As filed with the Securities and Exchange Commission on September 7, 2018

Registration No. 333-            

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

1895 Bancorp of Wisconsin, Inc.

1895 Bancorp of Wisconsin 401(k) Plan

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Federal		6036		Pending
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

7001 West Edgerton Avenue

Greenfield, WI 53220

(414) 421-8200

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

 

 

Richard B. Hurd

President and Chief Executive Officer

1895 Bancorp of Wisconsin, Inc.

7001 West Edgerton Avenue

Greenfield, WI 53220

(414) 421-8200

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

 

 

Copies to:

Kip Weissman, Esq.

Marc Levy, Esq.

Luse Gorman, PC

5335 Wisconsin Avenue, N.W., Suite 780

Washington, D.C. 20015

(202) 274-2000

 

 

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

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

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

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

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

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

 

Large accelerated filer		☐		Accelerated filer		☐
Non-accelerated filer		☐  (Do not check if a smaller reporting company)		Smaller reporting company		☒
				Emerging growth company		☒

 

 

CALCULATION OF REGISTRATION FEE

 

Title of each class of securities to be registered		Amount to be registered		Proposed maximum offering price per share		Proposed maximum aggregate offering price		Amount of registration fee
Common Stock, $0.01 par value per share		3,273,188 shares		$10.00		$32,731,880(1)		$4,076
Participation Interests		528,550(2)						(2)

 

(1)	Estimated solely for the purpose of calculating the registration fee.

(2)	The securities to be purchased by the PryraMax Bank, FSB 401(k) Plan are included in the amount shown for the common stock. Accordingly, no separate fee is required for the participation interests.

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

 

 

 

Prospectus Supplement

Interests in

PYRAMAX BANK, FSB 401(K) SAVINGS PLAN

Offering of Participation Interests in up to 528,550 Shares of

1895 Bancorp of Wisconsin, Inc.

Common Stock

In connection with the conversion of PyraMax Bank, FSB (the “Bank”) from the mutual to the stock form of organization and the related stock offering of 1895 Bancorp of Wisconsin, Inc. (the “Reorganization”), 1895 Bancorp of Wisconsin, Inc. and the Bank are allowing participants in the PyraMax Bank, FSB 401(k) Savings Plan (the “401(k) Plan”) the opportunity to invest up to 50% of their accounts in shares of common stock of 1895 Bancorp of Wisconsin, Inc. (“1895 Bancorp Common Stock”) on the date of the stock offering. Based on the value of the 401(k) Plan assets at July 31, 2018, the trustee of the 401(k) Plan can acquire up to 528,550 shares of 1895 Bancorp Common Stock, at the purchase price of $10.00 per share. This prospectus supplement relates to the initial election of the 401(k) Plan participants to direct the trustee of the 401(k) Plan to invest up to 50% of their 401(k) Plan accounts in 1895 Bancorp Common Stock at the time of the stock offering.

The Bank has registered on behalf of the 401(k) Plan up to 528,550 participation interests so that the trustee of the 401(k) Plan could purchase up to 528,550 shares of 1895 Bancorp Common Stock in the offering, at the purchase price of $10.00 per share. This prospectus supplement relates to the election of Plan participants to direct the trustee of the 401(k) Plan to invest up to 50% of their 401(k) Plan accounts in the 1895 Bancorp Stock Fund on the date of the stock offering.

The prospectus of 1895 Bancorp of Wisconsin, Inc., dated [DATE], accompanies this prospectus supplement. It contains detailed information regarding the Reorganization of the Bank and the stock offering of 1895 Bancorp Common Stock and the financial condition, results of operations and business of 1895 Bancorp of Wisconsin, Inc. and the Bank. This prospectus supplement provides information regarding the 401(k) Plan. You should read this prospectus supplement together with the prospectus and keep both for future reference.

 

 

For a discussion of risks that you should consider, see “Risk Factors” beginning on page [    ] of the accompanying prospectus and “Notice of Your Rights Concerning Employer Securities” below.

The interests in the 401(k) Plan and the offering of 1895 Bancorp of Wisconsin, Inc. common stock have not been approved or disapproved by the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, the Securities and Exchange Commission or any other federal or state agency. Any representation to the contrary is a criminal offense.

The securities offered in this prospectus supplement and in the prospectus are not deposits or accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

This prospectus supplement may be used only in connection with offers and sales by 1895 Bancorp of Wisconsin, Inc. of participation interests in shares of 1895 Bancorp Common Stock pursuant to the 401(k) Plan. No one may use this prospectus supplement to re-offer or resell participation interests or shares of 1895 Bancorp Common Stock acquired through the 401(k) Plan.

You should rely only on the information contained in this prospectus supplement and the accompanying prospectus. 1895 Bancorp of Wisconsin, Inc., the Bank and the 401(k) Plan have not authorized anyone to provide you with information that is different.

This prospectus supplement does not constitute an offer to sell or solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make an offer or solicitation in that jurisdiction. Neither the delivery of this prospectus supplement and the prospectus nor any sale of 1895 Bancorp Common Stock or participation interests representing an ownership interest in 1895 Bancorp Common Stock shall under any circumstances imply that there has been no change in the affairs of 1895 Bancorp of Wisconsin, Inc. or any of its subsidiaries or the 401(k) Plan since the date of this prospectus supplement, or that the information contained in this prospectus supplement or incorporated by reference is correct as of any time after the date of this prospectus supplement.

The date of this prospectus supplement is [DATE].

TABLE OF CONTENTS

 

THE OFFERING			1
Securities Offered			1
1895 Bancorp Stock Fund			1
Purchase Priorities			1
Purchases in the Offering and Oversubscriptions			2
Composition of 1895 Bancorp Stock Fund			3
Value of the 401(k) Plan Assets			4
In Order to Participate in the Offering			4
How to Order Stock in the Offering			4
Order Deadline			6
Irrevocability of Transfer Direction			6
Other Purchases in Your Account During the Offering Period			6
Additional Purchases of 1895 Bancorp Stock Fund Units after the Offering			7
Purchase Price of Common Stock in the Offering and After the Offering			7
Nature of a Participant’s Interest in the Common Stock			7
Voting Rights of Common Stock			7
DESCRIPTION OF THE 401(k) PLAN			8
Introduction			8
Eligibility and Participation			8
Contributions under the 401(k) Plan			9
Limitations on Contributions			10
Benefits under the 401(k) Plan			11
Investment of Contributions and Account Balances			11
Performance History			12
Description of the Investment Funds			12
1895 Bancorp Stock Fund			18
Withdrawals from the 401(k) Plan			18
Administration of the 401(k) Plan			19
Amendment and Termination			19
Merger, Consolidation or Transfer			19
Federal Income Tax Consequences			20
Notice of Your Rights Concerning Employer Securities			21
Additional ERISA Considerations			22
Securities and Exchange Commission Reporting and Short-Swing Profit Liability			22
Financial Information Regarding 401(k) Plan Assets			23
LEGAL OPINION			23

 

THE OFFERING

 

Securities Offered

1895 Bancorp of Wisconsin, Inc. is offering participants in the PyraMax Bank, FSB 401(k) Savings Plan (the “401(k) Plan”) the opportunity to purchase stock of 1895 Bancorp of Wisconsin, Inc. through the 401(k) Plan by purchasing “participation interests,” through the Stock Offering Fund established under the 401(k) Plan in connection with the stock offering (“Offering”). The 401(k) Plan may acquire up to 528,550 shares of 1895 Bancorp of Wisconsin, Inc. common stock (“1895 Bancorp Common Stock”) in the stock offering. Your investment in 1895 Bancorp Common Stock in connection with the stock offering through the Stock Offering Fund is subject to the purchase priorities contained in the PyraMax Bank, FSB Plan of Reorganization from a Mutual Savings Bank to a Mutual Holding Company and Stock Issuance Plan (the “Plan of Reorganization”).

 

Information with regard to the 401(k) Plan is contained in this prospectus supplement and information with regard to the financial condition, results of operations and business of 1895 Bancorp of Wisconsin, Inc. is contained in the accompanying prospectus. The address of the principal executive office of 1895 Bancorp of Wisconsin, Inc. and the Bank is 7001 West Edgerton Avenue, Greenfield, WI 53220. The Bank’s telephone number is (414) 421-8200.

 

All elections to purchase stock in the Stock Offering Fund in the stock offering under the 401(k) Plan and any questions about this prospectus supplement should be addressed to Monica Baker, Senior Vice President, Chief Brand Officer and Director, PyraMax Bank, FSB, 7001 West Edgerton Avenue, Greenfield, WI, 53220.

 

1895 Bancorp Stock Fund

In connection with the Reorganization and stock offering, you may elect to designate a percentage of your 401(k) Plan account balance (up to 50 percent) to the Stock Offering Fund, to be used to purchase common stock of 1895 Bancorp of Wisconsin, Inc. issued in the stock offering at $10 per share. In making this determination, you should carefully consider the information set forth on page 19 of this prospectus supplement under “Notice of Your Rights Concerning Employer Securities — The Importance of Diversifying Your Retirement Savings.” The trustee of the Stock Offering Fund will purchase common stock of 1895 Bancorp of Wisconsin, Inc. at $10.00 per share to be held as stock in accordance with your directions.

 

Purchase Priorities

401(k) Plan participants are eligible to direct a transfer of funds to the Stock Offering Fund. However, such directions are subject to the purchase priorities and purchase limitations in the 401(k) Plan of Reorganization of PyraMax Bank, FSB, which provides for a subscription and community offering, as described below.

 

1

In the Offering, the purchase priorities are as follows and apply in the case more shares are ordered than are available for sale (an “oversubscription”):

Subscription offering:

 

(1)

First, to depositors of PyraMax Bank, FSB with $50 or more as of March 15, 2017.

 

(2)

Second, to PyraMax Bank, FSB’s and 1895 Bancorp of Wisconsin, Inc.’s tax-qualified plans, including the employee stock ownership plan and the 401(k) Plan.

 

(3)

Third, to depositors of PyraMax Bank, FSB with $50 or more on deposit as of [SERD].

 

(4)

Fourth, to members of PyraMax Bank, FSB (as defined in the Bank’s charter and bylaws) as of [DATE] who do not qualify in one of the foregoing categories.

 

If there are shares remaining after all of the orders in the subscription offering have been filled, shares will be offered in a community offering with a preference to natural persons residing in Milwaukee County, Wisconsin.

 

If you fall into subscription offering categories (1), (3), or (4) above, you have subscription rights to purchase 1895 Bancorp Common Stock in the subscription offering. You will separately receive offering materials in the mail, including a Stock Order Form. If you wish to purchase stock outside of the 401(k) Plan, you must complete and submit the Stock Order Form and payment, using the stock order reply envelope provided.

 

Additionally, or instead of placing an order outside of the 401(k) Plan through a Stock Order Form, as a 401(k) Plan participant, you may place an order for common stock through the 401(k) Plan, using the enclosed Special Investment Election Form, to be completed and submitted in the manner described below.

 

Purchases in the Offering and Oversubscriptions

The trustee of the 401(k) Plan will purchase 1895 Bancorp Common Stock in the stock offering based on the designated percentage set forth in your Special Investment Election Form. Once you make your election, the amount that you elect to transfer from your existing investment options for the purchase of 1895 Bancorp Common Stock in connection with the stock offering will be removed from your existing investment options and transferred to the Stock Offering Fund, which is an interest-bearing cash account in the 401(k) Plan, pending the formal closing of the stock offering, several weeks later.

 

2

After the end of the stock offering period, we will determine whether all or any portion of your order may be filled (based on your purchase priority as described above and whether the stock offering is oversubscribed). The amount that can be used toward your order will be applied to the purchase of participation interests and will be denominated in shares of 1985 Bancorp Common Stock in the 401(k) Plan.

 

In the event the stock offering is oversubscribed, i.e. there are more orders for shares of 1895 Bancorp Common Stock than shares available for sale in the stock offering, and the trustee is unable to use the full amount allocated by you to purchase shares of common stock in the stock offering, the amount that cannot be invested in shares of common stock, and any interest earned, will be reinvested in the other investment funds of the 401(k) Plan in accordance with your then existing investment election (in proportion to your investment direction for future contributions). If you do not have an existing election as to the investment of future contributions, then such amounts will be transferred to and invested in applicable Blackrock Lifepath Index Fund, based on your retirement age assumption, pending your reinvestment in another fund of your choice.

 

If you choose not to direct the investment of your account balances towards the purchase of any shares in the Offering, your account balances will remain in the investment funds of the 401(k) Plan as previously directed by you.

 

At the conclusion of the stock offering, once the eligible assets in the Stock Offering Fund have been used to purchase 1895 Bancorp Common Stock, the shares will be transferred to and held in the 1895 Bancorp Stock Fund. Your interests in the 1895 Bancorp Stock Fund will be referred to as participation interests and will be denominated in shares of 1895 Bancorp Common Stock.

 

Composition of 1895 Bancorp Stock Fund

The value of one participation interest will equal one share of common stock of 1895 Bancorp of Wisconsin, Inc., which will be initially valued at $10.

 

Following the stock offering, each day, the aggregate value of the 1895 Bancorp Stock Fund will be determined by dividing the total market value of the 1895 Bancorp Stock Fund at the end of the day by the total number of shares held in the 1895 Bancorp Stock Fund

 

3

as of the previous day’s end. The change in share value reflects the day’s change in 1895 Bancorp Common Stock price, and the value of each participation interest should be the same as one share of 1895 Bancorp Common Stock. Your account in the 1895 Bancorp Stock Fund will be reported to you on your regular 401(k) Plan participant statements. You can also go on-line at any time to principal.com or call 1-800-547-7754 to review your account balances.

 

Value of the 401(k) Plan Assets

As of July 31, 2018, the market value of the assets of the 401(k) Plan attributable to active and former employees of the Bank was approximately $10,570,976. The 401(k) Plan administrator informed each participant of the value of his or her account balance under the 401(k) Plan as of June 30, 2018, however participants can also go on-line and look at their account balances at any time.

 

In Order to Participate in the Offering

Enclosed is a Special Investment Election Form on which you can elect to transfer up to 50% of your account balance in the 401(k) Plan to the Stock Offering Fund for the purchase of participation interests in 1895 Bancorp Common Stock at $10 each in the stock offering. If you wish to use all or part of your account balance in the 401(k) Plan to purchase 1895 Bancorp Common Stock issued in the Offering, you should indicate that decision on the Special Investment Election Form. In making this determination, you should carefully consider the information set forth on page [PAGE] of this prospectus supplement under “Notice of Your Rights Concerning Employer Securities — The Importance of Diversifying Your Retirement Savings.”

 

If you do not wish to purchase 1895 Bancorp Common Stock in the Offering through the 401(k) Plan, you must still fill out the Special Investment Election Form and check Box D for “No Election” in Section D of the form and return the form to Monica Baker, Senior Vice President, Chief Brand Officer, PyraMax Bank, FSB, as indicated below.

 

How to Order Stock in the Offering

Enclosed is a Special Investment Election Form on which you can elect to purchase 1895 Bancorp Common Stock in connection with the stock offering. This is done by following the procedures designated below. Please note the following stipulations concerning this election:

 

•

Using your Special Investment Election Form, you can direct up to 50% (designated as a percentage) of your current account balance to the Stock Offering Fund.

 

4

•

Your election is subject to a minimum purchase of 25 shares which equates to $250.00.

 

•

Your election, plus any order you placed outside the 401(k) Plan, is subject to a maximum purchase of 10,000 shares which equates to $100,000

 

•

The election period closes at 4:00 p.m., Eastern Time, [DEADLINE].

 

•

Following the Offering period for the 401(k) Plan (“401(k) offering period”), the 401(k) Plan trustee will sell the applicable percentage of each of your investment funds that you have elected to sell in order to purchase shares in the Stock Offering Fund and will transfer the proceeds upon settlement to the Stock Offering Fund. The 401(k) Plan trustee will process such sales for all participants on a single day following the 401(k) offering period and before the close of the subscription offering period. After your election is accepted, it will be rounded down to the closest dollar amount divisible by $10.00. The difference will remain in the Stock Offering Fund until the Offering closes and the shares are acquired by the 401(k) Plan.

 

•

At that time, the shares purchased in the Stock Offering Fund based on your election will be transferred to the 1895 Bancorp Stock Fund and any remaining funds from your account will be transferred out of the Stock Offering Fund for investment in the other funds under the 401(k) Plan, based on your election currently on file for future contributions. If you do not have an election on file for future contributions, any remaining funds will be transferred to the applicable Blackrock Lifepath Index Fund, based on your retirement age assumption, to be reinvested by you in your discretion.

 

•

During the stock offering period, you will continue to have the ability to transfer amounts not invested in the 1895 Bancorp Stock Fund among all the other investment funds on a daily basis. However, you will not be permitted to change the investment amounts that you designated to be transferred to the Stock Offering Fund.

 

•

The amount you elect to transfer to the purchase of 1895 Bancorp Common Stock needs to be segregated and held until the Offering closes. Therefore, this money is not available for distributions, loans or withdrawals until the Offering is completed, which is after the closing of the subscription offering period.

 

5

You are allowed only one election to transfer funds to the 1895 Bancorp Stock Fund. Follow these steps to elect to use all or part of your account balance in the 401(k) Plan to purchase shares in the stock offering:

 

•

Use the enclosed Special Investment Election Form to transfer up to 50% of your account balance to the Stock Offering Fund to purchase 1895 Bancorp Common Stock in the Offering. Indicate next to each fund in which you are invested the percentage of that fund you wish to transfer to the 1895 Bancorp Stock Fund. If you do not wish to transfer an amount from a particular fund in which you have an investment, you do not have to indicate anything, or you can indicate -0-.

 

•

Please print your name and social security number on the Special Investment Election Form.

 

•

Please complete Section D of the Special Investment Election Form — Purchaser Information — indicating your individual purchase priority and provide the information requested on your accounts in PyraMax Bank, FSB.

 

•

Sign and date the Special Investment Election Form and return it by hand delivery, regular mail or fax to the person designated immediately below.

 

Order Deadline

If you wish to purchase 1895 Bancorp Common Stock with up to 50% of your 401(k) Plan account balances, your Special Investment Election Form must be received by Monica Baker; no later than 4:00 p.m., Eastern Time, on [DEADLINE]. To allow for processing, this deadline is prior to the subscription offering period deadline (which is [DATE]). If you have any questions with respect to the Special Investment Election Form, please contact Monica Baker, Senior Vice President, Chief Brand Officer.

 

Irrevocability of Transfer Direction

You may not revoke your Special Investment Election Form once it has been delivered to Monica Baker, Senior Vice President, Chief Brand Officer. You will, however, continue to have the ability to transfer amounts not directed towards the purchase of 1895 Bancorp Common Stock in the Offering among all of the other investment funds on a daily basis.

 

Other Purchases in Your Account During the Offering Period

Whether or not you choose to purchase 1895 Bancorp Common Stock in the Offering through the 401(k) Plan, you will at all times

 

6

have complete access to those amounts in your account that you do not apply towards purchases in the Offering. For example, you will be able to purchase other funds within the 401(k) Plan with that portion of your account balance that you do not apply towards purchases in the Offering during the Offering period. Such purchases will be made at the prevailing market price in the same manner as you make such purchases now, i.e., through telephone transfers and internet access to your account. You can only purchase 1895 Bancorp Common Stock in the Offering through the 401(k) Plan by returning your Special Investment Election Form to Monica Baker by the due date. You cannot purchase 1895 Bancorp Common Stock in the Offering by means of telephone transfers or the internet. That portion of your 401(k) Plan account balance that you elect to apply towards the purchase of 1895 Bancorp Common Stock in the Offering will be irrevocably committed to such purchase.

 

Additional Purchases of 1895 Bancorp Stock Fund Units after the Offering

After the Offering closes, you will have the opportunity to direct the 401(k) Plan trustee to sell any shares that you purchased in the Offering. You will also have the opportunity to purchase any additional shares in the open market, to the extent shares are available. 1895 Bancorp Common Stock will be listed on the Nasdaq stock market. Special restrictions may apply to transfers directed to and from the 1895 Bancorp Stock Fund by the participants who are subject to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, relating to the purchase and sale of securities by officers, directors and principal shareholders of 1895 Bancorp of Wisconsin, Inc.

 

Purchase Price of Common Stock in the Offering and After the Offering

The trustee will pay $10 per share of common stock in the stock offering, which will be the same price paid by all other persons for a share of common stock in the stock offering. No sales commission will be charged for common stock purchased in the stock offering. After the stock offering, any additional purchases will be made in the open market at the prevailing price. In addition, a brokerage commission of $0.05 per share of stock purchased will be charged

 

Nature of a Participant’s Interest in the Common Stock

The Common Stock acquired by the trustee at your direction will be allocated to your account and will be held in the 1895 Bancorp Stock Fund.

 

Voting Rights of Common Stock

You may direct the trustee as to how to vote your shares of 1895 Bancorp Common Stock held in the 1895 Bancorp Stock Fund. If the trustee does not receive your voting instructions, the trustee will be directed by PyraMax Bank, FSB to vote your shares in the same proportion as the voting instructions received from other participants related to their shares of 1895 Bancorp Common Stock

 

7

held by the 401(k) Plan, provided that such vote is made in accordance with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). All voting instructions will be kept confidential.

DESCRIPTION OF THE 401(k) PLAN

Introduction

PyraMax Bank, FSB originally adopted the 401(k) Plan effective as of February 13, 1989. The 401(k) Plan was last restated, effective July 1, 2017. In connection with the Conversion of PyraMax Bank, FSB from the mutual to stock form of organization as the wholly owned subsidiary of 1895 Bancorp of Wisconsin, Inc., 1895 Bancorp of Wisconsin, Inc. and the Bank desire to allow participants to purchase common stock of 1895 Bancorp of Wisconsin, Inc. in their accounts in the 401(k) Plan. The 401(k) Plan is a tax-qualified plan with a cash or deferred compensation feature established in accordance with the requirements under Section 401(a) and Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”).

The Bank intends that the 401(k) Plan, in operation, will comply with the requirements under Section 401(a) and Section 401(k) of the Code. The Bank will adopt any amendments to the 401(k) Plan that may be necessary to ensure the continuing qualified status of the 401(k) Plan under the Code and applicable Treasury Regulations.

Employee Retirement Income Security Act of 1974 (“ERISA”). The 401(k) Plan is an “individual account plan” other than a “money purchase pension plan” within the meaning of ERISA. As such, the 401(k) Plan is subject to all of the provisions of Title I (Protection of Employee Benefit Rights) and Title II (Amendments to the Code Relating to Retirement Plans) of ERISA, except to the funding requirements contained in Part 3 of Title I of ERISA, which by their terms do not apply to an individual account plan (other than a money purchase plan). The 401(k) Plan is not subject to Title IV (Plan Termination Insurance) of ERISA. The funding requirements contained in Title IV of ERISA are not applicable to participants or beneficiaries under the 401(k) Plan.

Reference to Full Text of 401(k) Plan. The following portions of this prospectus supplement summarize certain provisions of the 401(k) Plan. They are not complete and are qualified in their entirety by the full text of the 401(k) Plan. Copies of the 401(k) Plan are available to all employees by filing a request with the 401(k) Plan Administrator c/o PyraMax Bank, FSB, Attn: Monica Baker, Senior Vice President, Chief Brand Officer. You are urged to read carefully the full text of the 401(k) Plan.

Eligibility and Participation

As an employee of the Bank, you are eligible to become a participant in the 401(k) Plan by making elective deferral contributions on the first day of the calendar month, coincident or next following the date you attain age 18 and complete 1 month of service, measured from

 

8

your date of hire, provided that you are an eligible employee at such time. Eligible employees will become participants with respect to profit sharing contributions on the next payroll date after attaining age 18 and completing six months of consecutive service. You will be eligible to receive a profit sharing contribution if you meet the eligibility requirements and have 1,000 hours of service during the plan year and are employed on the last day of the plan year. You will be eligible to receive “safe harbor contributions” (as defined below), if you are an eligible employee after six months of service and entry on the next payroll date. You are not an eligible employee if you are a member of the following classes of employees: (i) an employee who is included in a unit of employees covered by a collective bargaining agreement, if retirement benefits were the subject of good faith bargaining; (ii) any leased employee; (iii) any non-resident alien who received no earned income which constitutes income from services performed in the United States; and (iv) employees of South Milwaukee Investments, Inc. and “Temporary Employees” as classified by the Bank.

As of July 31, 2018, there were approximately 145 active and former employees with account balances in the 401(k) Plan.

Contributions under the 401(k) Plan

Elective Deferrals. You are permitted to defer on a pre-tax basis up to 100% of your Compensation, subject to certain restrictions imposed by the Code, and to have that amount contributed to the 401(k) Plan on your behalf. Your pre-tax deferrals are subject to certain restrictions imposed by the Code, and for 2018, you may defer up to $18,500 and you may defer an additional $6,000 if you qualify for catch-up contributions as described in the next paragraph. The Compensation of each participant taken into account under the 401(k) Plan is limited by the Code, and for 2018 the limit is $275,000 (this limit may change on an annual basis). Canceling or changing your contribution percentage can be accomplished either over the telephone or over the internet at any time.

If, after receiving a notice from the Bank, you do not make an elective deferral contribution election, you will be deemed to have made an election to defer 6% of your Compensation. This percentage election will increase each year by 1% until your elective deferral is 10%. You can prevent this automatic deferral contribution election if you turn in the applicable form to prevent such contributions. Similarly, you can withdraw contributions made without your consent for up to a brief period of time after the automatic contributions are first removed from your Compensation.

Roth Elective Deferrals. You may elect to designate all or a portion of deferrals as Roth elective deferrals. Roth elective deferrals do not reduce your total taxable income or your current taxes. Because you pay taxes on these contribution when they are made, these contributions will not be taxed later when received as a benefit and distributed as a qualified distribution. A distribution will be a qualified distribution if (i) the distribution is made on or after you attain age 59  ¹⁄₂, on or after the date of your death, or as a result of you becoming disabled as defined by the Code; or (ii) the distribution is made after the end of the 5-taxable-year period beginning with the first taxable year in which you make a Roth elective deferral contribution to this plan.

 

9

Catch-up Contributions. If you have made the maximum amount of elective deferrals allowed by the 401(k) Plan or other legal limits and you have attained at least age 50 (or will reach age 50 prior to the end of the tax year, which is March 31), you are also eligible to make an additional catch-up contribution. In 2018, the maximum catch-up contribution is $6,000. You may authorize your employer to withhold a specified dollar amount of your compensation for this purpose.

Safe Harbor Matching Contributions. The Bank will make a safe harbor matching contribution to your account if you have satisfied the eligibility requirements and have made a “matched employee contribution during the plan year. A matched employee contribution is any elective deferral contribution or catch-up contribution that you may make. The safe harbor matching contribution is an amount equal to 100% of your matched employee contributions that are not in excess of six percent (6%) of your Compensation. The safe harbor matching contribution is subject to change from year to year, in the discretion of the Bank.

Profit Sharing Contributions. The Bank may, in its discretion, make profit sharing contributions to the accounts of eligible participants from time to time on a nondiscriminatory basis. The amount of any profit sharing contributions, if made, will be determined in the sole discretion of the Bank and will only be available to participants who have 1,000 hours of service during the plan year and are employed on the last of the plan year.

Qualified Non-Elective Contributions. In addition to the contributions described above, the Bank may make additional qualified non-elective contributions for the benefit of participants determined at the discretion of the Bank.

Rollover Contributions. The 401(k) Plan may accept a rollover contribution from another tax-qualified plan or eligible individual retirement account made on behalf of an eligible employee, regardless of whether such employee has met the age and service requirements of the Plan. An eligible employee who has not met the age and service requirements of the 401(k) Plan shall be considered a participant only with respect to the amount of his or her rollover contributions, if any.

Limitations on Contributions

Contribution Limits. For the tax year beginning January 1, 2018, the amount of your elective deferrals may not exceed $18,500 per calendar year, or $24,500 if you are eligible to make catch-up contributions. Contributions in excess of this limit are known as excess deferrals. If you defer amounts in excess of this limitation, your gross income for federal income tax purposes will include the excess in the year of the deferral. In addition, unless the excess deferral is distributed before April 15 of the following year, it will be taxed again in the year distributed. Income on the excess deferral distributed by April 15 of the immediately succeeding year will be treated, for federal income tax purposes, as earned and received by you in the tax year in which the contribution is made.

The total amount of contributions that you make and any contribution your employer makes on your behalf to your account in one year is limited to the lesser of 100% of your compensation or $55,000 (for 2018), or if applicable, $61,000 (for 2018) including catch-up contributions.

 

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Rollovers. You may make a rollover contribution of an eligible rollover distribution from any other qualified retirement plan or an individual retirement arrangement (IRA). These funds will be maintained in a separate rollover account in which you will have a nonforfeitable vested interest.

Benefits under the 401(k) Plan

Vesting. At all times, you have a fully vested, nonforfeitable interest in your elective deferrals, including Roth elective deferrals, catch-up contributions, if any, safe harbor matching contributions, qualified non-elective contributions and rollover contributions.

Your profit sharing contributions, if any, will vest in accordance with the following:

 

Vesting Schedule
Profit Sharing Contributions
Period of Service		Vested Percentage
Less than 2 years		0%
2 years		20%
3 years		40%
4 years		60%
5 years		100%
6 years		100%

Distribution at Termination of Employment. You will be entitled to receive a distribution of the vested amounts in your account when your employment terminates for any reason. Your benefit will be equal to the vested balance of your account. The 401(k) Plan will make involuntary cash-out distributions of vested account balances in accordance with the 401(k) Plan. If you are not a 5% or more owner of your employer, your required benefit commencement date is the April 1^st following the close of the year in which the later occurs: you attain age 70  ¹⁄₂ or you terminate employment.

Distribution after Death of Participant. In the event of your death, the value of your entire account will be payable to your beneficiary in accordance with the 401(k) Plan.

Investment of Contributions and Account Balances

All amounts credited to your accounts under the 401(k) Plan are held in the 401(k) Plan trust (the “Trust”), which is administered by the trustee of the 401(k) Plan. Prior to the effective date of the Offering, you were provided the opportunity to direct the investments of your account into one of the investment options described below.

 

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Performance History

The following table provides performance data with respect to the investment funds in the 401(k) Plan:

 

		Average Annual Total Return (as of 6/30/2018 quarter end)
Investment Option Name		YTD				1-Year				3-Year				5-Year				10-Year				Incept Date
AB Global Bond Z Fund			(0.64	)			0.27				3.14				3.21				4.58				10/2013
AllianzGI NFJ Mid-Cap Value Institutional Fund			(3.86	)			5.26				10.89				12.29				9.62				12/30/1997
American Beacon International Equity Institutional Fund			(3.45	)			6.50				3.59				5.86				3.39				08/07/1991
American Beacon Small Cap Value Institutional Fund			4.34				12.70				9.87				11.43				10.78				12/31/1998
American Funds EuroPacific Growth R6 Fund			(1.82	)			9.35				6.51				8.34				4.82				05/01/2009
American Funds New World R6 Fund			(2.56	)			10.45				7.46				6.71				3.90				05/01/2009
Baird Aggregate Bond Institutional Fund			(1.76	)			(0.34	)			2.10				2.81				4.43				09/29/2000
Bond Market Index Separate Account-Z			(1.74	)			(0.65	)			1.43				2.02				—				12/30/2009
Delaware Corporate Bond Instl Fund			(3.73	)			(1.28	)			2.40				3.31				6.69				09/15/1998
Dodge & Cox Stock Fund			0.96				11.85				10.95				12.81				9.70				01/04/1965
Eaton Vance Floating Rate I Fund			2.29				4.31				4.52				3.84				4.48				01/2001
Global Real Estate Securities Separate Account-Z			1.87				9.54				6.83				7.56				7.46				09/30/2013
Goldman Sachs International Small Cap Insights Instl Fund			(1.65	)			11.44				10.10				11.67				8.19				09/28/2007
Harbor Capital Appreciation Inst Fund			10.94				29.21				15.29				18.14				12.35				12/29/1987
International Equity Index Separate Account-Z			(2.55	)			6.22				4.62				6.14				—				12/30/2009
Invesco Growth and Income R6 Fund			(1.14	)			8.17				9.12				10.88				9.17				09/24/2012
Ivy High Income N Fund			1.91				4.78				5.64				5.26				8.03				07/2014
LargeCap S&P 500 Index Separate Account-Z			2.64				14.31				11.86				13.33				10.10				01/01/1990
MFS Blended Research Core Equity R6 Fund			0.83				12.05				9.14				12.40				9.61				01/14/1994
MidCap S&P 400 Index Separate Account-Z			3.45				13.40				10.79				12.58				10.67				08/31/1999
PIMCO International Bond (US Dollar-Hedged) I Fund			1.91				4.33				4.81				5.24				6.71				12/1992
Oppenheimer Developing Markets Institutional Fund			(1.09	)			12.63				7.59				6.04				5.67				12/2011
PIMCO Real Return Instl Fund			(0.25	)			2.05				1.97				1.64				3.36				01/29/1997
Principal Fixed Income Guaranteed Option (no chart info)
Putnam Convertible Securities Y Fund			4.07				10.73				6.27				8.26				7.32				12/1998
SmallCap S&P 600 Index Separate Account-Z			9.31				20.35				13.74				14.52				12.18				08/31/1999
Vanguard Explorer Admiral Fund			11.65				23.67				11.63				13.52				11.23				12/11/1967
Western Asset Core Bond IS Fund			(1.82	)			0.19				2.74				3.38				5.34				08/29/1990
BlackRock Lifepath Index Retirement K Fund			(0.28	)			4.74				4.80				5.55				—				05/31/2011
BlackRock Lifepath Index 2020 K Fund			(0.31	)			5.55				5.33				6.35				—				05/31/2011
BlackRock Lifepath Index 2025 K Fund			(0.05	)			6.75				6.21				7.19				—				05/31/2011
BlackRock Lifepath Index 2030 K Fund			0.12				7.92				6.92				7.90				—				5/31/2011
BlackRock Lifepath Index 2035 K Fund			0.21				8.92				7.61				8.54				—				05/31/2011
BlackRock Lifepath Index 2040 K Fund			0.37				9.86				8.22				9.14				—				05/31/2011
BlackRock Lifepath Index 2045 K Fund			0.49				10.52				8.64				9.59				—				05/31/2011
BlackRock Lifepath Index 2050 K Fund			0.49				10.72				8.76				9.85				—				05/31/2011
BlackRock Lifepath Index 2055 K Fund			0.49				10.75				8.79				10.04				—				05/31/2011
BlackRock Lifepath Index 2060 K Fund			0.50				10.80				—				—				—				02/29/2016

Description of the Investment Funds

The following is a description of each of the funds:

AB Global Bond Z Fund. This fund seeks to generate current income consistent with preservation of capital. The fund invests at least 80% of its net assets in fixed-income securities. It invests significantly in fixed-income securities of non-U.S. companies. The fund normally invests in the fixed-income securities of companies located in at least three countries. It may invest in a broad range of fixed-income securities in both developed and emerging markets. The fund may invest across all fixed-income sectors, including U.S. and non-U.S. government and corporate debt securities.

 

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AllianzGI NFJ Mid-Cap Value Institutional Fund. This fund seeks long-term growth of capital and income. The fund seeks to achieve its investment objective by normally investing at least 80% of its net assets (plus borrowings made for investment purposes) in common stocks and other equity securities of companies with medium market capitalizations. The manager currently defines medium market capitalization companies as companies with a market capitalization of at least $3 billion and up to the largest company held in the Russell Midcap Index.

American Beacon International Equity Institutional Fund. This fund seeks long-term capital appreciation. The fund normally invests at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in common stocks and securities convertible into common stocks of issuers based in at least three different countries located outside the United States. It primarily invests in countries comprising the Morgan Stanley Capital International Europe Australasia and Far East Index (“MSCI EAFE Index”). The MSCI EAFE Index is comprised of equity securities of companies from various industrial sectors whose primary trading markets are located outside the United States.

American Beacon Small Cap Value Institutional Fund. This fund seeks long-term appreciation and current income. Under normal circumstances, at least 80% of the fund’s net assets (plus the amount of any borrowings for investment purposes) are invested in equity securities of small market capitalization U.S. companies. These companies have market capitalizations of $5 billion or less at the time of investment. The fund’s investments may include common stocks, real estate investment trusts (“REITs”), American Depositary Receipts (“ADRs”) and U.S. dollar-denominated foreign stocks traded on U.S. exchanges.

American Funds EuroPacific Growth R6 Fund. This fund seeks long-term growth and capital. The fund invests primarily in common stocks of issuers in Europe and the Pacific Basin that This fund adviser believes have the potential for growth. Growth stocks are stocks that the investment adviser believes have the potential for above-average capital appreciation. It normally will invest at least 80% of its net assets in securities of issuers in Europe and the Pacific Basin. The fund may invest a portion of its assets in common stocks and other securities of companies in emerging markets.

American Funds New World R6 Fund. This fund seeks long-term capital appreciation. The fund invests primarily in common stock of companies with significant exposure to countries with developing economies and/or markets. Under normal market conditions, the fund will invest at least 35% of its assets in equity and debt securities of issuers primarily based in qualified countries that have developing economics and/or markets.

Baird Aggregate Bond Institutional Fund. This fund seeks an annual rate of total return, before fund expenses, greater than the annual rate of total return of the Barclays U.S. Aggregate Bond Index. The fund normally invests at least 80% of its net assets in the following types of U.S. dollar-denominated debt obligations: U.S. government and other public-sector entities; asset-backed and mortgage-backed obligations of U.S. foreign issuers; corporate debt of U. S. and foreign issuers. It only invests in debt obligations rated investment grade at the time of purchase by at least one major rating agency or, if unrated, determined by Robert W. Baird & Co. incorporated to be investment grade.

 

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Bond Market Index Separate Account-Z. This fund seeks to provide current income. The fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in debt securities held by the Barclay U.S. Aggregate Bond Index at the time of purchase. The index is composed of investment grade, fixed rate debt issues, including government, corporate, assets-backed, and mortgage-backed securities, with maturities of one year or more. It employs a passive investment approach designed to attempt to track the performance of the index.

Delaware Corporate Bond Instl Fund. This fund seeks total return. Under normal circumstances, the fund will invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in corporate bonds (“80% bonds”). It may also invest up to 20% of its net assets in high yield corporate bonds (“junk bonds”). In addition, the fund may invest up to 40% of its total assets in foreign securities, but the fund’s total non-U.S.-dollar currency exposure will be limited, in the aggregate, to no more that 25% of net assets.

Dodge & Cox Stock Fund. This fund seeks long-term growth of principal and income; a secondary objective is to achieve a reasonable current income. The fund invests primarily in a diversified portfolio of equity securities. It will invest at least 80% of its total assets in equity securities, including common stocks, depositary receipts evidencing ownership of common stocks, preferred stocks, securities convertible into common stocks, and securities that carry the right to buy common stocks. The fund may invest up to 20% of its total assets in U.S. dollar-denominated securities of non-U.S. issuers traded in the United States that are not in the S&P 500.

Eaton Vance Floating Rate I Fund. This fund seeks to provide a high level of current income. Under normal circumstances, the fund invests at least 80% of its total assets in income producing floating rate loans and other floating rate debt securities. It invests primarily in senior floating rate loans of domestic and foreign borrowers (“Senior Loans”). Senior Loans typically are of below investment grade quality and have below investment grade credit ratings, which ratings are associated with securities having high risk, speculative characteristics (sometimes referred to as “junk”).

Global Real Estate Securities Separate Account-Z. This investment seeks to generate a total return. Under normal circumstances, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of U.S. and non-U.S. companies principally engaged in the real estate industry at the time of purchase. For the fund’s investment policies, a real estate company has at least 50% of its assets, income or profits derived from products or services related to the real estate industry.

Goldman Sachs International Small Cap Insights Instl Fund. This fund seeks long-term growth of capital. The fund invests, under normal circumstances, at least 80% of its net assets plus any borrowings for investment purposes (measured at the time of purchase) (“Net Assets”) in a broadly diversified portfolio of equity investments in small-cap non-U.S. issuers. The advisor uses a quantitative style of management in combination with a qualitative overlay at emphasizes fundamentally-based stock selection, careful portfolio construction and efficient implementation.

 

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Harbor Capital Appreciation Inst Fund. This fund seeks long-term growth of capital. The fund invests primarily in equity securities, principally common and preferred stocks, of U.S. companies with market capitalizations of at least $1 billion at the time of purchase and that the Subadvisor considers having above average prospects for growth. The stocks of mid and large cap companies in the fund’s portfolio are those the Subadvisor expects to maintain or achieve above average earnings growth. The fund may invest up to 20% of its total assets in the securities of foreign issuers, including issuers located or doing business in emerging markets.

International Equity Index Separate Account-Z. This fund seeks long-term growth of capital. The fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in securities that compose the MSCI EEAFE NR Index at the time of purchase. The Index is a market-weighted equity index designed to measure the equity performance of developed markets, excluding the United States and Canada. The advisor employs a passive investment approach designed to attempt to track the performance of the index.

Invesco Growth and Income R6 Fund. This fund seeks total return through growth of capital and current income. Under normal market conditions, the fund’s investment adviser seeks to achieve the fund’s investment objective by investing primarily in income-producing equity securities, which include common stocks and convertible securities. It may invest in securities of issuers of all capitalization sizes; however, a substantial number of the issuers in which the fund invests are large-capitalization issuers. The fund may invest up to 25% of its net assets in securities of foreign issuers, which may include depositary receipts.

Ivy High Income N Fund. This fund seeks to provide total return through a combination of high current income and capital appreciation. The fund invests primarily in a diversified portfolio of high-yield, high-risk, fixed-income securities, including secured and unsecured loan assignments, loan participations and other loan instruments (loans), of U.S. and foreign issuers, the risks of which are, in the judgment of the adviser consistent with the fund’s objective. It may invest up to 100% of its total assets in foreign securities that are denominated in U.S. dollars or foreign currencies.

LargeCap S&P 500 Index Separate Account-Z. This fund option normally invests the majority of assets in common stocks of companies that compose the S&P 500 Index. Management attempts to mirror the investment performance of the index by allocating assets in approximately the same weightings as the S&P 500 Index. Over the long-term, management seeks a very close correlation between the performance of the Separate Account before expenses and that of the S&P 500 Index.

MFS Blended Research Core Equity R6 Fund. This fund seeks capital appreciation. The fund normally invests at least 80% of the fund’s net assets in equity securities. Equity securities include common stocks and other securities that represent an ownership interest (or right to acquire an ownership interest) in a company or other issuer.

 

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MidCap S&P 400 Index Separate Account-Z. The investment option normally invests the majority of assets in common stocks of companies that compose the S&P MidCap 400 Index. Management attempts to mirror the investment performance of the index by allocating assets in approximately the same weightings as the S&P MidCap 400 Index. Over the long-term, management seeks a very close correlation between the performance of the Separate Account before expenses and that of the S&P MidCap 400 Index.

Oppenheimer Developing Markets Institutional Fund. This fund seeks capital appreciation. The fund mainly invests in common stock of issuers in developing and emerging markets throughout the world and at times it may invest up to 100% of its total assets in foreign securities. Under normal market conditions, it will invest at least 80% of its net assets, plus borrowings for investment purposes, in equity securities of issuers whose principal activities are in a developing market, i.e. are in a developing market or are economically tied to a developing market country. The fund will invest in at least three developing markets.

PIMCO International Bond (US Dollar-Hedged) I Fund. This fund seeks maximum total return, consistent with preservation of capital and prudent investment management. The fund normally invests at least 80% of its assets in Fixed Income Instruments that are economically tied to foreign (non-U.S.) countries, representing at least three foreign countries, which may be represented by forwards or derivatives such as options, future contracts or swap arrangements. It invests primarily in investment-grade debt securities, but may invest up to 10% of its total assets in junk bonds as rated by Moody’s, S&P or Fitch, or, if unrated, as determined by PIMCO. The fund is non-diversified.

PIMCO Real Return Instl Fund. This fund seeks maximum real return, consistent with preservation of capital and prudent investment management. The fund normally invests at least 80% of its net assets in inflation-indexed bonds of varying maturities issued by the U.S. and non-U.S. governments, their agencies or instrumentalities, and corporations, which may be represented by forwards or derivatives such as options, futures contracts or swap agreements.

Principal Fixed Income Guaranteed Option. The Principal Fixed Income Guaranteed Option is a guaranteed general-account backed group annuity contract that has been issued by Principal Life Insurance Company (Principal Life) to Principal Trust Company as custodian.

Putnam Convertible Securities Y Fund. This fund seeks current income and capital appreciation; its secondary objective is conservation of capital. The fund invests mainly in convertible securities of U.S. companies. Convertible securities combine the investment characteristics of bonds and common stocks. Under normal circumstances, it invests at least 80% of the fund’s net assets in convertible securities. Convertible securities include bonds, preferred stocks and other instruments that can be converted into or exchanged for common stock or equivalent value. A significant portion of the convertible securities are below-investment-grade.

SmallCap S&P 600 Index Separate Account-Z. This fund seeks long-term growth of capital and normally invests the majority of assets in common stocks of companies that compose the S&P SmallCap 600 Index. Management attempts to mirror the investment performance of the index by allocating assets in approximately the same weightings as the S&P 600 Index. Over the long-term, management seeks a very close correlation between the performance of the Separate Account before expenses and that of the S&P 600 Index.

 

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Vanguard Explorer Admiral Fund. This fund seeks to provide long-term capital appreciation. The fund invests mainly in the stocks of small and mid-size companies. These companies tend to be unseasoned but are considered by the fund’s advisors to have superior growth potential. Also, these companies often provide little or no dividend income. It uses multiple investment advisors.

Western Asset Core Bond IS Fund. This fund seeks to maximize total return, consistent with prudent investment management and liquidity needs. The fund invests in a portfolio of fixed income securities of various maturities and, under normal market conditions, will invest at least 80% of its net assets in debt and fixed income securities. Although the fund may invest in debt and fixed income securities of any maturity, under normal market conditions the target dollar-weighted average effective duration for the fund is expected to range within 20% of the average duration of the domestic bond market as a whole as estimated by the fund’s subadvisor.

BlackRock Lifepath Index Retirement K Fund. This fund seeks to provide for retirement outcomes based on quantitatively measured risk. The fund is a “Feeder” fund that invests all of its assets in the Master Portfolio, a series of Master Investment Portfolio with a substantially identical investment objective, which allocates and reallocates its assets among a combination of equity and bond index funds and money market funds in propositions based on its own instruments that are components of or have economic characteristics similar to the securities included in its custom benchmark index.

BlackRock Lifepath Index 2020 K Fund

BlackRock Lifepath Index 2025 K Fund.

BlackRock Lifepath Index 2030 K Fund.

BlackRock Lifepath Index 2035 K Fund.

BlackRock Lifepath Index 2040 K Fund.

BlackRock Lifepath Index 2045 K Fund.

BlackRock Lifepath Index 2050 K Fund.

BlackRock Lifepath Index 2055 K Fund.

BlackRock Lifepath Index 2060 K Fund. These funds seek to provide for retirement outcomes based on quantitatively measured risk. The funds are “Feeder” funds that invest all of their assets in the Master Portfolio, a series of Master Investment Portfolio (“MIP”) with substantially identical investment objectives, which allocate and reallocate their assets among a combination of equity and bond index funds and money market funds (the “underlying funds”) in proportions based on their own comprehensive investment strategy.

An investment in any of the funds listed above is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. As with any mutual fund investment, there is always a risk that you may lose money on your investment in any of the funds listed above.

 

17

1895 Bancorp Stock Fund

In connection with the stock offering, the 401(k) Plan now offers the 1895 Bancorp Stock Fund as an additional choice to the investment options described above. 1895 Bancorp Stock Fund invests primarily in the shares of common stock of 1895 Bancorp of Wisconsin, Inc. In connection with the stock offering, you may, in the manner described earlier, direct the trustee to invest up to 50% of your 401(k) Plan account in 1895 Bancorp Stock Fund as a one-time special election.

As of the date of this prospectus supplement, there is no established market for 1895 Bancorp of Wisconsin, Inc. common stock. Accordingly, there is no record of the historical performance of 1895 Bancorp Stock Fund. Performance of 1895 Bancorp Stock Fund depends on a number of factors, including the financial condition and profitability of 1895 Bancorp of Wisconsin, Inc. and the Bank and market conditions for shares of 1895 Bancorp of Wisconsin, Inc. common stock generally.

Investments in 1895 Bancorp Stock Fund involve special risks common to investments in the shares of common stock of 1895 Bancorp of Wisconsin, Inc. In making a decision to invest all or a part of your account balance in the 1895 Bancorp Stock Fund, you should carefully consider the information set forth on page 16 of this prospectus supplement under “Notice of Your Rights Concerning Employer Securities — The Importance of Diversifying Your Retirement Savings.”

For a discussion of material risks you should consider, see “Risk Factors” beginning on page 16 of the attached prospectus and the section of this prospectus supplement called “Notice of Your Rights Concerning Employer Securities” below.

Withdrawals from the 401(k) Plan

Applicable federal law requires the 401(k) Plan to impose substantial restrictions on the right of a 401(k) Plan participant to withdraw amounts held for his or her benefit under the 401(k) Plan prior to the participant’s termination of employment with the Bank. A substantial federal tax penalty may also be imposed on withdrawals made prior to the participant’s attainment of age 59 ¹⁄₂, regardless of whether such a withdrawal occurs during his or her employment with the Bank or after termination of employment.

Withdrawal from your Account prior to Retirement. Once you have attained age 59 ¹⁄₂, you may request distribution of all or part of the amounts credited to your accounts attributable to elective deferrals, nonelective contributions and matching contributions.

Hardship Withdrawals. If you incur a financial hardship, you may request a withdrawal from the portion of your account attributable to your pre-tax and after-tax elective deferrals.

Rollover Contributions. You may withdraw amounts you contributed to the 401(k) Plan as a rollover contribution at any time.

 

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Loan. You may request a loan from your account pursuant to the procedures established in the 401(k) Plan.

Administration of the 401(k) Plan

The Trustee and Custodian. The trustee of the 401(k) Plan is the Board of Directors of the Bank.

Plan Administrator. Pursuant to the terms of the 401(k) Plan, the 401(k) Plan is administered by the 401(k) Plan administrator. The address of the 401(k) Plan administrator is PyraMax Bank, FSB, 7001 West Edgerton Avenue, Greenfield, WI 53220. The 401(k) Plan administrator is responsible for the administration of the 401(k) Plan, interpretation of the provisions of the 401(k) Plan, prescribing procedures for filing applications for benefits, preparation and distribution of information explaining the 401(k) Plan, maintenance of plan records, books of account and all other data necessary for the proper administration of the 401(k) Plan, preparation and filing of all returns and reports relating to the 401(k) Plan which are required to be filed with the U.S. Department of Labor and the Internal Revenue Service, and for all disclosures required to be made to participants, beneficiaries and others under Sections 104 and 105 of ERISA.

Reports to Plan Participants. The 401(k) Plan administrator will furnish you a statement at least quarterly showing the balance in your account as of the end of that period, the amount of contributions allocated to your account for that period, and any adjustments to your account to reflect earnings or losses (if any). In addition, you can go on-line to principal.com or call 1-800-547-7754 at any time to review your account balances.

Amendment and Termination

It is the intention of the Bank to continue the 401(k) Plan indefinitely. Nevertheless, the Bank may terminate the 401(k) Plan at any time. If the 401(k) Plan is terminated in whole or in part, then regardless of other provisions in the 401(k) Plan, you will have a fully vested interest in your accounts. The Bank reserves the right to make any amendment or amendments to the 401(k) Plan which do not cause any part of the trust to be used for, or diverted to, any purpose other than the exclusive benefit of participants or their beneficiaries; provided, however, that the Bank may make any amendment it determines necessary or desirable, with or without retroactive effect, to comply with ERISA.

Merger, Consolidation or Transfer

In the event of the merger or consolidation of the 401(k) Plan with another plan, or the transfer of the trust assets to another plan, the 401(k) Plan requires that you would receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit you would have been entitled to receive immediately before the merger, consolidation or transfer.

 

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Federal Income Tax Consequences

The following is a brief summary of the material federal income tax aspects of the 401(k) Plan. You should not rely on this summary as a complete or definitive description of the material federal income tax consequences relating to the 401(k) Plan. Statutory provisions change, as do their interpretations, and their application may vary in individual circumstances. Finally, the consequences under applicable state and local income tax laws may not be the same as under the federal income tax laws. Please consult your tax advisor with respect to any distribution from the 401(k) Plan and transactions involving the 401(k) Plan.

As a “tax-qualified retirement plan,” the Code affords the 401(k) Plan special tax treatment, including:

(1)     the sponsoring employer is allowed an immediate tax deduction for the amount contributed to the 401(k) Plan each year;

(2)     participants pay no current income tax on amounts contributed by the employer on their behalf; and

(3)     earnings of the 401(k) Plan are tax-deferred, thereby permitting the tax-free accumulation of income and gains on investments.

The Bank will administer the 401(k) Plan to comply with the requirements of the Code as of the applicable effective date of any change in the law.

Lump-Sum Distribution. A distribution from the 401(k) Plan to a participant or the beneficiary of a participant will qualify as a lump-sum distribution if it is made within one taxable year, on account of the participant’s death, disability or separation from service, or after the participant attains age 59 ¹⁄₂, and consists of the balance credited to participants under the 401(k) Plan and all other profit sharing plans (and in some cases all other stock bonus plans), if any, maintained by the Bank. The portion of any lump-sum distribution required to be included in your taxable income for federal income tax purposes consists of the entire amount of the lump-sum distribution, less the amount of after-tax contributions, if any, you have made to this 401(k) Plan and any other profit sharing plans maintained by the Bank, which is included in the distribution.

1895 Bancorp of Wisconsin, Inc. Common Stock Included in Lump-Sum Distribution. If a lump-sum distribution includes 1895 Bancorp Common Stock, the distribution generally will be taxed in the manner described above, except that the total taxable amount may be reduced by the amount of any net unrealized appreciation with respect to 1895 Bancorp Common Stock, that is, the excess of the value of 1895 Bancorp Common Stock at the time of the distribution over its cost or other basis of the securities to the trust. The tax basis of 1895 Bancorp Common Stock, for purposes of computing gain or loss on its subsequent sale, equals the value of 1895 Bancorp Common Stock at the time of distribution, less the amount of net unrealized appreciation. Any gain on a subsequent sale or other taxable disposition of 1895 Bancorp Common Stock, to the extent of the amount of net unrealized appreciation at the time of distribution, will constitute long-term capital gain, regardless of the holding period of 1895 Bancorp Common Stock. Any

 

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gain on a subsequent sale or other taxable disposition of 1895 Bancorp Common Stock, in excess of the amount of net unrealized appreciation at the time of distribution, will be considered long-term capital gain. The recipient of a distribution may elect to include the amount of any net unrealized appreciation in the total taxable amount of the distribution, to the extent allowed by regulations to be issued by the Internal Revenue Service.

Distributions: Rollovers and Direct Transfers to Another Qualified Plan or to an IRA. You may roll over virtually all distributions from the 401(k) Plan to another qualified plan or to an individual retirement account (IRA) in accordance with the terms of the other plan or account.

Notice of Your Rights Concerning Employer Securities

There has been an important change in Federal law that provides specific rights concerning investments in employer securities, such as 1895 Bancorp of Wisconsin, Inc. common stock. Because you may in the future have investments in 1895 Bancorp Stock Fund under the 401(k) Plan, you should take the time to read the following information carefully.

Your Rights Concerning Employer Securities. The 401(k) Plan must allow you to elect to move any portion of your account that is invested in the 1895 Bancorp Stock Fund from that investment into other investment alternatives under the 401(k) Plan. You may contact the 401(k) Plan Administrator shown above for specific information regarding this new right, including how to make this election. In deciding whether to exercise this right, you will want to give careful consideration to the information below that describes the importance of diversification. All of the investment options under the 401(k) Plan are available to you if you decide to diversify out of the 1895 Bancorp Stock Fund.

The Importance of Diversifying Your Retirement Savings. To help achieve long-term retirement security, you should give careful consideration to the benefits of a well-balanced and diversified investment portfolio. Spreading your assets among different types of investments can help you achieve a favorable rate of return, while minimizing your overall risk of losing money. This is because market or other economic conditions that cause one category of assets, or one particular security, to perform very well often cause another asset category, or another particular security, to perform poorly. If you invest more than 20% of your retirement savings in any one company or industry, your savings may not be properly diversified. Although diversification is not a guarantee against loss, it is an effective strategy to help you manage investment risk.

In deciding how to invest your retirement savings, you should take into account all of your assets, including any retirement savings outside of the 401(k) Plan. No single approach is right for everyone because, among other factors, individuals have different financial goals, different time horizons for meeting their goals, and different tolerance for risk. Therefore, you should carefully consider the rights described here and how these rights affect the amount of money that you invest in 1895 Bancorp Common Stock through the 401(k) Plan.

It is also important to periodically review your investment portfolio, your investment objectives, and the investment options under the 401(k) Plan to help ensure that your retirement savings will meet your retirement goals.

 

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Additional ERISA Considerations

The 401(k) Plan is subject to certain provisions of ERISA, including special provisions relating to control over the 401(k) Plan’s assets by participants and beneficiaries. The 401(k) Plan’s feature that allows you to direct the investment of your account balances is intended to satisfy the requirements of Section 404(c) of ERISA relating to control over plan assets by a participant or beneficiary. The effect of this is two-fold. First, you will not be deemed a “fiduciary” because of your exercise of investment discretion. Second, no person who otherwise is a fiduciary, such as the Bank, the 401(k) Plan Administrator, or the 401(k) Plan’s trustee is liable under the fiduciary responsibility provision of ERISA for any loss which results from your exercise of control over the assets in your 401(k) Plan account.

Because you will be entitled to invest up to 50% of your account balance in the 401(k) Plan in 1895 Bancorp of Wisconsin, Inc. common stock, the regulations under Section 404(c) of ERISA require that the 401(k) Plan establish procedures that ensure the confidentiality of your decision to purchase, hold, or sell employer securities, except to the extent that disclosure of such information is necessary to comply with federal or state laws not preempted by ERISA. These regulations also require that your exercise of voting and similar rights with respect to the common stock be conducted in a way that ensures the confidentiality of your exercise of these rights.

Securities and Exchange Commission Reporting and Short-Swing Profit Liability

Section 16 of the Securities Exchange Act of 1934, as amended, imposes reporting and liability requirements on (i) officers, (ii) directors, and (iii) persons beneficially owning more than 10% of public companies such as 1895 Bancorp of Wisconsin, Inc. Section 16(a) of the Securities Exchange Act of 1934 requires the filing of reports of beneficial ownership. Within 10 days of becoming an officer, director or person beneficially owning more than 10% of the shares of 1895 Bancorp of Wisconsin, Inc. the individual must fill out a Form 3 reporting initial beneficial ownership and file it with the Securities and Exchange Commission. Changes in beneficial ownership, such as purchases, sales and gifts generally must be reported periodically, either on a Form 4 within two business days after the change occurs, or annually on a Form 5 within 45 days after the close of 1895 Bancorp of Wisconsin, Inc.’s fiscal year. Discretionary transactions in and beneficial ownership of the common stock through the 1895 Bancorp Stock Fund of the 401(k) Plan by officers, directors and persons beneficially owning more than 10% of the common stock of 1895 Bancorp of Wisconsin, Inc. generally must be reported to the Securities and Exchange Commission by such individuals.

In addition to the reporting requirements described above, Section 16(b) of the Securities Exchange Act of 1934, as amended, provides for the recovery by 1895 Bancorp of Wisconsin, Inc. of profits realized by an officer, director or any person beneficially owning more than 10% of 1895 Bancorp of Wisconsin, Inc.’s common stock resulting from non-exempt purchases and sales of 1895 Bancorp of Wisconsin, Inc. common stock within any six-month period.

The Securities and Exchange Commission has adopted rules that provide exemptions from the profit recovery provisions of Section 16(b) for all transactions in employer securities within an employee benefit plan, provided certain requirements are met. These requirements generally involve restrictions upon the timing of elections to acquire or dispose of employer securities for the accounts of Section 16(b) persons.

 

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Except for distributions of common stock due to death, disability, retirement, termination of employment or under a qualified domestic relations order, persons affected by Section 16(b) are required to hold shares of common stock distributed from the 401(k) Plan for six months following such distribution and are prohibited from directing additional purchases within the 1895 Bancorp Stock Fund for six months after receiving such a distribution.

Financial Information Regarding 401(k) Plan Assets

Financial information representing the assets available for plan benefits at December 31, 2017, is available upon written request to the 401(k) Plan Administrator at the address shown above.

LEGAL OPINION

The validity of the issuance of the common stock has been passed upon by Luse Gorman, PC, Washington, D.C., which firm acted as special counsel to 1895 Bancorp of Wisconsin, Inc. in connection with 1895 Bancorp of Wisconsin, Inc.’s stock offering.

 

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1895 Bancorp of Wisconsin, Inc.

(Proposed Holding Company for PyraMax Bank, FSB)

Up to 2,783,000 Shares of Common Stock

(Subject to increase to up to 3,200,450 shares)

1895 Bancorp of Wisconsin, Inc. is offering up to 2,783,000 shares of its common stock for sale at $10.00 per share on a best efforts basis in connection with the reorganization of PyraMax Bank, FSB into the mutual holding company form of ownership. There is no established market for our common stock. We expect that our common stock will be traded on the Nasdaq Capital Market under the symbol “BCOW” upon conclusion of the offering. We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012.

The shares being offered represent 44.0% of the shares of common stock of 1895 Bancorp of Wisconsin, Inc. that will be outstanding following the offering. After the offering, 55.0% of our outstanding common stock will be owned by 1895 Bancorp of Wisconsin, MHC, our federally chartered mutual holding company, and 1.0% will be contributed to our charitable foundation. These percentages will not be affected by the number of shares we sell in the offering. We must sell a minimum of 2,057,000 shares in order to complete the offering. We may sell up to 3,200,450 shares to reflect demand for the shares or changes in market conditions following the commencement of the offering, without resoliciting subscribers.

We are offering the shares of common stock in a “subscription offering” to eligible depositors of PyraMax Bank, FSB and to our tax-qualified employee benefit plans. Depositors who had accounts with aggregate balances of at least $50 at the close of business on March 15, 2017 will have first priority to purchase shares of common stock of 1895 Bancorp of Wisconsin, Inc. Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a “community offering.” To the extent any shares offered for sale are not purchased in the subscription or community offerings, they may be sold in a “syndicated community offering” to be managed by Keefe Bruyette & Woods, Inc., a Stifel Company (“KBW”).

The minimum number of shares of common stock you may order is 25 shares. The maximum number of shares of common stock that can be ordered by any person in the offering, or persons exercising subscription rights through a single deposit account, is 10,000 shares ($100,000), and no person together with an associate or group of persons acting in concert may purchase more than 15,000 shares ($150,000).

The offering is scheduled to expire at 1:00 p.m., Central Time, on [Date 1]. We may extend the expiration date without notice to you, until [Date 2], or such later date as the Board of Governors of the Federal Reserve System may approve, which may not be beyond              , 2020. Once submitted, orders are irrevocable unless the offering is terminated or extended beyond [Date 2], or the number of shares of common stock to be sold is increased to more than 3,200,450 shares or decreased to less than 2,057,000 shares. If the offering is extended beyond [Date 2], all subscribers will be notified and given an opportunity to confirm, cancel or change their orders. If you do not respond to this notice, we will promptly return your funds with interest or cancel your deposit account withdrawal authorization. If the number of shares to be sold in the offering is increased to more than 3,200,450 shares or decreased to less than 2,057,000 shares, we will resolicit subscribers, and all funds delivered to us to purchase shares of common stock in the subscription and community offerings will be returned promptly with interest. Funds submitted for the purchase of shares in the offering will be held in a segregated account at PyraMax Bank, FSB and will earn interest at 0.15% until completion or termination of the offering.

KBW will use its best efforts to assist us in selling our common stock, but is not obligated to purchase any of the common stock that is being offered for sale. In addition, our officers, directors and employees may participate in the solicitation of offers to purchase common stock in reliance upon Rule 3a4-1 under the Securities Exchange Act of 1934, as amended. Subscribers will not pay any commissions to purchase shares of common stock in the offering.

OFFERING SUMMARY

Price: $10.00 per share

 

		Minimum				Midpoint				Maximum				Adjusted Maximum
Number of shares			2,057,000				2,420,000				2,783,000				3,200,450
Gross offering proceeds		$	20,570,000			$	24,200,000			$	27,830,000			$	32,004,500
Estimated offering expenses, excluding selling agent fees and expenses		$	1,185,000			$	1,185,000			$	1,185,000			$	1,185,000
Estimated selling agent fees and expenses (1) (2)		$	315,000			$	315,000			$	315,000			$	315,000
Estimated net proceeds (1)		$	19,070,000			$	22,700,000			$	26,330,000			$	30,504,500
Estimated net proceeds per share (1)		$	9.27			$	9.38			$	9.46			$	9.53

 

(1)	See “The Reorganization and Offering - Plan of Distribution and Marketing Arrangements” for a discussion of KBW’s compensation for this offering and the compensation to be received by KBW and the other broker-dealers who may participate in a syndicated community offering.

(2)	Excludes reimbursable expenses and records agent fees, which are included in estimated offering expenses.

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

Please read the “Risk Factors” beginning on page 22.

These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. None of the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

KEEFE BRUYETTE & WOODS, INC.

                    A Stifel Company

For assistance, please contact the Stock Information Center at (    )     -        .

The date of this prospectus is         , 2018.

 

[MAP TO BE INSERTED ON INSIDE COVER PAGE]

 

TABLE OF CONTENTS

 

SUMMARY			1
RISK FACTORS			22
SELECTED FINANCIAL AND OTHER DATA			39
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			42
HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING			44
OUR POLICY REGARDING DIVIDENDS			46
MARKET FOR THE COMMON STOCK			47
HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE			48
CAPITALIZATION			49
PRO FORMA DATA			51
COMPARISON OF VALUATION AND PRO FORMA INFORMATION WITH AND WITHOUT THE CHARITABLE FOUNDATION			57
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF PYRAMAX BANK, FSB			59
BUSINESS OF 1895 BANCORP OF WISCONSIN, INC.			75
BUSINESS OF 1895 BANCORP OF WISCONSIN, MHC			75
BUSINESS OF PYRAMAX BANK, FSB			76
TAXATION			108
REGULATION AND SUPERVISION			109
MANAGEMENT			120
THE REORGANIZATION AND OFFERING			132
1895 BANCORP OF WISCONSIN COMMUNITY FOUNDATION			155
RESTRICTIONS ON THE ACQUISITION OF 1895 BANCORP OF WISCONSIN, INC. AND PYRAMAX BANK, FSB			158
DESCRIPTION OF CAPITAL STOCK OF 1895 BANCORP OF WISCONSIN, INC.			161
TRANSFER AGENT AND REGISTRAR			162
LEGAL AND TAX MATTERS			162
EXPERTS			163
WHERE YOU CAN FIND MORE INFORMATION			163
REGISTRATION REQUIREMENTS			163
INDEX TO FINANCIAL STATEMENTS OF PYRAMAX BANK, FSB			164

 

 

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RISK FACTORS

You should consider carefully the following risk factors, in addition to all other information in this prospectus, in evaluating an investment in our common stock.

Risks Related to Our Business

We have a substantial amount of commercial real estate and commercial 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, 2018, commercial real estate loans (which includes non-owner occupied commercial real estate, multi-family, owner occupied commercial real estate and one- to four-family non-owner occupied loans) totaled $182.7 million, or 49.3% of our loan portfolio, and commercial loans (which includes commercial and industrial loans) totaled $32.5 million, or 8.8% of our loan portfolio. Of this aggregate amount, we had $70.4 million in non-owner occupied non-residential real estate, $57.9 million in multi-family residential real estate, $36.1 million in owner occupied non-residential real estate, $11.6 million in non-owner occupied residential real estate and $6.7 million in commercial real estate construction loans. We intend to increase originations of these types of loans. Given their larger balances and the complexity of the underlying collateral, commercial real estate and commercial loans generally have more risk than the one- to four-family residential real estate loans we originate. Because the repayment of commercial real estate and commercial loans depends on the successful management and operation of the borrower’s properties or related businesses, repayment of such loans 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 properties securing the loan or the revenues from the borrower’s business, thereby increasing the risk of non-performing loans. Further, unlike residential mortgage loans, commercial real estate loans and commercial loans may be 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. In addition, the physical condition of non-owner occupied properties may be below that of owner occupied properties due to lax property maintenance standards, which have a negative impact on the value of the collateral properties. As our commercial real estate and commercial loan portfolios increase, the corresponding risks and potential for losses from these loans may also increase.

Our portfolio of loans with a higher risk of loss is increasing, which may lead to additional provisions for loan losses or charge-offs, which would reduce our profits or cause losses.

Our commercial real estate loan portfolio has increased to $182.7 million, or 49.3% of total loans, at June 30, 2018 from $101.5 million, or 36.6% of total loans, at December 31, 2013. We intend to continue our emphasis on originating commercial real estate and commercial loan originations. Many of these loans have not been subjected to unfavorable economic conditions. As a result, it is difficult to predict the future performance of this part of our loan portfolio. These loans may have delinquency or charge-off levels above our historical experience, which could adversely affect our future performance.

 

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The level of our commercial real estate loan portfolio may subject us to additional regulatory scrutiny.

The FDIC, the Federal Reserve Board and the OCC have promulgated joint guidance on sound risk management practices for financial institutions with concentrations in commercial real estate lending. Under this guidance, a financial institution that, like us, is actively involved in commercial real estate lending should perform a risk assessment to identify concentrations. A financial institution may have a concentration in commercial real estate lending if, among other factors (i) total reported loans for construction, land development and other land represent 100% or more of total capital, or (ii) total reported loans secured by multi-family and non-farm non-residential properties, loans for construction, land development and other land, and loans otherwise sensitive to the general commercial real estate market, including loans to commercial real estate related entities, represent 300% or more of total capital. The particular focus of the guidance is on exposure to commercial real estate loans that are dependent on the cash flow from the real estate held as collateral and that are likely to be at greater risk to conditions in the commercial real estate market (as opposed to real estate collateral held as a secondary source of repayment or as an abundance of caution). The purpose of the guidance is to guide banks in developing risk management practices and capital levels commensurate with the level and nature of real estate concentrations. The guidance states that management should employ heightened risk management practices including board and management oversight and strategic planning, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing. We have concluded that we have a concentration in commercial real estate lending under the foregoing standards because our balance in commercial real estate loans at June 30, 2018 represents more than 300% of total capital. Owner occupied commercial real estate totals 93% of total capital, while non-owner occupied commercial real estate totals an additional 378% of total capital. While we believe we have implemented policies and procedures with respect to our commercial real estate loan portfolio consistent with this guidance, bank regulators could require is to implement additional policies and procedures consistent with their interpretation of the guidance that may result in additional costs to us.

Our business strategy includes managed growth, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively. Growing our operations could also cause our expenses to increase faster than our revenues.

Our business strategy includes growth in loans and deposits. Achieving such growth will require us to attract customers that currently bank at other financial institutions in our market area. Our ability to successfully grow will depend on a variety of factors, including the ability of our executive officers to execute our business strategy to increase commercial real estate and commercial loans and to increase our new and existing customers’ deposit relationships, our ability to attract and retain experienced bankers, the continued availability of desirable business opportunities, competition from other financial institutions in our market area and our ability to manage our growth. Growth opportunities may not be available or we may not be able to manage our growth successfully. If we do not manage our growth effectively, our financial condition and operating results could be negatively affected. Furthermore, there can be considerable costs involved in expanding lending capacity, and generally a period of time is required to generate the necessary revenues to offset these costs, especially in areas in which we do not have an established presence. Accordingly, any such business expansion can be expected to negatively impact our earnings until certain economies of scale are reached.

 

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Our utilization of time deposits, including brokered certificates of deposit, as a source of funds for loans and our other liquidity needs could have an adverse effect on our operating results.

We rely primarily on deposits for funds to make loans and provide for our other liquidity needs, including time deposits and brokered certificates of deposit. As of June 30, 2018, brokered deposits, represented approximately 16.8% of our total deposits. Such deposits may not be as stable as other types of deposits and, in the future, depositors may not renew those time deposits when they mature, or we may have to pay a higher rate of interest to attract or keep them or to replace them with other deposits or with funds from other sources. Not being able to attract those deposits or to keep or replace them as they mature would adversely affect our liquidity. Additionally, we are regulated by the OCC, which requires us to maintain certain capital levels to be considered “well capitalized.” If we fail to maintain these capital levels, we could lose our ability to obtain funding through brokered deposits. In addition, we may also be restricted from paying higher deposit rates to attract, keep or replace those deposits, which could have a negative effect on our operating results and the value of our common stock.

Our cost of operations is high relative to our revenues.

The cost of generating our income is measured by our efficiency ratio (the ratio of non-interest expense to the sum of net interest income and non-interest income). Our efficiency ratio was 106.86%, 112.19% and 91.79% for the six months ended June 30, 2018 and the years ended December 31, 2017 and 2016, respectively. Our efficiency ratio lags our peer group as our competitors for loans and deposits are often larger banks who can offer very competitive terms to originate and retain commercial real estate and commercial loans, as well as very competitive rates on deposit products. Additionally, our interest expense is higher than our peer group as our sources of funding tend to rely on higher-cost brokered certificates of deposit and Federal Home Loan Bank (“FHLB”) advances more than our competitors. We have also had a series of significant one-time expenses over the last several years, including core data processing conversion, branch sale costs and expenses related to our self-insured healthcare coverage. The additional costs associated with being a public company will adversely affect our efficiency ratio. We anticipate, however, that the net proceeds from this offering will increase our capital levels, which will also allow us to increase interest-earning assets, such as loans and investments, and our interest income, which should benefit our efficiency ratio.

Costs related to our self-insured healthcare coverage may adversely affect our results of operations and financial condition.

We provide self-insured healthcare coverage to our employees and their dependents. We are self-insured with respect to substantially all of our healthcare coverage. We maintain reserves (recorded in “Other Liabilities” on our balance sheet) to cover our estimated liabilities for healthcare claims. The reserve was $534,000 as of June 30, 2018. The determination of these reserves is based upon a number of factors, including current and historical claims activity, claims payment patterns and medical cost trends. Accordingly, reserves do not represent an exact calculation of liability. Reserves can be affected by both internal and external events, such as adverse developments in existing claims or changes in medical costs, medical conditions of claimants, claims handling procedures, administrative costs and legal fees, inflation, and legal trends and legislative changes. Reserves are adjusted from time to time to reflect new claims, claim developments, or systemic changes, and such adjustments are reflected in the results of the periods in which the reserves are changed. Our estimated accrual for healthcare coverage claims is based upon an actuarial estimate provided by our independent actuary. The estimated accrual does not include an estimated provision for the incidence of unknown catastrophic claims. Moreover, because of the uncertainties that surround estimating healthcare requirements and expenses, we cannot be certain that our reserves are adequate. If the number or severity of claims for which we are self-insured increases, or if our reserves are insufficient to cover our actual healthcare coverage expenses, we would incur charges to our earnings that could be material to our results of operations and financial condition.

 

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We face additional risks due to our mortgage banking activities that could negatively impact net income and liquidity.

We sell the majority of the fixed-rate conforming and eligible jumbo one-to four-family residential real estate loans that we originate. The sale of these loans generates noninterest income and are a source of liquidity for PyraMax Bank, FSB. Disruption in the secondary market for residential mortgage loans could result in our inability to sell mortgage loans, which could negatively impact our liquidity position and earnings. In addition, declines in real estate values or increases in interest rates could reduce the potential for robust mortgage originations, which could negatively impact our earnings. As we do sell mortgage loans, we also face the risk that such loans may have been made in breach of our representations and warranties to the buyers and we could be forced to repurchase such loans or pay other damages.

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 are dependent 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.”

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. 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 management. Material additions to the allowance would materially decrease our net income.

 

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We may be adversely affected by recent changes in U.S. tax laws.

Changes in tax laws contained in the Tax Cuts and Jobs Act, which was enacted in December 2017, include a number of provisions that will have an impact on the banking industry, borrowers and the market for single-family residential real estate. Changes include (i) a lower limit on the deductibility of mortgage interest on single-family residential mortgage loans, (ii) the elimination of interest deductions for home equity loans, (iii) a limitation on the deductibility of business interest expense and (iv) a limitation on the deductibility of property taxes and state and local income taxes. The recent changes in the tax laws may have an adverse effect on the market for, and valuation of, residential properties, and on the demand for such loans in the future, and could make it harder for borrowers to make their loan payments. If home ownership becomes less attractive, demand for mortgage loans could decrease. The value of the properties securing loans in our loan portfolio may be adversely impacted as a result of the changing economics of home ownership, which could require an increase in our provision for loan losses, which would reduce our profitability and could materially adversely affect our business, financial condition and results of operations.

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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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, 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.

Our size makes it more difficult for us to compete.

Our asset size makes it more difficult to compete with other financial institutions that are larger and can more easily afford to invest in the marketing and technologies needed to attract and retain customers. Because our principal source of income is the net interest income we earn on our loans and investments after deducting interest paid on deposits and other sources of funds, our ability to generate

 

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the revenues needed to cover our expenses and finance such investments is limited by the size of our loan and investment portfolios. Accordingly, we are not always able to offer new products and services as quickly as our competitors. Our lower earnings may also make it more difficult to offer competitive salaries and benefits. In addition, our smaller customer base may make it difficult to generate meaningful non-interest income from such activities as securities brokerage. Finally, as a smaller institution, we are disproportionately affected by the continually increasing costs of compliance with new banking and other regulations.

We face significant operational risks because the financial services business involves a high volume of transactions and increased reliance on technology, including risk of loss related to cyber-security breaches.

We operate in diverse markets and rely on the ability of our employees and systems to process a high number of transactions and to collect, process, transmit and store significant amounts of confidential information regarding our customers, employees and others and concerning our own business, operations, plans and strategies. Operational risk is the risk of loss resulting from our operations, including but not limited to, the risk of fraud by employees or persons outside our company, the execution of unauthorized transactions by employees, 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. Insurance coverage may not be available for such losses, or where available, such losses may exceed insurance limits. This risk of loss also includes the potential legal actions that could arise as a result of operational deficiencies or as a result of non-compliance with applicable regulatory standards or customer attrition due to potential negative publicity. In addition, we outsource some of our data processing to certain third-party providers. If these third-party providers encounter difficulties, including as a result of cyber-attacks or information security breaches, or if we have difficulty communicating with them, our ability to adequately process and account for transactions could be affected, and our business operations could be adversely affected.

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, face regulatory action, civil litigation and/or suffer damage to our reputation.

Our information technology systems may be subject to failure, interruption or security breaches.

Information technology systems are critical to our business. We use various technology systems to manage our customer relationships, general ledger, securities investments, deposits, and loans. 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, but such events may still occur or may not be adequately addressed if they do occur.

There have been increasing efforts by third parties to breach data security at financial institutions. There have been several recent instances involving financial services and consumer-based companies reporting the unauthorized disclosure of client or customer information or the destruction or theft of corporate data. 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.

 

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In addition, we outsource a majority of our data processing requirements to certain third-party providers. If these 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. Threats to information security also exist in the processing of customer information through various other vendors and their personnel.

The occurrence of any system failures, interruption, or breach of security could damage our reputation and result in a loss of customers and business, subject us to additional regulatory scrutiny, or could expose us to litigation and possible financial liability. Any of these events could have a material adverse effect on our financial condition and results of operations.

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

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

 

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the interest income we earn on interest-earning assets, such as loans and securities; and

 

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the interest expense we pay on interest-bearing liabilities, such as deposits and borrowings.

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

In addition, changes in interest rates can affect the average life of loans and mortgage-backed and related securities. A decline in interest rates results in increased prepayments of loans and mortgage-backed and related securities as borrowers refinance their debt to reduce their borrowing costs. This creates reinvestment risk, which is the risk that we may not be able to reinvest prepayments at rates that are comparable to the rates we earned on the prepaid loans or securities. Furthermore, an inverted interest rate yield curve, where short-term interest rates (which are usually the rates at which financial institutions borrow funds) are higher than long-term interest rates (which are usually the rates at which financial institutions lend funds for fixed-rate loans) can reduce a financial institution’s net interest margin and create financial risk for financial institutions that originate longer-term, fixed-rate mortgage loans. At June 30, 2018, 70.1% of our loan portfolio consisted of fixed-rate loans.

Any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition, liquidity and results of operations. Changes in the level of interest rates also may negatively affect the value of our assets and ultimately affect our earnings.

We monitor interest rate risk through the use of simulation models, including estimates of the amounts by which the fair value of our assets, liabilities and equity (our economic value of equity or “EVE”) would change in the event of a range of assumed changes in market interest rates. As of June 30, 2018, in the event of an instantaneous 200 basis point increase in interest rates, we estimate that we would experience a 16.7% decrease in EVE. For further discussion of how changes in interest rates could impact us, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations of PyraMax Bank, FSB—Management of Market Risk.”

 

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Strong competition within our market areas may limit our growth and profitability.

Competition in the banking and financial services industry is intense. In our market area, we compete with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, and securities brokerage firms and 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. Competition also makes it increasingly difficult and costly to attract and retain qualified employees. 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.

The financial services industry could become even more competitive as a result of new legislative, regulatory and technological changes and continued consolidation. Banks, securities firms and insurance companies can merge under the umbrella of a financial holding company, which can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking. Also, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Many of our competitors have fewer regulatory constraints and may have lower cost structures. Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than we can. We expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry. For additional information see “Business of PyraMax Bank, FSB—Market Area” and “—Competition.”

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.

PyraMax Bank, FSB is subject to extensive regulation, supervision and examination by the Office of the Comptroller of the Currency, and 1895 Bancorp of Wisconsin, 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 PyraMax Bank, FSB, 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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The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) has significantly changed the regulation of banks and savings institutions and affects the lending, deposit, investment, trading and operating activities of financial institutions and their holding companies. The Dodd-Frank Act requires various federal agencies to adopt a broad range of new implementing rules and regulations, and to prepare numerous studies and reports for Congress. The federal agencies have exercised significant discretion in drafting the implementing rules and regulations. It will be some time before the full effect of the Dodd-Frank Act and the regulations thereunder can be assessed. Compliance with the Dodd-Frank Act and its implementing regulations and policies has already resulted in changes to our business and operations, as well as additional costs, and has diverted management’s time from other business activities, all of which have adversely affected our financial condition and results of operations.

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

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

We have become subject to more stringent capital requirements, which may adversely impact our return on equity, require us to raise additional capital, or limit our ability to pay dividends or repurchase shares.

Federal regulations establish minimum capital requirements for insured depository institutions, including minimum risk-based capital and leverage ratios, and defines “capital” for calculating these ratios. The minimum capital requirements are: (i) a common equity Tier 1 capital ratio of 4.5%; (ii) a Tier 1 to risk-based assets capital ratio of 6%; (iii) a total capital ratio of 8%; and (iv) a Tier 1 leverage ratio of 4%. The regulations also establish a “capital conservation buffer” of 2.5%, and, when fully phased in, will result in the following minimum ratios: (i) a common equity Tier 1 capital ratio of 7.0%; (ii) a Tier 1 to risk-based assets capital ratio of 8.5%; and (iii) a total capital ratio of 10.5%. The capital conservation buffer requirement began being phased in January 2016 at 0.625% of risk-weighted assets and is increasing each year until fully implemented in January 2019. An institution will be subject to limitations on paying dividends, engaging in share repurchases and paying discretionary bonuses if its capital level falls below the then applicable buffer amount.

The application of more stringent capital requirements could, among other things, result in lower returns on equity, and result in regulatory actions if we are unable to comply with such requirements. Specifically, following the completion of the offering, PyraMax Bank, FSB’s ability to pay dividends to 1895 Bancorp of Wisconsin, Inc. will be limited if it does not have the capital conservation buffer required by the new capital rules, which may further limit 1895 Bancorp of Wisconsin, Inc.’s ability to pay dividends to stockholders. See “Regulation and Supervision—Federal Banking Regulation—Capital Requirements.”

 

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

As a result of the completion of this offering, we will become a public reporting company. We expect that the obligations of being a public company, including the substantial public reporting obligations, will require significant expenditures and place additional demands on our management team. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a stand-alone public company. However, the measures we take may not be sufficient to satisfy our obligations as a public company. Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes Oxley Act”) requires annual management assessments of the effectiveness of our internal control over financial reporting, starting with the second annual report that we would expect to file with the Securities and Exchange Commission. Any failure to achieve and maintain an effective internal control environment could have a material adverse effect on our business and stock price. In addition, we may need to hire additional compliance, accounting and financial staff with appropriate public company experience and technical knowledge, and we may not be able to do so in a timely fashion. As a result, we may need to rely on outside consultants to provide these services for us until qualified personnel are hired. These obligations will increase our operating expenses and could divert our management’s attention from our operations.

Changes in accounting standards could affect reported earnings.

The bodies responsible for establishing accounting standards, including the Financial Accounting Standards Board, the Securities and Exchange Commission and other regulatory bodies, periodically change the financial accounting and reporting guidance that governs the preparation of our financial statements. 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.

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

In preparing this prospectus as well as periodic reports we will be required to file under the Securities Exchange Act of 1934, including 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.

Legal and regulatory proceedings and related matters could adversely affect us.

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

 

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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. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If 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.

We are a community bank and our ability to maintain our reputation is critical to the success of our business and 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. As such, we strive to conduct our business in a manner that enhances our reputation. This is done, in part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve, delivering superior service to our customers and caring about our customers and associates. If our reputation is negatively affected by the actions of our employees, by our inability to conduct our operations in a manner that is appealing to current or prospective customers, or otherwise, our business and, therefore, our operating results may be materially adversely affected.

Risks Related to the Offering

The future price of our common stock may be less than the purchase price in the offering.

If you purchase shares of common stock in the offering, you may not be able to sell them later at or above the $10.00 purchase price in the offering. 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 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 1895 Bancorp of Wisconsin, Inc. and the outlook for the financial services industry in general. Price fluctuations in our common stock may be unrelated to our operating performance.

 

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The capital we raise in the offering may negatively impact our return on equity until we can fully implement our business plan. This could negatively affect the trading price of our shares of common stock.

Net income divided by average equity, known as “return on equity,” is a ratio many investors use to compare the performance of a financial institution to its peers. Although we anticipate increasing net interest income using proceeds of the offering, our return on equity will be reduced by the capital raised in the offering, higher expenses from the costs of being a public company, and added expenses associated with our employee stock ownership plan and the stock-based benefit plans we intend to adopt. Until we can implement our business plan and increase our net interest income through investment of the proceeds of the offering, we expect our return on equity to remain relatively low compared to our peer group, which may reduce the value of our shares.

We have broad discretion in using the proceeds of the offering. Our failure to effectively deploy the net proceeds of the offering may have an adverse effect on our financial performance and the value of our common stock.

We intend to invest between $9.5 million and $15.3 million of the net proceeds of the offering in PyraMax Bank, FSB. We also expect to use a portion of the net proceeds we retain to fund a loan to the employee stock ownership plan for the purchase of shares of common stock in the offering by the employee stock ownership plan, and will contribute $100,000 to 1895 Bancorp of Wisconsin, MHC as a part of our formation of the mutual holding company and will contribute $100,000 to the charitable foundation that we are establishing in connection with the reorganization. We may use the remaining net proceeds to invest in short-term and other investments, repurchase shares of our common stock, pay dividends, although we currently do not intend to pay dividends, or for other general corporate purposes. PyraMax Bank, FSB intends to use the net proceeds it receives to fund new loans, enhance existing products and services, invest in securities, expand its banking franchise, or for other general corporate purposes. However, with the exception of the loan to the employee stock ownership plan and the contributions to 1895 Bancorp of Wisconsin, MHC and to the charitable foundation, 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 the timing of such applications. Also, certain of these uses, such as any potential acquisition, paying dividends and repurchasing common stock, may require the approval of or non-objection from 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, accordingly, we may not invest the net proceeds at the time that is most beneficial to 1895 Bancorp of Wisconsin, Inc., PyraMax Bank, FSB or the stockholders. For additional information see “How We Intend To Use The Proceeds From The Offering.”

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

We have never issued capital stock and there is no established market for our common stock. We expect that our common stock will be quoted on the Nasdaq Capital Market under the symbol “BCOW” upon conclusion of the offering, subject to completion of the offering and compliance with certain conditions, including having 300 “round lot” stockholders (stockholders owning more than 100 shares) and at least three companies making a market for our common stock. The development of an active trading market depends on the existence of willing buyers and sellers, the presence of which is not within

 

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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. In addition, our public “float,” which is the total number of our outstanding shares less the shares held by 1895 Bancorp of Wisconsin, MHC, our employee stock ownership plan and our directors and executive officers, is likely to be quite limited. As a result, it is unlikely that an active trading market for the common stock will develop or that, if it develops, it will continue. If you purchase shares of common stock, you may not be able to sell them at or above $10.00 per share. Purchasers of common stock in this offering should have long-term investment intent and should recognize that there will be a limited trading market in the common stock. This may make it difficult to sell the common stock after the offering and may have an adverse impact on the price at which the common stock can be sold.

Our stock-based benefit plans will increase our costs, which will reduce our net income.

We anticipate that our employee stock ownership plan will purchase in the offering shares of our common stock equal to up to 3.92% of our outstanding shares (including the shares held by 1895 Bancorp of Wisconsin, MHC and the charitable foundation) We will record annual employee stock ownership plan expenses in an amount equal to the fair value of shares of common stock committed to be released to employees. If shares of common stock appreciate in value over time, compensation expense relating to the employee stock ownership plan will increase.

We also intend to adopt a stock-based benefit plan after the offering, under which participants would be awarded shares of restricted common stock (at no cost to them) and/or options to purchase shares of our common stock. Under federal regulations, we are authorized to grant awards of stock or options under a stock-based benefit plan in an amount up to 25% of the shares of common stock held by persons other than 1895 Bancorp of Wisconsin, MHC. The number of shares of common stock or options granted under any initial stock-based benefit plan may not exceed 1.96% and 4.90%, respectively, of our total outstanding shares, including shares issued to 1895 Bancorp of Wisconsin, MHC and contributed to the charitable foundation.

The shares of restricted common stock granted under the stock-based benefit plan will be expensed by us over their vesting period based on the fair market value of the shares on the date they are awarded. If the shares of restricted common stock to be granted under the stock-based benefit plan are repurchased in the open market (rather than issued directly from authorized but unissued shares by 1895 Bancorp of Wisconsin, Inc.) and cost the same as the purchase price in the offering, the reduction to stockholders’ equity due to the plan would be between $916,000 at the minimum of the offering range and approximately $1.4 million at the adjusted maximum of the offering range. To the extent we repurchase shares of common stock in the open market to fund the grants of shares of restricted common stock under the plan, and the price of such shares exceeds the offering price of $10.00 per share, the reduction to stockholders’ equity would exceed the range described above. Conversely, to the extent the price of such shares is below the offering price of $10.00 per share, the reduction to stockholders’ equity would be less than the range described above.

We will generally recognize as an expense in our income statement the grant-date fair value of stock options as such options vest. When we record an expense related to the grant of options using the fair value method, we will incur significant compensation and benefits expense. As discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations of PyraMax Bank, FSB,” and based on certain assumptions discussed therein, we estimate this annual pre-tax expense, assuming it is amortized over a 10-year vesting period, would be approximately $101,000, assuming we sell 3,200,450 shares in the offering.

 

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The implementation of a stock-based benefit plan may dilute your ownership interest.

We intend to adopt a stock-based benefit plan following the reorganization and offering. The stock-based benefit plan will be funded through either open market purchases, if permitted, or from the issuance of authorized but unissued shares. Public stockholders would experience a reduction in ownership interest totaling 2.95% in the event newly issued shares are used to fund stock options and restricted stock awards in an amount equal to 4.90% and 1.96%, respectively, of the total shares issued in the reorganization and offering (including shares issued to 1895 Bancorp of Wisconsin, MHC and the charitable foundation).

Persons who purchase stock in the offering will own a minority of 1895 Bancorp of Wisconsin, Inc.’s common stock and will not be able to exercise voting control over most matters put to a vote of stockholders.

Public stockholders will own a minority of the outstanding shares of 1895 Bancorp of Wisconsin, Inc.’s common stock. As a result, stockholders other than 1895 Bancorp of Wisconsin, MHC will not be able to exercise voting control over most matters put to a vote of stockholders. 1895 Bancorp of Wisconsin, MHC will own a majority of 1895 Bancorp of Wisconsin, Inc.’s common stock after the offering and, through its board of directors, will be able to exercise voting control over most matters put to a vote of stockholders. Generally, the same directors and officers who manage PyraMax Bank, FSB will also manage 1895 Bancorp of Wisconsin, Inc. and 1895 Bancorp of Wisconsin, MHC. Our board of directors, officers or 1895 Bancorp of Wisconsin, MHC may take actions that the public stockholders believe to be contrary to their interests, including whether or not the mutual holding company should convert to stock form in a “second-step” transaction. The only matters as to which stockholders other than 1895 Bancorp of Wisconsin, MHC will be able to exercise voting control currently include any proposal to implement a stock-based benefit plan or a “second-step” conversion. In addition, 1895 Bancorp of Wisconsin, MHC may exercise its voting control to prevent a sale or merger transaction in which stockholders could receive a premium for their shares.

Our stock value may be negatively affected by our mutual holding company structure and federal regulations restricting takeovers.

1895 Bancorp of Wisconsin, MHC, as the majority stockholder of 1895 Bancorp of Wisconsin, Inc., will be able to control the outcome of virtually all matters presented to stockholders for their approval, including any proposal to acquire 1895 Bancorp of Wisconsin, Inc. Accordingly, 1895 Bancorp of Wisconsin, MHC may prevent the sale of control or merger of 1895 Bancorp of Wisconsin, Inc. or its subsidiaries even if such a transaction were favored by a majority of the public stockholders of 1895 Bancorp of Wisconsin, Inc. The board of directors of PyraMax Bank, FSB has decided to form a mutual holding company rather than undertake a standard conversion to stock form in part because the mutual holding company structure will allow our board of directors to control the future of 1895 Bancorp of Wisconsin, Inc. and its subsidiaries. Additionally, although federal regulations permit a mutual holding company to be acquired by a mutual institution in a remutualization transaction, such transactions may be unlikely because of the heightened regulatory scrutiny given to such transactions.

For three years following the offering, federal regulations prohibit any person from acquiring or offering to acquire more than 10% of our common stock without the prior written approval of the Federal Reserve Board and/or the Office of the Comptroller of the Currency. Moreover, current Federal Reserve

 

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Board and Office of the Comptroller of the Currency policy prohibits the acquisition of a mutual holding company subsidiary by any person or entity other than a mutual holding company or a mutual institution, and restricts the terms of permissible acquisitions. See “Restrictions on the Acquisition of 1895 Bancorp of Wisconsin, Inc. and PyraMax Bank, FSB” for a discussion of applicable Federal Reserve Board regulations regarding acquisitions.

The corporate governance provisions in our charter and bylaws may prevent or impede the holders of a minority of our common stock from obtaining representation on our board of directors and may also prevent or impede a change in control.

Provisions in our charter and bylaws may prevent or impede holders of a minority of our common stock from obtaining representation on our board of directors. For example, our board of directors will be divided into three classes with staggered three-year terms. A classified board makes it more difficult for stockholders to change a majority of the directors because it generally takes at least two annual elections of directors for this to occur. Second, our charter provides that there will not be cumulative voting by stockholders for the election of our directors, which means that 1895 Bancorp of Wisconsin, MHC, as the holder of a majority of the shares eligible to be voted at a meeting of stockholders, may elect all of our directors to be elected at that meeting. Also, we have the ability to issue preferred stock with voting rights to third parties who may be friendly to our board of directors.

In addition, a section in 1895 Bancorp of Wisconsin, Inc.’s charter will generally provide that, for a period of five years from the closing of the offering, no person, other than 1895 Bancorp of Wisconsin, MHC, may directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of equity security of 1895 Bancorp of Wisconsin, Inc. held by persons other than 1895 Bancorp of Wisconsin, MHC, and that any shares acquired in excess of this limit will not be entitled to be voted and will not be counted as voting stock in connection with any matters submitted to the stockholders for a vote. PyraMax Bank, FSB’s charter will contain a similar provision, except the ownership restriction will apply to persons other than 1895 Bancorp of Wisconsin, MHC and 1895 Bancorp of Wisconsin, Inc.

Our management team has limited experience managing a public company, and regulatory compliance may divert its attention from the day-to-day management of our business.

Our management team has limited experience managing a publicly traded company or complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to a public company, which will be subject to significant regulatory oversight and reporting obligations under the federal securities laws. In particular, these new obligations will require substantial attention from our management team and may divert their attention away from the day-to-day management of our business, which could materially and adversely impact our business operations.

You may not receive dividends on our common stock.

Holders of our common stock are only entitled to receive such dividends as our board of directors may declare out of funds legally available for such payments. We do not currently intend to pay dividends on our common stock following completion of our offering. The declaration and payment of future cash dividends will be subject to, among other things, regulatory restrictions, our then current and projected consolidated operating results, financial condition, tax considerations, future growth plans, general economic conditions, and other factors our board of directors deems relevant. In particular, we will be limited in our ability to pay dividends only to our public stockholders, under the regulations that have been implemented by the Federal Reserve Board following the enactment of the Dodd-Frank Act

 

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with regard to dividend waivers by mutual holding companies. See “Our Policy Regarding Dividends,” “Regulation and Supervision—Federal Banking Regulation—Capital Requirements,” “Federal Banking Regulation—Capital Distributions” and “—Holding Company Regulation—Waivers of Dividends by 1895 Bancorp of Wisconsin, MHC.”

1895 Bancorp of Wisconsin, Inc. will depend primarily upon the proceeds it retains from the offering as well as earnings of PyraMax Bank, FSB to provide funds to pay dividends on our common stock. The payment of dividends by PyraMax Bank, FSB also is subject to certain regulatory restrictions. Federal law generally prohibits a depository institution from making any capital distributions (including payment of a dividend) to its parent holding company if the depository institution would thereafter be or continue to be undercapitalized, and dividends by a depository institution are subject to additional limitations.

As a result, any payment of dividends in the future by 1895 Bancorp of Wisconsin, Inc. will depend, in large part, on PyraMax Bank, FSB’s ability to satisfy these regulatory restrictions and its earnings, capital requirements, financial condition and other factors.

Under current law, if we declare dividends on our common stock, 1895 Bancorp of Wisconsin, MHC will be restricted from waiving the receipt of dividends.

1895 Bancorp of Wisconsin, Inc.’s board of directors will have the authority to declare dividends on our common stock, subject to statutory and regulatory requirements. If 1895 Bancorp of Wisconsin, Inc. pays dividends to its stockholders, it also will be required to pay dividends to 1895 Bancorp of Wisconsin, MHC, unless 1895 Bancorp of Wisconsin, MHC is permitted by the Federal Reserve Board to waive the receipt of dividends. The Federal Reserve Board’s current regulations significantly restrict the ability of newly organized mutual holding companies to waive dividends declared by their subsidiaries. Accordingly, because dividends would likely be required to be paid to 1895 Bancorp of Wisconsin, MHC along with all other stockholders, the amount of dividends available for all other stockholders will be less than if 1895 Bancorp of Wisconsin, MHC were to waive the receipt of dividends.

You may not be able to sell your shares of common stock until you have received a statement reflecting ownership of shares, which will affect your ability to take advantage of changes in the stock price immediately following the offering.

A statement reflecting ownership of shares of common stock purchased in the offering may not be delivered for several days after the completion of the offering and the commencement of trading in the common stock. Your ability to sell the shares of common stock before receiving your ownership statement will depend on arrangements you may make with a brokerage firm, and you may not be able to sell your shares of common stock until you have received your ownership statement. As a result, you may not be able to take advantage of fluctuations in the price of the common stock immediately following the offering.

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

We are an emerging growth company, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy

 

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statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation or on any golden parachute payments not previously approved. As an emerging growth company, we also will not be subject to Section 404(b) of the Sarbanes-Oxley Act of 2002, which would require that our independent auditors review and attest as to the effectiveness of our internal control over financial reporting. We have also elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

We could remain an “emerging growth company” for up to five years, or until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (c) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period.

As a result, our stockholders may not have access to certain information they may deem important, and investors may find our common stock less attractive if we choose to rely on these exemptions. This could result in a less active trading market for our common stock and the price of our common stock may be more volatile.

Risks Related to the Charitable Foundation

The contribution to the charitable foundation will dilute your ownership interest and adversely affect net income in 2019.

We intend to establish and fund a new charitable foundation in connection with the reorganization and offering. We intend to contribute $100,000 in cash and 1.0% of our outstanding shares, or 55,000 shares at the midpoint of the offering range (for an aggregate contribution of $650,000, at the midpoint of the offering range, based on the $10.00 per share offering price) to this charitable foundation. The contribution will have an adverse effect on our net income for the quarter and year in which we make the issuance and contribution to the charitable foundation. The after-tax expense of the contribution is expected to reduce net income in the year of the contribution by approximately $434,500, at the midpoint of the offering range. Our 2017 net income was $1.7 million.

Our contribution to the charitable foundation may not be tax deductible, which could reduce our profits.

We may not have sufficient profits to be able to fully use the tax deduction from our contribution to the charitable foundation. Under the Internal Revenue Code, an entity is permitted to deduct up to 10% of its taxable income (generally income before federal income taxes and charitable contributions expense) in any one year for charitable contributions. Any contribution in excess of the 10% limit may be deducted for federal income tax purposes over each of the five years following the year in which the charitable contribution is made. Accordingly, a charitable contribution could, if necessary, be deducted over a six-year period and expires thereafter.

 

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SELECTED FINANCIAL AND OTHER DATA

The following tables set forth selected historical financial and other data for PyraMax Bank, FSB at the dates and for the periods indicated. It is only a summary and it should be read in conjunction with the business and financial information contained elsewhere in this prospectus, including the financial statements beginning on page F-1. The information at June 30, 2018 and for the six months ended June 30, 2018 and 2017 is not audited but, in the opinion of management, includes all adjustments necessary for a fair presentation. All adjustments are normal and recurring. The results of operations for the six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the entire year. The information at December 31, 2017 and 2016 and for the years ended December 31, 2017 and 2016 is derived in part from the audited financial statements appearing in this prospectus. The information at and for the years ended December 31, 2015, 2014 and 2013 is derived in part from financial statements not appearing in this prospectus.

 

		At June 30,				At December 31,
		2018				2017				2016				2015				2014				2013
		(In thousands)
Selected Financial Condition Data:
Total assets		$	482,617			$	468,361			$	450,173			$	425,674			$	414,448			$	429,927
Cash and cash equivalents			7,995				12,497				7,779				7,192				9,790				12,997
Securities available-for-sale			69,296				88,955				96,458				73,010				83,885				106,712
Loans held for sale			1,170				217				479				339				246				953
Loans receivable, net			368,021				331,206				312,523				314,000				288,794				274,018
Premises and equipment, net			7,601				7,661				8,925				9,115				9,491				10,695
Mortgage servicing rights, net			2,163				2,270				2,421				2,476				2,673				2,454
Federal Home Loan Bank stock			1,818				1,436				2,170				1,720				2,091				2,091
Accrued interest receivable			1,144				1,214				1,163				1,160				1,219				1,362
Bank owned life insurance			13,931				13,732				13,321				12,872				12,426				11,991
Other assets			9,478				9,173				4,934				3,790				3,833				6,654
Total liabilities			444,927				429,367				412,833				388,841				378,367				392,418
Deposits			404,560				389,291				358,882				352,979				350,575				345,398
Federal Home Loan Bank advances			27,677				34,693				48,224				31,452				22,795				41,820
Accrued interest payable			346				340				276				208				173				333
Other liabilities			12,344				5,043				5,451				4,202				4,824				4,867
Total equity			37,690				38,994				37,340				36,833				36,081				37,509

 

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		For the Six Months Ended June 30,								For the Year Ended December 31,
		2018				2017				2017				2016				2015				2014				2013
		(In thousands)
Selected Operating Data:
Interest and dividend income		$	8,013			$	7,500			$	15,256			$	13,797			$	13,856			$	14,654			$	14,808
Interest expense			1,948				1,591				3,361				2,685				2,556				3,139				3,761
Net interest income			6,065				5,909				11,895				11,112				11,300				11,515				11,047
Provision for loan losses			—				—				—				—				(684	)			—				(600	)
Net interest income after provision for loan losses			6,065				5,909				11,895				11,112				11,984				11,515				11,647
Non-interest income			1,483				1,465				2,892				4,155				3,004				2,243				4,421
Non-interest expense			8,065				6,936				16,590				14,013				14,223				16,946				14,850
Income (loss) before income tax expense (benefit)			(517	)			438				(1,803	)			1,254				765				(3,188	)			1,218
Income tax expense (benefit) (1)			(194	)			(4,589	)			(3,462	)			—				—				—				—
Net income (loss)		$	(323	)		$	5,027			$	1,659			$	1,254			$	765			$	(3,188	)		$	1,218

 

(1)	For the years ended December 31, 2016, 2015, 2014 and 2013, the recorded income tax expense and the reversal of our deferred tax asset valuation allowance resulted in a net income tax expense of $0.

 

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		At or For the Six Months Ended June 30,								At or For the Year Ended December 31,
		2018				2017				2017				2016				2015				2014				2013
Performance Ratios (1):
Return on average assets (2)			(0.14	)%			2.22	%			0.36	%			0.29	%			0.18	%			(0.74	)%			0.29	%
Return on average equity (3)			(1.68	)%			25.42	%			4.02	%			3.26	%			2.06	%			(8.33	)%			3.14	%
Interest rate spread (4)			2.65	%			2.71	%			2.67	%			2.70	%			2.83	%			2.79	%			2.71	%
Net interest margin (5)			2.79	%			2.83	%			2.80	%			2.81	%			2.94	%			2.89	%			2.83	%
Efficiency ratio (6)			106.86	%			94.06	%			112.19	%			91.79	%			99.43	%			123.17	%			96.00	%
Average interest-earning assets to average interest-bearing liabilities			114.99	%			116.08	%			116.31	%			116.80	%			115.78	%			113.48	%			112.50	%
Average loans to average deposits			90.05	%			84.77	%			85.85	%			87.74	%			89.78	%			83.38	%			80.62	%
Equity to assets (7)			8.16	%			8.75	%			8.95	%			9.02	%			8.94	%			8.86	%			9.13	%
Capital Ratios:
Tier 1 capital (to adjusted total assets)			7.46	%			8.52	%			7.35	%			8.41	%			8.50	%			8.40	%			8.79	%
Tier I capital (to risk-weighted assets)			9.70	%			12.27	%			11.07	%			11.31	%			11.53	%			10.98	%			11.90	%
Total capital (to risk-weighted assets)			10.55	%			13.24	%			12.05	%			12.22	%			12.52	%			12.16	%			13.11	%
Common equity Tier 1 capital (to risk-weighted assets)			9.70	%			12.27	%			11.07	%			11.31	%			11.53	%			10.98	%			11.90	%
Asset Quality Ratios:
Allowance for loan losses as a percent of total loans			0.83	%			0.95	%			0.93	%			0.95	%			0.97	%			1.28	%			1.38	%
Allowance for loan losses as a percent of non-performing loans			167.40	%			143.98	%			163.90	%			100.39	%			66.35	%			74.71	%			37.49	%
Net charge-offs (recoveries) to average outstanding loans during the period			—	%			0.01	%			0.03	%			(0.03	)%			0.01	%			(0.03	)%			(0.35	)%
Non-performing loans as a percent of total loans			0.50	%			0.66	%			0.57	%			0.96	%			1.47	%			1.71	%			3.69	%
Non-performing assets as a percent of total assets			0.38	%			0.46	%			0.40	%			0.67	%			1.09	%			1.21	%			2.82	%
Other Data:
Number of offices			9				9				9				8				8				8				8
Number of full-time equivalent employees			118				116				111				113				104				107				111

 

(1)	Performance ratios for the six months ended June 30, 2018 and 2017 are annualized.

(2)	Represents net income divided by average total assets. For the six months ended June 30, 2017 and the year ended December 31, 2017, reflects the reversal of our deferred tax asset valuation in the amount of $4.8 million.

(3)	Represents net income divided by average equity. For the six months ended June 30, 2017 and the year ended December 31, 2017, reflects the reversal of our deferred tax asset valuation in the amount of $4.8 million.

(4)

Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost on average interest-bearing liabilities. Tax exempt income is reported on a tax equivalent basis using a combined federal and state marginal tax rate of 29% for 2018 and 42% for the previous periods.

(5)	Represents net interest income as a percent of average interest-earning assets. Tax exempt income is reported on a tax equivalent basis using a combined federal and state marginal tax rate of 29% for 2018 and 42% for the previous periods.

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

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

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

 

•

statements of our goals, intentions and expectations;

 

•

statements regarding our business plans, prospects, growth and operating strategies;

 

•

statements regarding the quality of our loan and investment portfolios; and

 

•

estimates of our risks and future costs and benefits.

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

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

 

•

general economic conditions, either nationally or in our market areas, that are worse than expected;

 

•

changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses;

 

•

our ability to access cost-effective funding;

 

•

fluctuations in real estate values and both residential and commercial real estate market conditions;

 

•

demand for loans and deposits in our market area;

 

•

our ability to implement and change our business strategies;

 

•

competition among depository and other financial institutions;

 

•

inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make;

 

•

adverse changes in the securities or secondary mortgage markets;

 

42

•

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements, including as a result of Basel III;

 

•

the impact of the Dodd-Frank Act and the implementing regulations;

 

•

changes in the quality or composition of our loan or investment portfolios;

 

•

technological changes that may be more difficult or expensive than expected;

 

•

the inability of third-party providers to perform as expected;

 

•

our ability to manage market risk, credit risk and operational risk in the current economic environment;

 

•

our ability to enter new markets successfully and capitalize on growth opportunities;

 

•

our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames, and any goodwill charges related thereto;

 

•

changes in consumer spending, borrowing and savings habits;

 

•

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

 

•

our ability to retain key employees;

 

•

our compensation expense associated with equity allocated or awarded to our employees; and

 

•

changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Please see “Risk Factors” beginning on page 22.

 

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HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING

Although we will not be able to determine the amount of actual net proceeds we will receive from the sale of shares of common stock until the offering is completed, we anticipate that the net proceeds will be between $19.1 million and $26.3 million, or $30.5 million if the offering is increased by 15%.

1895 Bancorp of Wisconsin, Inc. intends to distribute the net proceeds from the offering as follows:

 

		Based Upon the Sale at $10.00 Per Share of
		2,057,000 Shares at Minimum of Offering Range								2,420,000 Shares at Midpoint of Offering Range								2,783,000 Shares at Maximum of Offering Range								3,200,450 Shares at Adjusted Maximum of Offering Range (1)
		Amount				Percent of Net Proceeds				Amount				Percent of Net Proceeds				Amount				Percent of Net Proceeds				Amount				Percent of Net Proceeds
		(Dollars in thousands)
Offering proceeds		$	20,570							$	24,200							$	27,830							$	32,005
Less: estimated offering expenses			(1,500	)							(1,500	)							(1,500	)							(1,500	)
Net offering proceeds		$	19,070				100.00	%		$	22,700				100.00	%		$	26,330				100.00	%		$	30,505				100.00	%
Less:
Amount contributed to 1895 Bancorp of Wisconsin, MHC		$	(100	)			(0.52	)%		$	(100	)			(0.44	)%		$	(100	)			(0.38	)%		$	(100	)			(0.33	)%
Cash contribution to foundation		$	(100	)			(0.52	)%		$	(100	)			(0.44	)%		$	(100	)			(0.38	)%		$	(100	)			(0.33	)%
Proceeds contributed to PyraMax Bank, FSB		$	(9,535	)			(50.00	)%		$	(11,350	)			(50.00	)%		$	(13,165	)			(50.00	)%		$	(15,253	)			(50.00	)%
Proceeds used for loan to employee stock ownership plan (2)		$	(1,833	)			(9.61	)%		$	(2,156	)			(9.50	)%		$	(2,479	)			(9.42	)%		$	(2,851	)			(9.35	)%
Proceeds retained by 1895 Bancorp of Wisconsin, Inc.		$	7,502				39.34	%		$	8,994				39.62	%		$	10,486				39.83	%		$	12,201				40.00	%

 

(1)	As adjusted to give effect to an increase in the number of shares, which could occur due to a 15% increase in the offering range to reflect demand for the shares or changes in market conditions following the commencement of the offering.

(2)

The employee stock ownership plan (“ESOP”) will purchase 3.92% of our outstanding shares (including shares issued to 1895 Bancorp of Wisconsin, MHC and shares contributed to the charitable foundation) with the ESOP obtaining the funds to purchase the shares from a loan made available by 1895 Bancorp of Wisconsin, Inc. to the ESOP. The loan will be repaid principally through PyraMax Bank, FSB’s contribution to the ESOP and dividends payable on common stock held by the ESOP over the anticipated 25-year term of the loan. The interest rate for the ESOP loan is expected to be equal to the prime rate, as published in The Wall Street Journal, on the closing date of the offering.

The net proceeds may vary because total expenses relating to the reorganization and offering may be more or less than our estimates. For example, our expenses would increase if a syndicated community offering were used to sell shares of common stock not purchased in the subscription offering and the community offering. See “The Reorganization and Offering—Plan of Distribution and Marketing Arrangements” for a discussion of fees to be paid in the event that shares are sold in a syndicated community offering. Payments for shares made through withdrawals from existing deposit accounts will not result in the receipt of new funds for investment but will result in a reduction of PyraMax Bank, FSB’s deposits. PyraMax Bank, FSB will receive at least 50% of the net proceeds of the offering.

Use of Proceeds Retained by 1895 Bancorp of Wisconsin, Inc.

1895 Bancorp of Wisconsin, Inc.:

 

•

intends to initially invest the proceeds that it retains in interest-earning deposits and in securities, including securities issued by the U.S. government and its agencies or government sponsored enterprises, mortgage-backed securities, and other securities as permitted by our investment policy. See “Business of PyraMax Bank, FSB—Investment Activities;”

 

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