The Office of Thrift Supervision is hitting the road to urge mutual savings banks to "think twice" before converting to stock institutions.

In the first stop of a nine-city "listening tour," agency officials were in Chicago on Thursday to meet with thrift executives and find out if OTS policies may be driving dozens of mutuals to convert each year. The OTS is also aiming to dispel any notions that it somehow encourages thrifts to go public.

"There seems to be a feeling within the mutual community that the OTS was initially neutral and perhaps even hostile to the mutual form," OTS Director Ellen Seidman said in an interview this week. "We think this can be a very good form."

Deputy Director Richard Riccobono is moderating the meetings, which are being co-hosted by America's Community Bankers. After visiting Chicago, New Orleans, Boston, Dallas, Lake Buena Vista., Fla., Baltimore, Cincinnati, and New York, the OTS road show wraps up Dec. 9 in Charlotte, N.C.

The pace of mutual-to-stock conversions has been furious. The number of state and federally chartered mutual thrifts dropped 26%, to 794, over the last five years, according to SNL Securities Inc. of Charlottesville, Va. In the last two years the number of OTS-regulated mutuals fell almost 14%, to 440.

Ms. Seidman said the OTS will not stand in the way of thrifts that have already made the decision to convert. Indeed, she said, the agency has never denied a conversion, which can be a good way to raise capital for acquisitions or offer stock options to keep or attract top employees.

But the agency is concerned about thrifts generating large payoffs for officers, directors, and advisers. "There's a difference between appropriate compensation and greed," Ms. Seidman said.

Mr. Riccobono said the OTS wants to find out if its regulatory policies are a "disincentive" to remaining a mutual. For example, he said, the OTS' peer group analyses typically compare thrifts in the same asset range or geographic region. Future examinations may compare stock institutions with other stock institutions.

"Our examiners might be too quick to think that one size fits all," he said.

The OTS also wants to alert officers and directors at mutual thrifts of some pitfalls to going public, including excess capital and increased pressure from investors and analysts.

When the mutual-to-stock conversion wave began in the early 1990s, "we had undercapitalized institutions for whom this was a godsend," Ms. Seidman said. But today, conversions have left some already well-capitalized thrifts with more currency than they know what to do with.

Cavalry Bancorp, a Murfreesboro, Tenn., thrift company that went public in March 1998, for example, has a capital-to-asset ratio above 20%. In December 1997 its ratio was less than 11%.

The result: Its return on equity in the first quarter was 5.75%, down from to 11.09% in the quarter before it went public.

Still, Cavalry chairman and chief executive officer Ed C. Loughry said he has no regrets about taking his company public because his $360 million-asset institution picked up a lot of customers on referrals from investors.

"Once you are a stockholder, you become a cheerleader," he said.

Charles J. Hamm, chairman of $6 billion-asset Independence Community Bancorp of Brooklyn, N.Y., said state and federal regulators are partly to blame for the excess capital. After all, they are the ones who determine the initial public offering price.

"The regulators forced us to a valuation that was so high that we raised way more money than we should have," Mr. Hamm said.

Independence converted in March 1998, when demand for thrift stocks was peaking. It went public at $10 a share and ended up raising up $704 million the second-largest among thrift offerings.

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