says takeover candidate. With $1.2 billion of assets, it's the second-largest public thrift based in Florida, located in an affluent area of Miami. It's twice as efficient as the average thrift - and about twice as profitable as well. "I think the word is out that they're for sale," said Lynne Laughna, an analyst with Raymond James & Associates Inc. in St. Petersburg, Fla. "No doubt about it." And, as of three weeks ago, the thrift can begin to consider any takeover offers. Regulators prohibit the sale of a thrift within one year of its mutual conversion, and Home Financial converted from mutual to stock form a year ago last month. "Our heels are not dug in here," said Nancy Coats, senior vice president of Home Financial, when asked about the possibility of being acquired. "Our minds are open, but we won't take a deal that's not in the best interests of our shareholders. We have a lot of options." Home Financial's top three officers probably won't resist a sale. All three of them have been with the thrift for at least 40 years. The chairman is 76 years old, the chief executive is 71, and the chief operating officer is 67. Analysts said Home Financial would likely appeal to commercial banks looking to expand their deposit base, rather than their branch network, in Florida. That would point to Charlotte, N.C., rivals First Union Corp. and NationsBank Corp., and Huntington Bancshares of Columbus, Ohio, among others, analysts said. That's because though Home Financial has more than $850 million of deposits, it operates only eight branches, translating into almost 2.5 times more deposits per branch than the average thrift in the state, Ms. Laughna said. Home Financial distinguishes itself in other ways. It makes very few loans - only about 25% of its total assets - preferring instead to invest in mortgage-backed securities, which account for about 60% of its balance sheet. Most thrifts do about the opposite. With underwriting and loan originations at such low levels, the thrift can save tremendously on overhead costs. Its efficiency ratio last quarter was 32%, about half the industry average. On the downside, Home Financial has a massive amount of capital - about 25% of total assets, or three times the industry average - which could scare off suitors fearful of dilution to earnings. The capital stockpile led to a return on equity last quarter of 6.46%, well below its peers.

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