North Carolina's first start-up state savings bank, which opened for business only last November, now wants to become a commercial bank.

Greensboro-based Carolina Savings Bank, with $17.5 million of assets, has applied to the state Banking Department for permission to adopt a state commercial bank charter. A hearing is set for next month.

North Carolina created its savings bank charter in 1991. The 36 other institutions that use it started out as savings and loans.

Carolina Savings' charter requires that 60% of assets be in real estate loans. But Robert T. Braswell, president and chief executive officer, said it's hard for a start-up thrift to build a niche in real estate lending in a market filled with nonbank lenders and more mature bank lenders.

"We have had far more interest and acceptance by the small- to medium- size business community than we have had from the real estate community," Mr Braswell said. "It just made more sense to refocus our energies and attentions to areas where we're going to be most successful."

Paul H. Stock, executive vice president of the North Carolina Bankers Association, said Carolina Savings' plan doesn't reflect poorly on the savings bank charter.

But Jim McGill of Burlington-based First State Savings Bank said that with Congress preparing to meld bank and thrift charters, there probably won't be much enthusiasm for savings banks in North Carolina.

Mr. McGill, president and CEO of First State, said he would even consider switching if the issue weren't going to become moot.

"If you ask a thrift manager what he wants his bank to look like, he would say he'd want it to look like a commercial bank," Mr. McGill said.

Carolina Savings' Mr. Braswell said choosing the savings bank charter wasn't his idea, but that of the original organizers-who had thrift backgrounds and wanted to create a mortgage company. They pulled out last year because the stock sale was going slowly, he said.

His own group had reservations about the charter but was "too far in the stock subscription process to change horses in midstream," Mr. Braswell said

He added that he had decided to operate under the savings bank charter to "see if I could make it work for us before I tried to bail out."

Converting Carolina Savings, which did not create a mortgage company, will cost about $12,000, including regulatory and attorney fees, Mr. Braswell said.

Additional costs will include changing signs and stationery to feature a new name, Carolina Bank.

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.