Essex Financial lost $4.4M in 3d quarter.

A Virginia Beach, Va., limited partnership that had attempted to erect a chain of thrifts throughout the Southeast suffered a $4.4 million net loss in the third quarter.

The primary cause of the loss for the company, called Essex Financial Partnership LP, came from the settlement in October of a lawsuit filed by disgruntled investors.

The settlement drained $2.4 million from Essex Financial, which operates Essex Savings Bank.

The company, which has $320 million of assets, has been buffeted by losses and regulatory problems practically since its inception in 1989.

"They're trying to restructure," said Vernon Plack, a bank analyst at Scott & Stringfellow, a Richmond, Va. investment firm. "Their goal is to develop some sort of coherent franchise out of it."

In its first year of activity, the company raised about $40 million from 2,700 investors lured primarily through the efforts of its limited partner and investment banker, Paine Webber Inc.

It was Paine Webber that was actually named in the lawsuit, filed last January. As part of the settlement, Paine Webber agreed to absorb $20 million of the company's debt.

As for Essex Financial, it agreed to make a preferred stock offering of $1 million to those investors. The offering process probably will begin sometime this month.

The third quarter loss also was attributed to a decline in interest-earning assets. It lost $93 million of deposits in July when it sold its three Florida-based Essex Savings Bank branches.

The sale was yet another retreat from the company's original goal to own thrifts in at least six states. Its remaining holdings are in Virginia and North Carolina. The company intends to merge the partnership into Essex Bancorp, a recently formed subsidiary of Essex Financial.

The company received regulatory approval for the move in August, and its limited partners will vote on it in January.

Essex Financial executives could not be reached for comment.

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