Share prices of recently converted mutual thrifts have fallen to lows not seen since the early 1990s, said market experts.

"Because interest in small-cap thrift stocks has declined, interest in thrift IPOs has sagged as well," said Ben A. Plotkin, president of Ryan Beck & Co., Livingston, N.J. "We haven't seen these levels for many years."

Indeed, share prices of at least five thrifts that converted in April are selling below their initial offering price of $10: PFSB Bancorp of Palmyra, Mo.; First Federal Bankshares of Sioux City, Iowa; First Bancorp of Indiana Inc. of Evansville; Floridafirst Bancorp in Lakeville; and Capital Federal Financial of Topeka.

Two years ago, prices for thrift IPOs were hitting new highs, analysts said.

As a result of the lower prices, the number of new thrift IPOs has declined. Since January, only 15 mutual thrifts have announced that they are going public, down from 26 last year, according to SNL Securities.

"This is the quietest market I have ever seen," said Michael R. Keller, president of Keller & Co., a Columbus, Ohio, consultant firm for financial institutions.

Thrift IPO shares are also down because of worries about year-2000 problems, Mr. Keller said. "Most computer systems of financial institutions, including mutual thrifts, are year-2000 compliant, but the market does believe this is so."

Mr. Keller pointed out that the median mutual conversion price today is 63.5% of book value, which is down from the median mutual thrift conversion price of 88.79% of book value in October 1998, Mr. Keller said.

The market has gotten so soft that Indian Village Bancorp, a financially sound, $40 million mutual thrift in Gnadenhutten, Ohio, chose to reprice its IPO lower, from 60% of book to 55% of book, said Mr. Keller, who is helping to bring the mutual public. Indian Village is expected to go public June 22.

Kip A. Weismann, an attorney at Silver Freedman & Taff in Washington, which works on thrift IPOs, said he is puzzled by the lack of the mutual conversions so far.

"Normally, mutuals want to convert at the lowest price possible," he said. "In a soft market, a mutual going public does not have to raise as much capital, has fewer shareholders, fewer reinvestment concerns and a better return on equity and higher earnings per share."

Mr. Weismann said that many thrifts raise too much capital in their initial public offerings, which means their return on equity is very low compared with commercial banks. With lower levels of equity, the ROE is higher on the same amount of earnings.

The soft market is prompting most mutuals to convert to mutual holding companies, also known as a partial initial public offerings, said Mr. Plotkin.

Indeed, Capital Savings of Topeka one of the largest mutual thrifts in the country, has just completed its conversion. Hudson City Savings Bank, Paramus N.J., another large mutual thrift, is expected to complete its mutual conversion in mid-July.

"The number of mutual holding companies increased because they limit the amount of capital that the company raises," said Mr. Plotkin, who remembers when there was only one mutual holding company in 1992. "Mutual executives are now more cognizant that the success of a mutual stock transaction is dependent on limiting the amount of capital that you raise."

The mutual holding company structure enables mutual thrifts to adjust to life as a public company without as many hassles, added Mr. Plotkin.

The structure is virtually takeover-proof, because 50% of the company still remains in the hands of depositors. Some thrift mutuals that have recently gone public have had to contend with shareholder activist who tend to agitate for the sale of the company just after it has gone public.

"This is one of the worse scenarios for a company that has just recently gone public because it diverts your attention from deploying capital," Mr. Plotkin said.

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