Dollar Dry Dock Seeking to Raise $50 Million in Capital, Shed Assets
Dollar Dry Dock Bank, a prominent New York-area thrift, confirmed it is scrambling to raise capital and reduce its balance sheet.
The $4.2 billion-asset savings bank plans to sell a "sizable" amount of assets and deposits within the next few months, said Kenneth Koehler, the company's chief executive.
Simultaneously, it is searching for about $50 million in fresh capital, he said.
Speculation about the thrift's plans had been circulating in industry circles over the last few weeks.
"I'm reasonably optimistic" about pulling off the plan, Mr. Koehler said in a phone interview this week. "But it's a very uncertain period for capital raising."
Fed Keeping Sharp Lookout
He cautioned that examiners from the Federal Deposit Insurance Corp. are now at Dollar Dry Dock's offices reviewing the capital proposal "for feasibility." The thrift needs their imprimatur to gain commitments from investors, he said.
Mr. Koehler said that Dollar, a privately held thrift, plans to target its existing investor base of about 100 institutions and individuals.
Dollar Dry Dock has a core capital level well below the regulatory minimum, and has already had at least one setback on its capital redesign. Emigrant Savings Bank, a New York City rival, recently turned down a sale proposal for certain assets and deposits, according to a well-placed source.
Mr. Koehler confirmed that Emigrant at one point was "an interested party" in the recapitalization effort, though he declined to elaborate.
Emigrant chairman Raymond O'Brien declined comment.
Dollar is clearly not the only struggling thrift in the metropolitan New York City area. However, its widespread Manhattan advertising compaigns and its well-publicized attempt in the mid-1980s to build glitzy "financial centers" within its branches give it a high profile.
The company, based in White Plains, N.Y., traces its problems to the same commercial real estate problems that are plaguing so many neighboring banks and thrifts.
In perhaps the most extreme case, the government is trying to arrange a sale of Crossland Savings in Brooklyn. Several banks, including some money-centers and others in New Jersey, are believed to have explored Crossland. But none has committed to a major purchase.
American Savings Bank, Dollar Dry Dock's White Plains neighbor, is trying to convert $68 million of cumulative preferred stock into securities that count as core capital. In addition, the $3.7 billion-asset thrift is "exploring the possibility of getting outside capital," an official there said.
Dollar Dry Dock lost $38 million last year. Mr. Koehler said he expects the thrift to be unprofitable both this year and next.
Its core capital has dipped to less than 1% of assets, versus a required 4%.
|Open Bank' Option
What are Dollar Dry Dock's options if the capital plan proves unsuccessful?
Mr. Koehler, who joined the thrift in 1989 and became chief executive this January, said a government-assisted sale - a maneuver known as "open bank assistance" - would not be out of the question.
"We've looked at that alternative, but obviously it's not our preference," Mr. Koehler said.
PHOTO : Kenneth Koehler Piloting on a choppy sea