A Pennsylvania thrift company is planning an unusual move: to cross into New York by investing about $4 million in a savings bank that has yet to open for business.
Northwest Savings Bank of Warren, Pa., will control about 51% of Jamestown Savings Bank by the time the thrift opens its doors later this year. The deal, which is subject to the approval of state and federal banking regulators, brings Jamestown Savings' capital to $8 million.
"We like the people - they know their market," said William Wagner, chief financial officer of the $1.5 billion-asset Northwest Savings. "It was a way of getting into the Jamestown market, where we've wanted to do business." He added that Jamestown Savings "will be our closest branch office outside of Warren."
Jamestown Savings' organizers were optimistic about the arrangement. They had been working to raise $5.3 million in initial capital since October, but were about $1 million shy.
"This offers us the capital ... that will enable us to grow a lot faster than we could have had from retained earnings," said Kenneth W. Strickler, chairman of Jamestown Savings.
Mr. Strickler said Jamestown's original goal was to grow to about $80 million in assets within six years. But the added capital should help the bank grow to nearly twice that size in five years, he said.
Mr. Strickler said Jamestown Savings' organizers will operate the thrift for a minimum of five years. They are trying to portray the deal with Northwest as "a partnership," Mr. Strickler said. But he acknowledged that if Northwest ever wants "to throw us off the board and put their own board in, they will be able to do that."
Mr. Wagner said Northwest could eventually buy more Jamestown Savings shares, but he declined to say whether such plans are in the works.
Northwest has 45 branches throughout western and central Pennsylvania. It recently raised $69 million in an initial public offering.