Southern Financial Federal Savings Bank, a well-capitalized thrift in Warrenton, Va., raised $5 million in an initial public offering last week.
The $103 million-asset thrift will use the proceeds in part to acquire loans, branches, or failed institutions from the Resolution Trust Corp.
"We would like to be a large community bank," said Georgia S. Derrico, the thrift's chairman and chief executive and a former senior officer with New York-based Chemical Banking Corp.
Eye on Washington Thrifts
Ms. Derrico said she is considering bidding on several failed savings and loans in the Washington, D.C., area. In addition, she is looking for healthy institutions that want to merge.
"We are in the very preliminary stages of talking to one or two people," she said. "We obviously have excess capital. We want to make sure we make the right moves."
Southern Financial issued 338,983 shares of common stock at $14.75 a share. The offering, which was underwritten by Potomac Securities Inc., Chevy Chase, Md., sold out in 10 days.
The additional funds boost the thrift's ratio of core capital to adjusted total assets to 12.10%. Office of Thrift Supervision regulations require thrifts to maintain a ratio of at least 3%.
Shareholder Base Expanded
Ms. Derrico and her husband beneficially own about 94,000 shares of Southern, or 9.7%. Directors, executives and employees own more than 200,000 shares, or 24% of the company.
Southern Financial increased its shareholder base to 350 investors, up from 160 before to the offering. The thrift's stock began trading Dec. 14 on the Nasdaq small-cap market under the symbol SFFB. The stock traded at $15.25 on Monday.
Southern Financial opened for business in 1986, when the thrift crisis was in full swing. It has grown slowly, but last year assets jumped 33% to $103 million, loans grew 21% to $61.1 million, and deposits were up 16% to $79.5 million. The thrift has seven offices and about 35 employees.
Good Efficiency Ratio
Despite the recent growth spurt, Southern Financial has few problem loans, and it boasts an efficiency ratio of 55.82%.
"We watch our pennies," said Ms. Derrico, who was senior vice president of corporate affairs with Chemical.
Southern Financial's earned $1.3 million in fiscal 1993, more than tripling 1992's net income. The thrift has a 1.45% return on average assets.
Ms. Derrico said Southern Financial was penalized for operating under a thrift charter. The stock was issued at book value, while banks of similar size in the region have recently raised funds at 1.50 times book.
In 1990, Ms. Derrico tried to convert Southern Financial to a bank, but the process bogged down and she dropped the plan.
"Our balance sheet is much like a commercial bank," Ms. Derrico said. "We would have gotten a larger premium if we were a commercial bank."
