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RALEIGH, N.C., May 07, 2019 (GLOBE NEWSWIRE) -- West Town Bancorp, Inc. (OTC PINK: WTWB) (“West Town”) announced today that Sound Bank has successfully completed a recapitalization as part of the bank’s plan to grow its franchise into a high performing, statewide North Carolina community bank. As part of the recapitalization, West Town sold a substantial portion of its interest in Sound Bank through a series of concurrent secondary sales of shares of Sound Bank common stock to certain third-party purchasers, which secondary sales resulted in gross proceeds to West Town of $28,010,000. Simultaneous with West Town’s completion of these secondary sales, Sound Bank completed a private placement of newly issued shares of Sound Bank common stock, which primary sales by Sound Bank resulted in gross proceeds to the bank of approximately $62 million, before fees and expenses of the bank offering. Following the concurrent closings of West Town’s secondary sales and Sound Bank’s primary offering, which are referred to collectively as the recapitalization, West Town retains an approximate 4.9% ownership interest in Sound Bank’s voting common stock and a 9.9% total equity interest in Sound Bank.
The $28,010,000 in cash proceeds received by West Town equates to 168% of Sound Bank’s tangible common equity as of March 31, 2019. As a result of the transaction, Sound Bank will no longer be a consolidated entity, and West Town will recognize a pre-tax gain of approximately $6.5 million. In addition, as of March 31, 2019, West Town carried $8.5 million of intangible assets related to Sound Bank, which will no longer be included in its financial statements. Together, the gain and elimination of Sound Bank intangible assets will result in an approximate 26.5%, or $4.28, increase in the tangible book value per share of West Town. West Town intends to deploy a portion of the new capital to West Town Bank & Trust, its Chicago-based subsidiary bank, for continued expansion of the bank’s government-guaranteed lending department and will retain the remaining proceeds for general corporate purposes. Two members of West Town’s board of directors will continue to serve on Sound Bank’s board of directors, which is being reconstituted in connection with the recapitalization. West Town was also issued a warrant by Sound Bank in connection with the recapitalization, which warrant has a five-year exercise period and entitles West Town to purchase an additional 99,900 shares of Sound Bank non-voting common stock at a $10.00 per share exercise price.
Eric Bergevin, President and CEO of West Town, commented, “The recapitalization represents the successful monetization of our investment in Sound Bank with an over 20% return on investment in just over one and half years. We continue to remain committed to the Sound Bank franchise and will support its growth in North Carolina through our ongoing ownership and board representation. Moving forward, our primary focus is on the growth of West Town Bank & Trust into a robust, full-service community bank franchise.”
Wyrick Robbins Yates & Ponton LLP served as legal counsel to West Town on the recapitalization, and Raymond James & Associates, Inc. issued a fairness opinion to West Town’s Board of Directors.
ABOUT WEST TOWN BANCORP, INC.
West Town Bancorp, Inc. is the financial holding company for West Town Bank & Trust, a North Riverside, IL based state-chartered bank. West Town Bank & Trust provides banking services through its two offices in Illinois. Primary deposit products are checking, savings, and certificate of deposit accounts, and primary lending products are government guaranteed lending, residential mortgage, commercial, and installment loans. West Town is also the parent company of Windsor Advantage, LLC, a loan servicing company, and West Town Insurance Agency, Inc., an insurance agency. West Town is registered with, and supervised by, the Federal Reserve. West Town Bank & Trust’s primary regulators are the Illinois Department of Financial and Professional Regulation and the FDIC.
For more information, visit https://www.westtownbank.com/
Important Note Regarding Forward-Looking Statements
This release contains certain forward-looking statements with respect to the financial condition, results of operations, business, and future plans of West Town., its subsidiaries, and Sound Bank. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of West Town’s management and on the information available to management at the time this release was prepared. Forward-looking statements can be identified by the use of words such as "expect," "anticipate," "estimate," "believe," variations of these words, and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause a difference include, among others: increased or unexpected costs and expenses associated with the recapitalization; the inability of Sound Bank to achieve its growth goals or expand its business; the diversion of West Town management’s time towards transition issues associated with Sound Bank’s new initiatives; changes in the national and local economies or market conditions; changes in interest rates, deposit flows, loan demand, and asset quality, including real estate and other collateral values; changes in Small Business Administration rules, regulations, or loan products, including the section 7(a) program; changes in other government-guaranteed loan programs or West Town’s ability to participate in such programs; changes in tax law, including the impact of such changes on our tax assets and liabilities; changes in banking regulations and accounting principles, policies, or guidelines; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with West Town’s acquisition activities; the failure of West Town’s strategic investments or acquisitions to perform as anticipated and the impact of any impairments to its intangible assets, such as goodwill; the impact of West Town’s strategic initiatives on its ability to retain key employees, and the impact of competition from traditional or new sources. These, and other factors that may emerge, could cause decisions and actual results to differ materially from current expectations. West Town assumes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.
Contact: Eric Bergevin, (252) 482-4400