8-K: Lake Shore Bancorp Enters Agency Agreement with Raymond James for Stock Offering

Lake Shore Bancorp has engaged Raymond James & Associates to assist in marketing its common stock during the company's stock offering related to its conversion from a mutual holding company to a stock holding company.

Summary

• Lake Shore Bancorp, Inc. has entered into an Agency Agreement with Raymond James & Associates, Inc. on May 14, 2025.
• Raymond James will assist in marketing the company's common stock during its stock offering.
• This offering is in connection with Lake Shore's conversion from a mutual holding company (MHC) to a stock holding company.
• Raymond James will receive a success fee of 1.35% of the aggregate dollar amount of shares sold in the subscription and community offerings.
• No fee will be paid for shares purchased by officers, directors, employees, their immediate families, or employee benefit plans.
• If a syndicated community offering is conducted, Raymond James will receive a fee of 6.00% of the aggregate dollar amount of common stock sold.
• Raymond James will also receive a $30,000 fee for records agent services.
• Reimbursement for out-of-pocket expenses and legal expenses related to marketing and records agent services are also included, subject to certain limitations.
• The shares are being offered pursuant to a Registration Statement on Form S-1, which was declared effective by the SEC on May 14, 2025.
• The company plans to offer up to 5,750,000 shares, subject to an increase up to 6,612,500 shares, at a subscription price of $10.00 per share.

Sentiment

Score: 7

Explanation: The document outlines a standard business transaction (an agency agreement for a stock offering) with clear terms and conditions. The sentiment is moderately positive as it indicates a strategic move by the company to raise capital and enhance its growth prospects.

Positives

• The engagement of Raymond James should facilitate a successful stock offering.
• The success fee structure aligns Raymond James' interests with the company's success in selling shares.
• The offering is part of a strategic conversion from a mutual holding company to a stock holding company, which could unlock value for the institution.
• The Registration Statement on Form S-1 was declared effective on May 14, 2025.

Negatives

• The fees paid to Raymond James will reduce the net proceeds from the stock offering.
• The company is reliant on Raymond James' marketing efforts to achieve a successful offering.
• The success of the offering is subject to market conditions and investor demand.

Risks

• Market conditions could negatively impact the success of the stock offering.
• The conversion from a mutual holding company to a stock holding company involves regulatory approvals and potential delays.
• Failure to sell the minimum number of shares would terminate the agreement and require refunds to subscribers.
• A material adverse change in the financial condition or operations of the bank could lead to termination of the agreement.

Future Outlook

The company intends to complete the conversion from a mutual holding company to a stock holding company and offer shares of common stock to depositors, employees, and the general public.

Industry Context

Community banks and thrifts often convert from mutual to stock ownership to raise capital and enhance their growth prospects. This transaction is in line with that trend.

Comparison to Industry Standards

• The fees paid to Raymond James are within the typical range for similar stock offerings by community banks.
• The offering size of up to 6,612,500 shares is comparable to other mutual-to-stock conversions in the industry.
• RP Financial, LC. is a well-known and respected appraisal firm specializing in valuations for the financial services industry, including mutual-to-stock conversions.

Stakeholder Impact

• Depositors of Lake Shore Savings Bank with Qualifying Deposits as of December 31, 2023, will have the opportunity to purchase shares in the subscription offering.
• Employees of the bank will also have the opportunity to purchase shares through the employee stock ownership plan.
• The general public will have the opportunity to purchase shares in the community offering.
• The conversion to a stock holding company could lead to increased shareholder value.

Next Steps

• Raymond James will market the company's common stock.
• The company will complete the subscription and community offerings.
• The company will finalize the conversion from a mutual holding company to a stock holding company.
• The Holding Company will file a Form 8-A for the Shares and the Exchange Shares to be registered under Section 12(b) of the Exchange Act (the Exchange Act Registration Statement).

Key Dates

Keywords

stock offering, Raymond James, mutual holding company, conversion, agency agreement, Lake Shore Bancorp, common stock, subscription offering, community offering