A New Jersey thrift has delayed its stock offering amid a report of embezzlement and the resignation of its CEO.
First Savings and Loan Association of Sea Isle City, N.J., indefinitely postponed its mutual-to-stock conversion on Jan. 19 and returned all funds sent by subscribers to buy stock.
In announcing the delay, the $108 million-asset thrift also said its president and chief executive officer, Linda L. Black, had resigned. It gave no indication whether the two events were related.
Since the announcement, The Press of Atlantic City reported that the Federal Bureau of Investigation was looking into "possible losses of funds" at the thrift. This week, the bank's chairman confirmed that embezzlement had been discovered during an audit.
In a statement to the newspaper Monday, First Savings chairman Gamaliel Broadley did not confirm the FBI's involvement but said the thrift was "investigating a defalcation" it had discovered.
Ms. Black could not be reached to comment.
Larry C. Schmidt, senior vice president and acting chief executive officer, did not return phone calls. But in a press release sent to American Banker by the Washington, D.C., law firm that was handling the thrift's conversion, Mr. Schmidt said the company is fiscally strong.
"Any adjustments to the bank's financial statements are not expected to have a material adverse affect on the overall condition of the bank," he said in the statement. It does not mention whether the thrift or any employee is under investigation.
The company appears sturdy. Noncurrent loans made up only 0.14% of First Savings' portfolio at Sept. 30, according to Federal Deposit Insurance Corp. data. That is better than the 2.98% average for the state's 82 thrifts. And First Savings still holds loan-loss reserves more than four times bigger than its total of troubled loans.
It is unclear whether the thrift will resume its conversion when the investigation is complete.
Mr. Broadley told the Atlantic City newspaper Monday that First Savings plans to continue with its reorganization. But later the same day, Mr. Schmidt said the company would issue no further statement "unless and until" it decides to resume its offering.
Under the conversion plan, First Savings had offered depositors 331,000 to 515,000 shares at $10 per share. The offering reportedly was oversubscribed.
A mutual holding company, to be named Sea Isle Financial, would have retained 53% of the shares outstanding.
