THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Wednesday, October 12, 1994 TAG: 9410120438
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: Medium: 90 lines
The atmosphere was downright giddy in the smart, newly restored executive offices of Life Savings Bank on Tuesday afternoon.
The savings and loan's president and chief executive, Edward E. Cunningham, beamed as he met with visitors. Another executive took a phone call and told a friend or business associate, ``It's begun, we started trading thirty minutes ago.''
The stock of Life Savings Bank's parent company began trading Tuesday on the national over-the-counter market known as NASDAQ.
Life Bancorp Inc., the largest financial institution based in Hampton Roads, raised nearly $106.6 million by selling more than 10.9 million shares of stock to its depositors.
With the sale, the thrift completed its previously announced conversion from a mutual institution - one owned solely by its depositors - to a publicly traded corporation owned by shareholders.
``This is the culmination of what's been in process since March,'' Cunningham said.
The thrift's 40,000 to 45,000 depositors approved the conversion to a investor-owned company at a Sept. 27 meeting. All of Life's stock was sold to depositors.
First priority to buy stock was given to those who had accounts opened before Feb. 28, 1993. They bought $53.7 million, or 49.2 percent of the stock.
People who opened deposits after that date bought 43.1 percent of the stock. The remaining 7.7 percent went into an employee stock-ownership plan.
Directors and top executives of Life bought between 2.5 percent and 3 percent of the newly issued stock as depositors. Other officers and employees also bought the stock, though the total for all buyers employed by the institution does not exceed $5 million, or 4.6 percent, Cunningham said.
The stock began trading at $10 per share a little after 2 p.m. While nearly 2.2 million shares of stock changed hands in the two hours before the markets closed, its share price rose only slightly to $10 1/4 each.
The large volume can be attributed to speculators known as ``flippers'' who had hoped for a first day pop up in the stock's price.
Due to its size and status as one of the last mutual-owned thrifts in Virginia, Life had attracted deposits from a lot of speculators intent on buying stock should it convert to an investor-owned institution.
Such speculators include the flippers, those expecting Life to be quickly bought for a premium on their investment and those investing for expected performance, Cunningham said.
The conversion marks the end of an era for the 59-year-old Life Savings and for the savings and loan industry in Hampton Roads.
Life was founded when mutual thrifts were the principal sources of home financing. But the industry collapsed in the 1980s when interest rates soared and thrifts were stuck with low-rate, 30-year home loans. As the industry was deregulated many thrifts got involved in riskier lending.
Many thrifts have since failed or been bought out by other financial institutions. Others converted to investor-owned companies to raise capital. Life survived those turbulent years and even managed to grow thanks to a strong capital base that it retains today.
Life Savings pursued the conversion to a stock institution to give it access to the capital markets and to finance expansion, Cunningham said.
Converting to investor ownership is often a precursor to being purchased by other, larger banks, but Cunningham insists that is ``absolutely not'' Life's intention.
But the thrift could be an attractive target for expansion-minded banks such as First Union Corp. or Crestar Financial Corp. due to its market share in South Hampton Roads. Life has 17 offices in the region and assets of $830.3 million and deposits of $573.0 million as of June 30.
The change in Life's structure does not affect depositors' accounts, insurance coverage of deposits, or lending relationships.
With the new capital and holding company structure, Life will begin to look at expanding, not just geographically, but in its lending base and lines of business, Cunningham said.
``The only real expansion strategy we have now, and we've already hired some people for it, is to get more involved in the commercial mortgage business,'' Cunningham said.
Life already makes some commercial mortgage loans under $1.5 million, but it wants to target the $1.5 million to $5 million range, he said.
``That's a segment that hasn't properly served,'' he said. ``It's too small for the big banks and too big for the small banks.''
Life also wants to look into establishing or buying a mortgage brokerage or servicing business at the holding company level, he said.
And new branches, either acquired or opened, on the Peninsula or in other contiguous markets is also a possibility. ILLUSTRATION: Color photo
JOSEPH JOHN KOTLOWSKI/Staff
by CNB