Life Savings Bank, the third-largest thrift in Virginia, is dropping its mutual status and selling stock to the public.
It's the largest such deal in a recent spate of mutual conversions in the state, as the remaining large mutuals seek to cope with the modern banking environment.
"The primary reason these thrifts are converting is to raise new capital," said Virginia banking consultant J.T. Baxter. "And they're doing it now because they [conversions] might be more difficult to do in the future."
Two other Virginia thrifts are in the process of converting, and another went public a year ago.
While all the converting institutions have said they intend to remain independent, they can't help but notice that the few remaining big thrifts in Virginia, because of their still-hefty market share in some areas and their cheap stock prices, are considered by many analysts to be potential acquisition targets.
Home to Naval Fleet
Life Savings is based at the mouth of the Chesapeake Bay in Norfolk, has 17 branches, and a 13.8% market share in its hometown, where the U.S. Navy's Atlantic fleet is headquartered.
Officials at Life Savings, which will be owned by a new publicly traded holding company called Life Bancorp, declined to comment because their stock offering is still in registration.
According to Life's registration statement, shares will be sold at $10 each. The minimum to be raised is $46.8 million and the maximum could be as high as $73 million.
Life Savings has $816.3 million in assets and equity of $47.6 million. If the offering goes to its maximum, the $10 issue price will be only 63.13% of book value. Stockholders' equity after the stock sale could be as high as $114.9 million.
Kaplan Associates performed the appraisal and Sandler O'Neill & Partners is the underwriter.
The Office of Thrift Supervision has already approved the conversion.
Stock will be offered, in order of priority, to Life account holders, a new ESOP, and the directors and officers. After that, shares will be sold to the Norfolk community, and if any are left, to the general public.
The ESOP intends to purchase 8% of the shares offered and will be the biggest shareholder.
With stockholder approval, expected in April 1995, a fund set up to buy shares to reward management will buy 4% of the outstanding shares. The company also will seek stockholder approval to issue options to management.
The OTS recently changed its conversion rules to require account holders first priority in buying stock, in addition to requiring shareholder approval for stock-purchase plans that benefit management.
Life Savings has not been a stellar performer in recent years, having never topped a 1% return on assets since 1989.
In the first quarter of 1993, however, it earned a 1.24% ROA, based on the strong performance of its huge securities holdings.
Life Savings Bank At a Glance
HEADQUARTERS: Norfolk, Va.
CEO: Edward E. Cunningham
ASSETS: $816 million
LOANS: $372 million