A small bank in Lexington, N.C., has been through more trouble in the last 10 months than in its entire 91-year history.

The $44 million-asset bank, about 20 miles south of Winston-Salem, is looking forward to returning to its normally tranquil life, after spending much of the past year in headlines over a controversial plan to convert from mutual to a stockholder-owned thrift.

To top it off, Perpetual State Bank lost $98,000 in the second quarter, a bit less than it made a year earlier. The loss stemmed from a boost in income tax expenses associated with Perpetual's conversion from a mutual thrift to a publicly traded commercial bank earlier this year.

"We've made a lot of changes," said Melanie Younts, vice president at Perpetual. "But we're looking to the future now, and we're excited about it. We have a good opportunity to excel as a community bank."

Perpetual's proposed conversion last fall included a depositor payout plan, which would have given about $1 million in stock and cash to depositors.

The Federal Deposit Insurance Corp. did not object to the payout plan. But less than two weeks later, the North Carolina Savings Institution Division rejected the application, saying, among other things, that it would set a bad precedent.

Perpetual found itself stuck between state and federal regulators, and suddenly receiving wide attention because it was seen as a test case for other mutuals seeking to convert. It quickly refiled, dropping the payout plan and asking to convert to a commercial bank. That move was approved.

A public offering raised $6 million, and the stock began trading on Nasdaq on April 11, but it will have to wait at least another quarter before posting an earnings gain. The added tax expenses that caused the loss came from taxation of income that wasn't taxable under its thrift charter.

Without the one-time expense, Perpetual's second-quarter earnings would have been 9% jump higher than a year earlier.

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When Edward Baker wants to sell correspondent services to Pennsylvania's community bankers for CoreStates Financial Corp.'s, he just turns to some sleight-of-hand.

The CoreStates vice president uses a repertoire of magic, ranging from card tricks to making a ball of fire burst from his wallet, while he pitches his business to Pennsylvania's community bankers.

"I like to have a more friendly type of atmosphere when I call on my customers," he said. "With the magic, that sort of breaks the ice, and it's not a very formal business setting when I go to see somebody."

In one of his most popular card tricks, which he calls his "voice- activated deck," Mr. Baker asks a banker to "talk to the deck" and name a card. That card will then be the only one upside down when Mr. Baker flips through the deck.

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