The Office of Thrift Supervision has fired a warning shot for lawyers handling mutual-to-stock conversions for thrifts.
In a letter dated June 1 the OTS mandated new filing deadlines for the 135-day conversion filing cycle, saying it was receiving too many last- minute submissions. Now lawyers must send the paperwork at least 45 days before the end of the cycle.
The OTS took particular issue with those thrifts that are forming charitable trusts. If the conversion involves the funding of a foundation, documents must be received at least 60 days before the final deadline.
The OTS said that if applicants fail to meet these deadlines, it could not guarantee action before the thrift's financial statements become outdated.
Moreover, no amendments that involve a significant change in the conversion plan will be accepted during the last week of the 135-day cycle, the OTS said.
"To date, the OTS staff and management have accommodated these untimely filings," the OTS letter said. "But because they have become the norm, rather than the exception, that is no longer possible. ... These tardy submissions do not allow for sufficient analysis by the staff nor by the final signator."
OTS officials declined to comment beyond the letter. It was signed by Diana L. Garmus, director of corporate activities, and Dwight C. Smith, deputy chief counsel.
One lawyer, who asked not to be identified, said, "I guess I will just have to get the documents in sooner." Another lawyer suggested that the tighter deadlines for charitable foundations may make them discouraging to thrifts.
Since 1990, more than 500 of mutual thrifts have filed applications to convert to stock ownership.
In recent years, several of those thrifts have also formed charitable foundations, including Ocean Financial Corp. in Toms River, N.J., Independence Community Bancorp in Brooklyn, N.Y., and Bay State Bancorp in Brookline, Mass.