OTS Approves SpinoffOf Internet-Only Thrift, Clearing Way for IPO

Atlanta Internet Bank cleared the final regulatory hurdle Monday for a planned public offering to raise at least $35 million.

The Office of Thrift Supervision approved a complex application that allows Atlanta Internet Bank to spin off from Carolina First Corp.-the Greenville, S.C., bank holding company under which it has operated since October-and sell 3.5 million shares to the public.

The resulting institution would be the second that OTS has approved to operate over the Internet. The first, Security First Network Bank, based in Atlanta, was approved in May 1995.

"Everything was based on regulatory approvals," said W. James Stokes, a director of Atlanta Internet Bank. "We can now move forward and become an (independent) Internet bank."

The new institution still must convince regulators that its on-line network is secure. OTS said Atlanta Internet Bank must hire outside security specialists to attempt to break into its system. A report on the test results is due by Aug. 31.

"Regulators should not impede the progress of technology, but must be cognizant of the importance of protecting the depositors and users of Internet banking systems," OTS Director Nicolas Retsinas said in a prepared statement.

As of early July, Atlanta Internet Bank said it held $43.6 million of deposits in 2,680 accounts that were solicited completely on-line.

The bank plans to operate 24 hours a day, seven days a week and offer loans, brokerage services, and other products next year.

Under the series of transactions approved by OTS, an Atlanta-based holding company called Net.B nk Inc. will acquire Premier Bank FSB, Acworth, Ga., from First Alliance Bancorp. Atlanta Internet Bank will then be merged into Premier Bank and its headquarters will be shifted to Columbia, S.C. However, the bulk of the bank's operations will continue to be located in Atlanta. After the public offering, Carolina First will own 23.5% of Net.B nk, Mr. Stokes said.

Atlanta Internet Bank and the other companies involved in the transaction applied to OTS in February. They must complete the deal within 120 days or file for an extension with the OTS.

The Federal Reserve Board, the Federal Deposit Insurance Corp., and the necessary state regulators have already granted approvals, Mr. Stokes added.

Net.B nk, which has been managing Atlanta Internet Bank's operations, filed its registration statement with the Securities and Exchange Commission in March. It intends to sell 3.45 million shares at $10 to $12 per share, which would raise $34.5 million to $41.4 million.

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