Hundreds of thrifts have switched to bank charters in recent years. A Colorado institution has bucked the trend.
Megabank, based in Englewood, shed its 15-year-old commercial charter Sept. 1 and became a thrift.
It is just the 20th bank to become a thrift since 1993, according to the Office of Thrift Supervision. In that time there have been 301 conversions in the other direction.
The parent Megabank Financial Corp. became to a unitary thrift holding company; no Colorado bank company had ever done that before.
Larry A. Olsen, president of $199 million-asset Megabank Financial, said the charter switch would enable it to offer products and services it could not under a commercial bank charter.
Megabank Financial, organized in 1983, has operated more like a thrift than a bank over the last five years. Since 1993 it has made $750 million of real estate loans, which account for 62.3% of its company's overall loan portfolio.
As a unitary thrift Megabank can make direct real estate investments and sell insurance anywhere in the country, said thrift attorney Ronald R. Glancz, a partner with the Venable law firm in Washington.
"It makes great business sense," Mr. Glancz said. "And they could affiliate with any commercial firm in the country, if they so desire."
Megabank Financial is planning a stock offering to finance its entry into new businesses. Its plans include injecting $3.5 million into a new real estate subsidiary that would buy undeveloped real estate in the Denver area. The subsidiary would sell the land to small or medium-size home builders.
"We hope to offer an array of services to home builders in the Denver area," Mr. Olsen said.
Securities and Exchange Commission documents filed Sept. 15 indicate that Megabank Financial would also like to form a real estate title company and build more branches in the Denver area. It recently opened its ninth branch and plans to spend $1.5 million to complete the 10th.