Magazine article American Banker

Virginia Mutual Thrifts Seize Chance to Convert

Magazine article American Banker

Virginia Mutual Thrifts Seize Chance to Convert

Article excerpt

A handful of Virginia thrifts think the time is right to tap the capital markets and convert to stock savings banks.

The group is led by $841 million-asset Life Savings Bank of Norfolk, which last week began a stock offering that could raise nearly $95 million in capital. The offering will close Sept. 26.

First Federal Savings Bank of Lynchburg and Southwest Virginia Savings Bank of Roanoke are also converting and have made offerings. A fourth institution, $112 million-asset Bedford completed its conversion two weeks ago.

Why the movement?

"The market is favorable right now," said Kate Lawton, managing director of Sandler O'Neill, an investment bank that is managing Life offering. "And once one of your competitors converts, it makes you take a good hard look at your own situation."

The instigator could have been Cooperative Federal Savings Bank of Lynchburg, which converted about a year ago. Cooperative Federal was fortunate to have convened before the latest round of Office of Thrift Supervision rules.

Among other changes, the new regulations curtailed stock option and stock benefit plans for bank management and required that a thrift's depositor accounts must have existed a year before the offering.

In its conversion, Cooperative Federal sold 2.8 million shares, raising $27 million, according to its chief financial officer, Tobi Jaeger.

The conversion of Cooperative Federal into a stock savings bank also created a holding company, to which 50% of the offering's proceeds were allocated, Ms. …

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