This Ex-CU Went For Bargain BasementPrice

FEASTERVILLE, Pa. - (05/20/05) -- Just a month after IGA FCU convertedto mutual savings bank in January 1999, executives of the new banknow known as IGA Federal Savings Bank were talking with managementof another nearby thrift, PSB Bancorp, parent of First Penn Bank,about a possible combination. Though executives of the twoinstitutions, who wouldn't tie the knot for another two yearsstill, told regulators and the the public their courtship didn'tbegin until June 2000, well after IGA became the first ex-creditunion to go public in an initial public offering, documentsrevealed in an unrelated lawsuit in federal court in Philadelphiashow the courtship began a whole lot earlier--even as the ink wasdrying on the credit union-convert's new bank charter. What madethe former credit union attractive to the then-ailing Philly thriftwas its cache of nearly $16 million in capital--capital built up bymembers since the 1975 founding of the credit union. By the timeIGA went public in October 1999, raising $14 million in its IPO,that cache of capital had swelled to more than $29 million,documents filed with the Securities and Exchange Commission andreviewed by The Credit Union Journal show. So it was that the 10%premium PSB finally agreed to pay IGA for its stock in theirOctober 2000 merger agreement--$13.55 a share--really turned out asa bargain for the Philly thrift company. That's because the $24.1million PSB paid for IGA bought them control of $29 million incapital then held by the former credit union.