In a bid to fend off pursuers, Rochester Community Savings Bank on Wednesday announced plans to recapitalize itself with $60 million in convertible preferred stock and an accelerated effort to sell off $174 million of bad real estate loans.

The moves follow disclosure last month by the $3.7 billion-asset thrift that it had received an unsolicited takeover bid.

Although the news sent Rochester Community's stock soaring, the western New York company decided to stay independent.

It is now acting to reassure its shareholders that it will get its house in order, analysts said.

Playing for Time

"It's a game plan," said John A. Chepak, a vice president of research at Thomas James Associates, a Rochester brokerage firm. "They are saying, listen, we're going to have a rough couple of months, but if you read between the lines, we're doing this to make ourselves better and get our problems behind us."

Rochester Community's non-performing assets represented 11% of total assets as of Feb. 28, reflecting several years of deteriorating commercial real estate credits.

The company said Wednesday that it expects to set aside $74 million for possible loan and real estate losses in the third quarter ending Aug. 31.

|Substantial' Losses Predicted

The move will result in "substantial net losses" in that period and in the fiscal year ending Nov. 30, the thrift said.

But Rochester Community, which has 28 offices in New York, as well as 16 in central New Jersey through its Shadow Lawn Savings Bank subsidiary, said it expects to be profitable by the fourth quarter of fiscal 1993.

"Their auto financing business, retail branches, and mortgage banking are all doing well," Mr. Chepak said. "By getting rid of their problem assets, hopefully they can move forward."

B-Plus from S&P

The thrift's mortgage unit, American Home Funding, operates in seven states.

Standard & Poor's Corp. on Wednesday assigned a B-plus rating to the thrift's $60 million convertible noncumulative preferred stock issue.

The rating agency said the grade reflects Rochester Savings asset-quality problems "but acknowledges its sizable capital base and well-established business lines as a depository, auto lender, and mortgage banker."

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.