Avondale Federal Savings Bank has hit yet another snag in its quest to become a stock institution.

The Office of Thrift Supervision delayed the $489 million-asset Chicago thrift's application to convert to a stock institution from a mutual until the agency completes its next Community Reinvestment Act examination this fall.

The move comes about two months after Avondale's plans to merge with an Iowa-based thrift-holding company and convert to a stock institution fell through.

"I believe it was delayed because there's a significant focus on CRA activities of banks," said Robert S. Engelman Jr. who became Avondale's president in January 1993.

An OTS spokesman said the agency had never denied an application by a thrift to convert to a stock institution from a mutual solely on the basis of CRA.

Avondale received a "needs to improve" rating last year and in 1992 on CRA exams, after getting a "substantial noncompliance" in 1991. The ratings are the lowest an institution can get on the four-point scale.

The thrift's most recent CRA exam noted that few consumer loans were being made. But that occurred at a time when Mr. Engelman was beginning efforts to correct the problems.

Although he won't speculate on the outcome of the next CRA exam, Mr. Engelman said Avondale's lending is "like night and day" from when the thrift received the low ratings. For instance, in calendar 1993, Avondale made and extended about 300 loans, he said.

The target for fiscal 1994, which began March 31, is 800 new loans. In the first four months, Avondale has booked 237 new loans.

The thrift agency allowed Avondale's conversion application to expire without approving or rejecting it. Avondale will update its application after the fall CRA exam. Subject to final approval by the OTS and Avondale shareholders, Mr. Engelman expects the conversion to be completed in early 1995.

About a year ago, Avondale announced a deal with Central Resource Group Inc., Des Moines, in which it would have been acquired by CRG's Midland Savings Bank at the same time it converted to stock.

Some Avondale depositors had complained that they would lose money in the merger conversion, while management would profit. After the deal was terminated in June, Avondale announced plans to execute a standard stock conversion.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.