THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Wednesday, July 13, 1994 TAG: 9407130456
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
SOURCE: By TOM SHEAN, STAFF WRITER
DATELINE: NEWPORT NEWS LENGTH: Medium: 69 lines
In the latest consolidation of Hampton Roads financial institutions, the parent of TideMark Bank said Tuesday it will buy $74 million of deposits, eight branches and certain other assets from the parent of Bay Savings Bank, another Newport News thrift.
The addition of these deposits will increase TideMark's deposit base by almost one-third and reduce its reliance on borrowed funds, said Robert N. Springer, president and chief executive officer of Tidemark and its parent, TideMark Bancorp Inc.
``We have depended to a much larger extent than other community institutions (in Hampton Roads) on borrowed funds,'' said Springer. He predicted the purchases will contribute to TideMark's earnings within a year.
TideMark Chairman Gordon L. Gentry Jr. said the additional deposits would boost TideMark's share of bank deposits on the Peninsula from 7.5 percent to almost 10 percent.
TideMark will pay $1.85 million for the Bay Savings deposits, which consist largely of local checking account deposits, Gentry said.
The interest rates that Bay Savings has paid on these deposits have been slightly lower than TideMark's rates, so any runoff of deposits after the transaction should be minimal, Springer said.
TideMark officers said they expect to complete the purchase in November or December. The transaction must be approved by federal regulators first.
Some of the eight Bay Savings branches being acquired will be consolidated with TideMark's 10 branches, TideMark officers said. Details of the consolidation have to be worked out, they said. Bay Savings has 55 full-time and six part-time employees.
In a separate deal, TideMark agreed to buy $207 million of servicing rights on residential mortgages now serviced by Bay Savings. The terms of that transaction were not disclosed.
Bay Savings' remaining assets and liabilities, including all of its loans, $39 million of brokered certificates of deposit and $7.8 million of ``jumbo'' deposits - those exceeding $100,000 per account - will be consolidated into FirstFed Michigan Corp., Bay's Detroit-based parent, said Donald Keegstra, chief operating officer at Bay Savings.
FirstFed Michigan entered Virginia in 1983 by acquiring two failing savings and loan associations in Newport News and merging them into a newly created thrift. During the mid-1980s, Bay Savings expanded to the Richmond area and opened additional offices in Hampton Roads.
But FirstFed Michigan has decided to withdraw from the Virginia market because the expansion strategy launched in 1983 has not worked as planned, said Ellen L. Batkie, a first vice president of FirstFed Michigan.
During the 1980s, an enormous secondary market for home loans developed, providing FirstFed Michigan with a better way to diversify the geographical mix of its loan portfolio, she said.
To raise the $2 million of capital necessary to support its expansion, TideMark said it plans to conduct a rights offering of new shares to existing stockholders in October or November. Any shares not bought in that offering will be made available in a public offering to area residents, bank officials said.
At the end of March, TideMark had $383 million of assets, $231 million of deposits and $19 million of shareholders' equity.
Separately, Springer said Tidemark has made further progress at reducing its non-performing assets by recently selling three hotels.
For the nine months through March 31, he said, the three hotels had cost the thrift $2 million in carrying costs, maintenance costs and improvements. by CNB