PORT ANGELES — First Federal has been reborn as a bank owned by stockholders.
Stock trading begins Friday.
Members of the 92-year-old North Olympic Peninsula savings-and-loan institution approved conversion from a mutual, or depositor-owned, institution by about a 2-1 vote, corporate officials announced Wednesday.
Depositors also approved the funding of a new First Fed Community Foundation that will give money to charities and other local community groups.
First Northwest Bancorp, the new holding company that owns 100 percent of First Fed, will be publicly traded on the NASDAQ exchange beginning Friday under the symbol “FNWB,” officials said.
Founded in 1923, First Federal has its headquarters in Port Angeles and operates branches in Port Angeles, Sequim, Port Townsend, Forks and Silverdale, plus a lending center in Bellingham. It has almost 180 employees.
The only locally owned community bank on the Peninsula, First Fed had assets of more than $795 million as of June 30, its last official reporting date.
A stock sale accompanying the conversion guarantees that First Fed will gain about $121 million after costs.
First Federal’s move follows a national trend in which other mutuals have converted to stock ownership to raise millions in new capital.
The money can be used to build new branches, expand lending and investments and offer new services.
“We’re very excited about the opportunity this presents the company,” said Larry Hueth, president and CEO, after a special meeting of depositors and others at the Port Angeles Red Lion Hotel.
About 60 people who attended Wednesday’s meeting learned that 2,120,479 yes votes were cast for the bank’s conversion, compared with 1,119,751 no votes.
Weighted votes
Votes were weighted on a formula based on deposits. The maximum number of votes an individual could cast was 1,000.
Of the 4,115,713 total votes eligible to be cast, 51.52 percent were in favor the conversion, 27.21 percent were against the conversion and 21.27 percent were not cast, officials said.
Also eligible to vote on the conversion were the bank’s loan recipients.
Final regulatory approval of the conversion is expected to be completed today.
Shares of First Federal stock are expected to be issued Friday.
The bank has no plans to issue more stock, Hueth said.
In its IPO, First Northwest Bancorp sold the maximum-allowed 12,167,000 shares of common stock at $10 per share for gross offering proceeds of $121.7 million.
The stock went on sale along with the voting shortly before Thanksgiving.
It was so popular that the 12,167,000 cap was reached quickly, with orders going to “first tier” depositors with First Federal accounts as of March 31, 2011.
The minimum order of stock was 25 shares for $250, with purchases limited to 20,000 shares per person ($200,000) or 40,000 shares ($400,000) for those acting together, such as married couples or domestic partners.
Bank officials said many of the first-tier account-holders are long-term First Fed customers who live in Clallam and Jefferson counties.
Refunds upcoming
Refunds to those who wanted to buy the stock — but couldn’t because it was oversubscribed — will go out after the conversion becomes official at the end of the week.
The money is in an escrow account accruing at the bank’s standard savings account interest rate of 0.03 percent.
The cost of the conversion was not immediately available Wednesday.
Hueth said in an email that it “may take a few days” for the final invoices to be accumulated.
The vote to convert to a bank owned by stockholders was extended from Jan. 6 to Wednesday to allow more depositors to weigh in.
With the conversion, First Fed has 13,100,360 shares of common stock outstanding, including 933,360 shares contributed to the new
First Federal Community Foundation.
Funding of the 501(c)(3) nonprofit foundation garnered 2,142,681 yes votes — or 52.06 percent of the votes eligible — and 1,097,549 (26.67 percent) no votes from members.
Hueth said the conversion and community foundation will spur economic development and continue First Fed’s philanthropic tradition.
“The board of directors and all of the employees of First Federal appreciate the strong support of First Federal by our customers and the community,” Hueth said in a news release Wednesday.
“We look forward to continuing to serve our communities as an even stronger community bank.
“In addition, the First Federal Community Foundation will receive a contribution in cash and stock of over $9.7 million, which will be used to provide charitable support to our communities.”
The foundation will be funded with $400,000 in cash and 933,360 shares of the $10 IPO stock.
The amount contributed to the foundation is equal to 8 percent of the gross offering proceeds received by First Northwest Bancorp.
No changes
First Federal’s conversion does not affect the balance, interest rate or federal deposit insurance protection of any checking or savings account, officials said.
Depositors with first-tier priority can confirm a stock allocation by phoning the stock information center at 844-731-2610 from 10 a.m. to 4 p.m. beginning today.
First Federal’s employee stock ownership plan was unable to purchase any shares in the offering because of the oversubscription, bank officials said.
But, subject to regulatory approval, the bank intends to purchase up to 1,048,029 shares of common stock in the open market for use in the employee stock plan.
