EWSB Bancorp, Inc. /MD/ (EWSB) stock intrinsic value fair value estimate & owner earnings analysis

EWSB Bancorp is the holding company for East Wisconsin Savings Bank, a savings bank founded in 1887 with its headquarters in Kaukauna and three branches in Appleton, Freedom and Kimberly, all in Outagamie County, Wisconsin. It converted from mutual to stock ownership in September 2024, selling 752,538 shares at $10.00, and sold another 261,682 shares for about $2.6 million (roughly $9.94 a share) in late June 2026. At June 30, 2026 it had about $266 million of assets, $225 million of deposits and $15.2 million of equity. Most of its lending is fixed-rate home mortgages (68% of loans), followed by boat and RV loans (16%), construction, home equity and a little commercial lending. It also earns fees from selling new mortgages into the secondary market. The central fact about this bank is that it does not make money. Net losses were $0.9 million in 2023, $1.7 million in 2024, $4.2 million in 2025 (including a $3.3 million write-down of tax assets it may never use) and $0.7 million in the first half of 2026. Measured as the cash the business actually generates for its owners (operating cash flow, stripping out timing swings in receivables and payables, and charging employee stock plan costs and the upkeep of its offices), it lost about $1.8 million in 2023, $2.6 million in 2024 and $1.5 million in 2025, or roughly $2.15 to $3.68 a share. The tax-asset write-down is a bookkeeping charge, so it is excluded from these cash figures. The reason is structural: the bank funds a book of older, low-rate fixed mortgages and bonds with deposits that are almost entirely interest-bearing (only $7.7 million of $217 million at year-end 2025 paid no interest) plus $38 million of Federal Home Loan Bank borrowings. Its net interest margin was 1.35% in 2024 and 1.74% in 2025, and net interest income ran at about $4.9 million a year in the second quarter of 2026, against roughly $7.6 million a year of operating costs that have barely moved since 2023. Fee income of about $1.7 million narrows the gap but does not close it. Since July 2023 the bank has operated under an informal agreement (a memorandum of understanding) with the FDIC and the Wisconsin Department of Financial Institutions. It requires plans to improve earnings, liquidity and interest-rate risk, bars dividends without regulatory consent, and requires a net worth ratio of at least 6%. The bank's core capital ratio was 6.1% at year-end 2025 and 7.1% at June 30, 2026 after the share sale, which leaves roughly $3 million of cushion. At the current loss rate that cushion lasts a little over two years. That is the clock this analysis runs on: within about that time the bank must either reach break-even, raise more capital (the June 2026 sale was priced well below book value per share), or be sold. Because this is a bank, deposits and borrowings are its raw material rather than debt in the usual sense, so its value is taken directly from what is left for shareholders and nothing further is subtracted for borrowings. Since the business loses money, its value to owners is not a stream of earnings; it is what the balance sheet is worth when the losses stop, reduced by the losses incurred until then. We value the equity at fair value: book equity of $15.2 million, less the $5.1 million by which the bank's own disclosure at year-end 2025 put the fair value of its loans below their carrying amount (down from $9.1 million a year earlier), less about $0.6 million of change-in-control costs under the employment and salary-continuation agreements with its senior officers, plus partial recovery of the $4.8 million of unrealized losses on its bond portfolio as those bonds move toward maturity. The tax losses the bank has built up (a $3.5 million reserve against tax assets at June 2026) and any premium for its deposit franchise are not credited, because neither has been shown to produce value. Per-share figures use about 966,000 shares, which excludes shares held unallocated by the employee stock plan. Growth check: owner losses narrowed about 42% in 2025 as asset yields rose. The base case assumes no further improvement in the first year, which is below that trailing rate, because the first half of 2026 showed the improvement has stalled (net interest income rose only about 9% year over year in the second quarter while costs were flat). No growth is credited in any case: the bank has not grown its deposits (they shrank from $231.5 million to $217.3 million in 2025) and a wider margin is not something it has secured. Bear case, about $5.01 a share: losses return toward the 2023-2024 level of about $2 million a year as deposit costs stay high, which the bank's heavy reliance on certificates and money-market deposits makes plausible, consuming about $4.5 million of equity by the end of 2028 and exhausting the capital cushion during 2028. The loan discount stays near $5.1 million because rates do not fall, bond losses recover only about $0.5 million, and the bank is sold or recapitalized at fair value. Net assets of about $5.5 million then, worth about $4.8 million today. Base case, about $7.70 a share: losses continue near the current run rate of about $1.35 million a year until the capital cushion is used up around the end of 2028, consuming about $3.0 million of equity. The loan discount shrinks to about $4.1 million as the older mortgages pay down, about $1.0 million of the bond losses reverse, and the bank is sold or merged at fair value. Net assets of about $8.5 million then, worth about $7.4 million today. Bull case, about $11.00 a share: the margin keeps improving as older mortgages and bonds roll off at higher rates, as it did from 2024 to 2025, so the loss falls to about $1.0 million, then $0.5 million, reaching break-even by 2028 and costing only about $1.5 million of equity. The loan discount shrinks to about $3.0 million, $2.0 million of bond losses reverse, and net assets of about $12.1 million at the end of 2028 are worth about $10.6 million today. Even in this case the bank only reaches break-even, so its value rests on its balance sheet rather than on future earnings. What would make this wrong: a sharp fall in deposit rates would accelerate the margin repair and lift the value toward the bull case, while further share sales below these values, a deterioration in the boat and RV or construction loans, or regulators escalating the informal agreement into a formal order would push it toward or below the bear case. The fair-value discount on loans for June 2026 was not available, so the year-end 2025 figure was used and adjusted for expected paydowns.