A handful of Virginia thrifts think the time is right to tap the capital markets and convert to stock savings banks.

The group is led by $841 million-asset Life Savings Bank of Norfolk, which last week began a stock offering that could raise nearly $95 million in capital. The offering will close Sept. 26.

First Federal Savings Bank of Lynchburg and Southwest Virginia Savings Bank of Roanoke are also converting and have made offerings. A fourth institution, $112 million-asset Bedford completed its conversion two weeks ago.

Why the movement?

"The market is favorable right now," said Kate Lawton, managing director of Sandler O'Neill, an investment bank that is managing Life offering. "And once one of your competitors converts, it makes you take a good hard look at your own situation."

The instigator could have been Cooperative Federal Savings Bank of Lynchburg, which converted about a year ago. Cooperative Federal was fortunate to have convened before the latest round of Office of Thrift Supervision rules.

Among other changes, the new regulations curtailed stock option and stock benefit plans for bank management and required that a thrift's depositor accounts must have existed a year before the offering.

In its conversion, Cooperative Federal sold 2.8 million shares, raising $27 million, according to its chief financial officer, Tobi Jaeger.

The conversion of Cooperative Federal into a stock savings bank also created a holding company, to which 50% of the offering's proceeds were allocated, Ms. Jaeger said.

"We're looking at this as the wave of the future," said Ms. Jaeger. "We were the first ones in our area to go to market, and we're fortunate that we did it when we did. We saw that thrifts were the only ones still out there who were mutuals. All the other ones are stock institutions."

Indeed, mutuals appear to be a dying breed in Virginia. Of the roughly 40 savings institutions in the state, only eight are mutuals. After September, the total will be five.

One reason that thrifts may be converting now could be their perception that regulations affecting conversions are set for the moment, analysts said.

"These banks may be thinking: 'We know what the rules are now, so we should go ahead with it now,'" said Sandler's Ms. Lawton. "It's been quiet, but we'll hear from the FDIC at some point soon."

All the thrift CEOs interviewed said they're converting to make their institutions more competitive. They said they would use the capital in a variety of ways, from investing in securities to offering more products and services. They also believe new stockholders may become customers.

"I'd call this a trend, but a trend to the end," said Louis Mayberg, managing director at National Capital Companies, a Chevy Case, Md.-based investment banking firm, referring to the fact that only five mutuals would remain eligible for conversions.

[Tabular Data Omitted]

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