Almost 70 community thrifts insured by the Savings Association Insurance Fund would drop to lower capital classifications if forced to pay a proposed one-time assessment to recapitalize it, according to an American Banker study.

The proposed fee - a one-time assessment of 85 basis points for every $100 of domestic deposits - would be assessed on all thrifts. Many larger ones are already preparing contingency plans to deal with the charge.

But it could pose a significant challenge for institutions with under $3 billion of assets - unless lawmakers also approved special exemptions for those whose capital would be impaired.

"This is a potentially devastating blow," particularly for institutions with at least 50% of their deposits in the thrift fund, said Jon D. Holtaway, vice president of Danielson & Associates in Rockville, Md.

The assessment would equal about one year to 18 months of normal earnings for most thrifts, he explained. In fact, Mr. Holtaway said, if the industry weren't so healthy now, "this idea might be looked upon as rather foolish."

The fees would inject $6.1 billion into the fund to bring it up to $1.25 for every $100 of domestic deposits, the level mandated by the 1991 Federal Deposit Insurance Corporation Improvement Act.

Based on March 31 deposit and capital data, the 85-basis-point assessment would have dropped Trust Savings Bank, Monterey Park, Calif., below a 3% Tier 1 leverage capital ratio. Trust would fall to 2.93%, placing it into the "significantly undercapitalized" category. Trust was bought by American Investment Security Inc. early this month.

A second thrift, Essex Savings Bank, already in the undercapitalized range, would see a further cut in capital, although it would still remain above 2%. Essex is planning a merger that would cure its capital deficiency.

No currently independent institution would fall below the 2% level, which would probably trigger a regulatory takeover under the prompt corrective action regulation.

Twelve more thrift-fund institutions would see their capital ratios reduced below 4% to the "undercapitalized" range, while another 57 thrifts would fall below the "well-capitalized" level of 5%.

The assessment would leave a total of 104 institutions below the 5% capital ratio.

"It will create a lot of hardship for a lot of thrift institutions," said Peter K. Yue, vice chairman and chief executive of Universal Savings Bank in Orange, Calif., whose capital would fall to 3.53% after the charge. "Eighty-five basis points is too high and I think it should be shared by all financial institutions."

The predicted capital ratios were calculated by American Banker using March 31 report data from the Office of Thrift Supervision. The results are not official.

The study also does not include so-called Oakar deposits - thrift-fund- insured deposits bought by a commercial bank - or thrifts that have flipped charters and are no longer OTS-regulated.

FDIC and OTS officials are also studying the effects on thrift capitalization, but haven't released any information yet.

"We don't know the exact impact at this point on the entire industry," said FDIC spokesman David Barr.

Despite the potentially sizable fees, most observers say they aren't concerned about the majority of thrifts, noting that much of the industry is well capitalized and healthy. In fact, the 85-basis-point fee is supposed to reduce the industry's capital by only 7.8%, said Thomas O'Donnell, senior thrift analyst at Smith Barney.

"It'll hurt troubled companies more than it will the healthy ones," he said. "It's the old theme in the thrift industry: The strong get stronger."

Further, analysts predict that Congress and regulators will either give threatened institutions more time to rebuild their capital base or allow them to pay the assessment in pieces over several years to prevent a new threat to the insurance fund.

"I believe that the regulators are going to have a policy of understanding and leniency," Mr. O'Donnell said. "It won't be an Attila the Hun slash-and-burn policy."

In fact, Mr. Barr noted, FDIC chairman Ricki Helfer has testified that weaker institutions that can't afford the assessment might be allowed to continue paying their current insurance premium for the next four years instead.

That helps bankers like John S. Wayne, president and chief executive of Midwest Savings Bank, in Bolingbrook, Ill., whose capital ratio could dip to 3.74% with a one-time fee, based on March data.

He also stressed that the FDIC won't make institutions pay higher insurance premiums if their capital levels fall only because of the one- time assessment. But without congressional authorization, the FDIC won't be more lenient in its regulatory capital requirements for its institutions, he said.

OTS officials declined to comment on what actions they might take.

"The regulators are going to have to come up with ways of handling undercapitalized companies," Mr. O'Donnell said. "What they don't want to do is cause another mini-thrift crisis or cause healthy thrifts to go into an unhealthy state."

But while thrifts are concerned about the assessment, many view it as the first step toward a unification of the bank and thrift charters.

"We want to make sure the problem is resolved once and for all," said Vince Kasperick, president and chief executive of Flagship Federal Savings Bank in San Diego, which is boosting capital through retained earnings. "If the one-time assessment is part of the solution, then we're going to have to figure out a way to deal with it."

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