First Lincoln Bancshares, Lincoln, Neb., was forced to suspend its mutual-to-stock conversion after a group of depositors threatened to sue.
The $1 billion-asset thrift's stock was scheduled to begin trading April 20. The company, parent of 91-year-old First Federal Lincoln Bank, was seeking to raise as much as $196 million.
But First Lincoln's board postponed the offering last week to address concerns raised by customers of its Iowa subsidiary. Unlike depositors of First Lincoln's Kansas and Nebraska units, customers of First Federal Lincoln Bank-Iowa were not given a chance to buy shares.
The Iowa customers were not offered stock subscriptions because the Iowa subsidiary is already a stock institution, said Gilbert G. Lundstrom, president and chief executive officer.
"The board felt that it was in the best interest of all concerned to cease the offering at this time rather than face any possible legal complications that might jeopardize the conversion process," he said.
He added that the initial offering was being restructured and that a new stock offering could take place this summer.
A new conversion plan would have to be approved by both the Securities and Exchange Commission and the Office of Thrift Supervision.
First Lincoln had planned to issue as many as 9.8 million shares at a purchase price of $20 per share. Mr. Lundstrom would not reveal how much had been raised to date, but said First Federal is returning the money-with interest-to investors.
"Right now we're concentrating on getting money back to everybody as fast as possible," he said.
First Lincoln formed its Iowa subsidiary in 1988 after it acquired two failed thrifts from Resolution Trust Corp. The subsidiary, with assets of $130 million, has traded publicly ever since.