatives, as a result of an increase in market interest rates during the nine months ended September 30, 2022, and treasury stock purchases of $623,000, partially offset by the recognition of $385,000 of previously unearned compensation and net income of $1.0 million for the nine months ended September 30, 2022.

Non-performing Assets. Non-performing assets include loans that are 90 or more days past due or on non-accrual status, including troubled debt restructurings on non-accrual status, and real estate and other loan collateral acquired through foreclosure and repossession. Troubled debt restructurings include loans for which either a portion of interest or principal has been forgiven or loans modified at interest rates materially less than current market rates.

Management determines that a loan is impaired or non-performing when it is probable at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral dependent. When a loan is determined to be impaired, the measurement of the loan in the allowance for loan losses is based on present value of expected future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral. Non-accrual loans are loans for which collectability is questionable and, therefore, interest on such loans will no longer be recognized on an accrual basis.

We generally cease accruing interest on our loans when contractual payments of principal or interest have become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. Interest received on non-accrual loans generally is applied against principal or applied to interest on a cash basis. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for at least six consecutive months and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Non-performing loans were $5,000 and $837,000 at September 30, 2022 and December 31, 2021, respectively. At December 31, 2021, non-performing loans consisted primarily of a residential mortgage loan and a home equity line of credit to deceased borrowers and a $195,000 non-performing residential mortgage loan that was repurchased from an investor and restructured in 2021. The property securing both credit facilities was sold in July 2022 and all outstanding loan balances were paid. The non-performing residential mortgage loan that was repurchased from an investor and restructured in 2021 was returned to performing status during June 2022. The outstanding balance of this now accruing troubled debt restructuring was approximately $190,000 and $195,000 at September 30, 2022 and December 31, 2021, respectively. At September 30, 2022 and December 31, 2021, we had no foreclosed assets.

 

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

 

		For the Three Months Ended September 30,
		2022												2021
		Average Outstanding Balance				Interest				Average Yield/Rate(1)				Average Outstanding Balance				Interest				Average Yield/Rate(1)
(Dollars in thousands)
Interest-earning assets:
Loans (2)		$	387,604			$	3,543				3.66	%		$	373,438			$	3,503				3.75	%
Taxable debt securities			55,966				271				1.94	%			33,698				114				1.35	%
Non-taxable debt securities			50,726				342				2.70	%			38,316				216				2.25	%
Interest-bearing deposits with other banks			6,802				24				1.41	%			31,184				19				0.24	%
Federal Home Loan Bank stock			2,982				37				4.96	%			2,022				8				1.58	%
Total interest-earning assets			504,080				4,217				3.35	%			478,658				3,860				3.23	%
Non-interest-earning assets			16,539												11,734
Total assets		$	520,619											$	490,392
Interest-bearing liabilities:
NOW and demand deposits		$	116,690			$	43				0.15	%		$	107,973			$	33				0.12	%
Money market deposits			65,596				31				0.19	%			73,939				28				0.15	%
Savings deposits			63,526				8				0.05	%			56,196				9				0.06	%
Time deposits			53,760				69				0.51	%			57,542				66				0.46	%
Total interest-bearing deposits			299,572				151				0.20	%			295,650				136				0.18	%
Borrowings			72,079				276				1.53	%			40,047				99				0.99	%
Other			1,642				—				—				1,626				—				—
Total interest-bearing liabilities			373,293				427				0.46	%			337,323				235				0.28	%
Non-interest-bearing deposits			90,645												88,618
Other noninterest-bearing liabilities			4,029												3,965
Total liabilities			467,967												429,906
Total stockholders’ equity			52,652												60,486
Total liabilities and stockholders’ equity		$	520,619											$	490,392
Net interest income						$	3,790											$	3,625
Net interest rate spread (3)											2.89	%											2.95	%
Net interest-earning assets (4)		$	130,787											$	141,335
Net interest margin (5)											3.01	%											3.03	%
Average interest-earning assets as a percent of interest-bearing liabilities			135.04	%											141.90	%

 

(1)	Annualized.

(2)	Net deferred fee (expense) income included in loan interest totaled $(118,000) and $64,000 for the three months ended September 30, 2022 and 2021.

(3)	Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(4)	Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(5)	Net interest margin represents net interest income divided by average total interest-earning assets.

 

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