More than three dozen privately insured Pennsylvania thrifts will have to merge, liquidate, or get federal insurance - if state regulators get their way.

State lawmakers there are on the verge of passing a bill that would require all thrifts in the state to obtain federal deposit insurance by September 1998.

The bill is being pushed by the state Banking Department, which is concerned about the adequacy of the current private insurance fund should the state's economy should go sour. About 38 thrifts, mostly small building-and-loan associations, would be affected.

The institutions average about $10 million in assets, but most have less than $2 million. And many are only part-time, meeting as infrequently as once a month in real estate offices.

All of the state's banks and credit unions already have federal insurance.

"Private insurance doesn't make sense," said secretary of banking Richard C. Rishel. "You don't have a huge mass to insure."

Under the bill, the institutions would face these options:

*Apply for insurance from the Federal Deposit Insurance Corp.

*Merge with an insured institution.

*Merge with one another and then seek insurance.


The thrifts must inform state regulators about their plans by September 1997.

The thrifts could also convert to a state credit union charter and apply for insurance from the National Credit Union Administration. But that road is also paved with obstacles, because the thrifts are dominated by mortgage lending, while NCUA requires 60% of portfolios to be in consumer lending.

"Of course we're concerned about it," said Doris E. Sigeske, secretary and treasurer of Bridesburg Savings Association in Philadelphia, the fourth-oldest banking institution in the state. "We have to do something, but what we're going to do, we don't know."

The bill was unanimously approved last week by both chambers' banking committees. A vote on the chamber floors is likely to be delayed until after the November elections.

Currently, the thrifts are covered under the private Pennsylvania Savings Association Insurance Corp. It was chartered by the state in 1980 to provide some protection for institutions that until then had none. At one time, as many as 90 institutions were insured under the private fund.

"It's something that's a high priority for the secretary and something that we will continue to pursue," said department spokesman Michael Wishnow. "The institutions that are covered by the insurance at this time are all very healthy, strong institutions, but should the economy become less favorable, we want to avoid any potential problems."

Already, the thrifts are examining their options and making plans. Some institutions are considering merging and then applying for FDIC insurance. Together, the institutions have about $150 million in assets.

Others are likely to liquidate, observers say, because they are not full-time operations and might not be considered viable because they are small.

A few are watching the example of Trident Savings and Loan Association, Philadelphia, which has received approval to convert to a credit union. But its NCUA insurance is being held up by agency concerns about its mortgage and business lending and its lack of computerization.

The thrifts are still trying to persuade lawmakers not to phase out the fund, said Gregory Walker, insurance fund chairman and president of Huntingdon Savings Bank.

"Most of the members are not pleased with this legislation," he said. "It would have been nicer to have some more leeway."

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