Two big New York thrifts have announced plans to switch from mutual to stock ownership, in conversions that would be among the largest ever.
The institutions are Green Point Savings Bank, which has $6.5 billion in assets, and Astoria Federal Savings and Loan Association, with $3.4 billion in assets.
Green Point's conversion could raise $800 million in stock, while Astoria Federal's offering could fetch up to $300 million, according to Wall Street sources.
The largest initial public offering to date by a thrift involved Dime Savings Bank of New York, which raised $398 million in 1986, according to SNL Securities.
Thrift Stocks Have Rallied
The announcements reflect the surging value of thrift stocks, which makes this a particularly attractive time to raise capital through conversions.
"Who would have thought two to three years ago ... that the industry as a whole could sell $800 million in stock, let alone a single institution," said Kip A. Weissman, a partner at Silver, Freedman & Taff, a Washington-based law firm specializing in thrifts.
In the case of Brooklyn-based Green Point, which is well capitalized, converting to a publicly held company could better position it to make acquisitions in the consolidating New York market, some observers said.
Green Point, one of the biggest mortgage lenders in the New York area, and Lake Success-based Astoria Federal both announced their conversion plans in brief press releases.
Fourth-quarter Closing Seen
George L. Engelke Jr., president and CEO of Astoria, said his institution's deal should be completed in the fourth quarter.
The two conversions are likely to be structured similarly. Both thrifts will form Delaware-based holding companies, which will control and issue all the stock.
Because mutual institutions are owned by their depositors, those customers, along with employees, are allowed to buy stock first. Unpurchased shares will be offered to the institution's borrowers and to nondepositors who live in the community. Any remaining stock could be offered to the public.
Since 1991, the number of mutual savings institutions converting to stock has risen dramatically along with the market for S&L stocks.
Favorable Deal for Managers
"Right now, what we're seeing is a surge in conversions," said Michael B. Seiler, senior vice president at Capital Resources Group Inc., a Washington-based thrift consulting and investment banking firm.
"You've seen very good returns for senior management people and directors and employees," said Mr. Seiler. "They're benefiting from the potential price increase alter conversion."
The market for converting savings institutions has been so hot that analysts and lawyers have begun trading war stories about the lengths investors will go to get in on the ground floor. Some big investors placed small deposits in dozens of savings institutions they thought were likely to convert so they would be allowed to buy as much of the thrift's stock as possible when it went public.
Out-of-town Deposits Spurned
Some mutual S&Ls have begun refusing out-of-town deposits if they know they are likely to convert because they prefer being controlled by small, local investors who are unlikely to churn their stock.
"You get some yo-yo from New York in there, and he'll be out in two days," said Mr. Weissman, who advises his clients to refuse such deposits.
An Office of Thrift Supervision official said that in 1983 -- the biggest year ever -- thrift regulators approved $2.75 billion in mutual conversions, including CalFed's.
The number of conversions dropped off in the late 1980s and picked up again in the early 1990s.
91 Conversions Last Year
Last year, 91 OTS-approved conversions worth $1.1 billion were completed. In 1991, there were 69 conversions worth $955 million, and in 1990, 69 conversions worth $775 million were completed, the official said.
So far this year, 25 conversions worth $600 million have been completed for OTS-regulated thrifts, the official said.
Green Point, which has two dozen branches in the New York area, was the 23rd-largest thrift at the end of 1992, when it had core capital of $761 million, equal to 12.47% of assets. Astoria, with 28 branches, was the 53rd-largest thrift. Its core capital was $241 million, or 7.02% of assets.
