A planned mutual-to-stock conversion by New York's Roslyn Savings Bank is refocusing attention on the speed and efficiency of the Federal Deposit Insurance Corp.'s approval process.

The conversion by the $1.6 billion-asset thrift, announced late last month, would be the second largest in history, behind GreenPoint Savings Bank's 1994 conversion. Roslyn, with $232 million in capital, is expected to offer about $450 million in stock to the public.

But its officials have opted to have Roslyn remain a state chartered institution - a move that puts the thrift's fate in the hands of the FDIC. Most of the mutuals that have converted in last two years have chosen federal charters because they say the Office of Thrift Supervision understands the applications better and moves more quickly.

New York State officials are hoping Roslyn will persevere because, like their counterparts in other states, there is concern about losing state banks.

"Roslyn sort of focuses everybody on it," said Richard Schaberg, banking attorney with Thacher Proffitt & Wood in Washington. "When you have a $100 million-asset institution that's state-chartered and debates flipping, that doesn't get people's attention. But it's a big loss to the state if Roslyn were to flip its charter."

An application has yet to be filed, and Roslyn officials declined to comment further.

"It's a gutsy move that they're trying to do it through the FDIC," said Bob Freedman, managing partner of Silver Freedman & Taff in Washington.

Since 1994, when the FDIC first began reviewing conversions, the agency has received 99 applications and has approved 62. By contrast in the same period, the OTS has received 157 applications and has approved all but four.

Recent attempts by other large thrifts, particularly in New York, met with disaster when they tried going through the FDIC. One of the last to attempt it was Hudson City Savings Institution, which abandoned a $1 billion offering because of FDIC delays.

In fact, roughly 33 mutual thrifts have switched to federal charters. And sources say state officials are worried that Roslyn and others might be driven to follow suit if the FDIC doesn't get its act together.

"I'd hate to see someone leave a system after 100 years just because they want to convert," Mr. Freedman said. "That's not a reason to switch charters."

But FDIC officials claim they're now using the same rules as the OTS and are processing cases faster.

"When we first got into the process there was a learning curve and we were feeling out our whole process," admitted Jesse G. Snyder, acting associate director in the FDIC's division of supervision. "But I think most of that's been overcome, so I think the concerns are unwarranted. We expect to process all these notices in a timely fashion."

Much of the FDIC's concerns have focused on excess capital generated by the conversion. In particular, the agency has questioned whether institutions really need the extra cash and whether they will be able to invest it prudently. Currently, Roslyn has a capital ratio of about 14%, which could rise to about 30% after the conversion.

But industry experts contend that decision should be left to thrift managements and boards, not regulators, especially because the added capital can only help, not hurt, the insurance system.

"The obligation to invest capital falls on the board of directors or board of trustees," Mr. Freedman said. "I don't think it's right for a regulatory agency to make a judgment as to whether somebody can or cannot reinvest their capital. That is micromanaging and that's not what regulatory agencies are all about."

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