Twice as many thrifts bought banks last year than in 1995, a sign of the savings industry's quest for profitability.

Twenty-seven thrifts bought commercial banks - small ones, mostly - in 1996, up from only 14 the year before. One such deal has already taken place this year and 10 are already slated, according to statistics compiled by Ryan Beck & Co., Orange, N.J.

In the six years through 1994 there were only 20 such deals.

The thrifts - many of which have less than $1 billion of assets, have recently converted from mutual ownership, and are flush with capital - aren't interested in building commercial lending from scratch. They're hoping the acquisitions will quickly give them a base of higher-yielding assets for their portfolios and the experienced personnel to expand.

Thrifts are looking at making acquisitions in general, and at buying banks in particular, to diversify their product lines so they can become high performers, said John M. Kline, an analyst at Ryan Beck, who has been researching the new trend.

"It's going to give us the margins at the holding-company level that commercial banks are used to seeing," said David B. Barbour, president and chief executive of Ashland, Ky.-based Classic Bancshares, which bought Kentucky's First Paintsville Bancshares in September.

Generally, the merger trend has run in the opposite direction since Congress began allowing banks and thrifts to buy each other in 1989. More than 300 thrifts have been purchased by banks in the past seven years.

"It's a very interesting phenomenon," said David P. Lazar, managing director of Berwind Financial Group Inc., an investment bank in Philadelphia. "Five to six years ago bank holding companies were buying the thrifts, and now the reverse is happening."

Still, there were more than twice as many bank purchases of thrifts - 59 - than thrift purchases of banks last year.

Some thrifts that haven't bought a bank yet have said they want to do so. Pomona, Calif.-based PFF Bancorp, for example, just bought a trust company, and the $2.5 billion-asset thrift is gearing up to try to buy a full-service commercial bank, Mr. Kline said.

First Midwest Financial Inc., a $340 million-asset thrift in Storm Lake, Iowa, bought a bank last year. The attraction "is primarily the ability for us to do ag lending and nonmortgage-type lending," explained James S. Haahr, chairman and chief executive.

"The demand is there in our market, and we haven't been able to do as much as we could have," Mr. Haahr said. "We'd like to be treated as a commercial bank and have no more - but no less - authority in lending."

In Massachusetts, Andover-based First Essex Bancorp, a thrift holding company, has been steadily growing its portfolio of indirect auto loans, aircraft credits, and other commercial loans over the past few years. It had also been hiring experienced lenders to help its efforts.

Just over a week ago it bought a small commercial bank holding company, Pelham, N.H.-based Finest Financial Corp., and bringing aboard a former Shawmut National Corp. commercial lender to head up its own ventures.

"We've been working toward that commercial orientation," said Leonard A. Wilson, president and chief executive of $1 billion-asset First Essex. "We haven't forgotten where we came from, but the spreads and the competition in the marketplace are propelling us to become more of a commercial community bank."

Kalispell, Mont.-based Glacier Bancorp, which already has two bank subsidiaries in addition to its main thrift, just completed its purchase of Missoula Bancshares. Officials of $530 million-asset Glacier said they like targeting banks because of the higher spreads, cheaper and more stable deposit funds, and fee orientation.

"I just don't think the thrift charter has a lot of value anymore," said Glacier's chairman and chief executive, John S. MacMillan. "The bank opportunities are what we'd prefer to be involved with."

Though in the past the acquirers tended to be the larger thrifts, those in 1996 were far smaller. Assets of the median buyer were $2.6 billion in 1995 but only $744 million in 1996.

For the smaller institutions, buying a bank to diversify their balance sheets also makes them more attractive as buyout targets. "It makes the prospective earnings stream a little better," Mr. Kline said. "You're looking at companies that have the potential to be more profitable."

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