With the pace at which savings and loans have converted to stock institutions, one might think that mutuality is a disease.

But based on the performance of mutual thrifts in the first half of last year, it's a disease that more stock institutions might want to catch.

The reason: For the first time in at least three years, the nation's mutual thrifts outperformed stock institutions in almost every major category - from return on equity to asset quality.

Behind the relative-performance surge, according to an analysis of data from Sheshunoff Information Services:

*Lower noninterest expenses - The cost structures of stock savings institutions have been stubbornly higher than mutuals', and the disparity became more pronounced in the first half of 1995.

*The yield spread enjoyed by mutuals - As more mutuals convert to stock form, the 800 or so remaining mutuals have the most loyal core deposit bases - as a result, they can pay much lower deposit rates.

In the second quarter, the 832 community mutuals had a yield/cost spread of 3.05%, compared with 2.73% for stock institutions of the same size - $3 billion or less of assets. The gigantic California thrifts were excluded from the analysis.

"Why are mutuals doing better than stocks?" asked Mark Versella, chief financial officer of mutual Cross County Federal Savings Bank in Middle Village, N.Y. "I haven't the faintest idea. All I can say is that in our case, it's just our style of banking."

Aided by a one-time tax benefit, Cross County was the highest-earning mutual thrift in the country in the first half of 1995 and the 18th-most- profitable thrift overall, based on return on capital. It had a 1.73% return on average assets during that period.

"It's a surprise to me," said John Snow, a research analyst whose firm, Rodman & Renshaw Inc., has made good sport of tracking the stockholder benefits of mutual conversions. "When mutuals convert, they become way overcapitalized, so their return on equity is hurt. But they usually have a boost in their ROA."

Mutuals returned 0.81% on their assets in the first half of last year, outpacing the 0.55% for 1,091 like-sized stock thrifts. For the prior three years, stock institutions' ROA had exceeded that for mutuals.

Mr. Snow said there are several explanations that could account for the rising fortunes of mutuals. Becoming a stock institution entails costs - bureaucratic, managerial, legal, and other - that mutuals are not accustomed to. There were 97 mutual-to-stock conversions in 1995, a record. Most of them were small thrifts, for which those costs can be overwhelming.

"Sure, there are costs to being a public company," he said. "But there's also a new emphasis on shareholder return, and that should translate into an increased emphasis on the bottom line.'

Only it hasn't. At least not yet.

"You're probably seeing a higher percentage of compensation to total expense in stock companies," he added. "I mean, one of the chief benefits of converting for a stock manager is, in essence, the opportunity to fill his own pocket."

The ratio of mutuals' compensation to total assets was 1.12%. For stock thrifts it was 1.16%.

Total noninterest expenses as a percentage of total assets was 2.17% for mutuals, down from 2.30% in 1994. For stock thrifts, noninterest expenses equaled 2.49% for the first half of 1995, down a meager 2 basis points from 1994.

Finally, mutuals that haven't jumped on the conversion bandwagon are likely the most conservative, profitable, and least cost-embedded institutions around, Mr. Snow said, and thus are the least inclined to feel the need for capital.

"Those mutuals left are probably pretty well satisfied with the status quo," he said.

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