North Shore Bank in Wisconsin may have started a trend last week when it closed its purchase of a small Milwaukee thrift.

The $12.6 million-deal - combining $1.6 billion-asset North Shore of Brookfield with $83 million-asset Marquette Savings Bank - was the first time a mutually owned thrift bought a mutual holding company, a hybrid of stock and mutual ownership. Public stockholders owned 49% of Marquette Savings; depositors owned the rest.

North Shore president James F. McKenna said their depressed stock prices soon might move other publicly traded banks and thrifts to consider selling to a mutually chartered thrift such as his.

The purchase price of $12 per share was just 1.3 times Marquette's book value. North Shore's offer had interested the thrift, however, because its stock price had plummeted from $8 in January 1998 - when it made its initial public offering - to $4.50 just before the acquisition was announced, in February.

"Timing was everything for this deal," Mr. McKenna said.

Like other thrifts that have recently converted to stock ownership, Marquette said its sagging price had investors pressing management to boost performance.

"As a public company, you're under so much pressure to produce quarterly earnings that you lose sight of what you're trying to create longer term," Richard Knisbeck, who was Marquette's president and chief executive officer before the acquisition, said Tuesday. "As a mutual, you don't have those pressures."

Mr. Knisbeck, who is now a senior vice president at North Shore, said he had few options. Regulators prohibit mutual holding companies from selling to fully public companies. Marquette's structure also limited Mr. Knisbeck's ability to buy back stock, and no other mutual holding companies in his area were interested in merging, he said.

However, no mutual holding company ever had attempted to sell to a mutual thrift - to revert, in effect, to a simpler form of ownership, said Eric Luse, a Washington lawyer specializing in mergers and conversions. So Mr. Luse, who advised North Shore on the deal, said he and his client had to "proceed with caution."

Because the regulatory door is now open, Mr. Luse and others say, more mutual holding companies might follow North Shore's lead. They also suggest that this deal might spur fully converted stock companies to weigh a sale to a mutual. "In this market, financial stocks - especially small- and mid-cap companies - are out of favor and cheap," said Mr. Luse, a partner with Luse, Lehman, Gorman, Pomerenk & Schick.

From 1993 to mid-2000, 42 mutuals converted to mutual holding companies and 284 made full conversions to stock ownership, according to Sandler O'Neill & Partners in New York.

"If I were an executive at a mutual, I'd be looking around," said Jay Westmoreland, vice president of investments at Legg Mason Wood Walker Inc. in Charlotte, N.C. "There are a lot of good buys."

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