WASHINGTON -- Regulators are forcing mutual thrifts selling stock for the first time to accept higher estimates of their net worth as part of a reform of the deals.

That means thrifts raise more capital because they sell more stock. But their new owners are not as likely to see a huge run-up in the share price. Last year, stock prices in the deals jumped nearly 30% on average in the first day of trading.

Regulators have been working on new mutual thrift conversion rules since January, when Congress expressed concern that S&L insiders were benefiting because their thrifts were under-valued and they awarded themselves large chunks of the hot new stock for free.

"There has definitely been an across-the-board government mandate to increase the appraisals," said Philip C, Colaco, a senior research analyst at Charlottesville, Va.-based SNL Securities.

Mutual thrift conversions are starting to look more like typical initial public offerings, where the stock price increases roughly 15% on the first day. Mr. Colaco said that from June through September, the stock price in thrift deals increased an average of 23% on the first day of trading.

Kip A. Weissman, a partner at the Washington-based law firm of Silver, Freedman & Taff, said, "The new high appraisal standards are creating postconversion capital levels far higher than anyone dreamed possible a couple of years ago."

Congress held hearings on the hot conversion deals last winter because of concerns that savings and loan insiders were pocketing free stock and stock options at the expense of depositors. Underpricing the thrift's net worth gave executives' shares more room to swing up in value, but left their institutions with less capital.

Since the congressional hearings, the Federal Deposit Insurance Corp. and the Office of Thrift Supervision have staged a drawn-out public debate on how best to rewrite the rules on the deals.

All the regulatory debate has left mutual thrifts that want to sell stock facing a confusing hodgepodge of temporary rules. Later this month, the FDIC and OTS are expected to finalize separate, but similar, rules for mutual thrift conversions.

The Savings and Community Bankers of America is relieved that an end to the uncertainty is in sight.

"Our hope would be that the changes in the rules... will be the last chapter in this conversion epic that we hear for about the next 20 years or so," said Randall H. McFarlane, the trade group's director of government relations.

FDIC Vice Chairman Andrew C. Hove Jr. said the vote on his agency's proposed rule "is scheduled for an October board meeting... We need to take the uncertainty away so people understand what they can and what they can't do. That's why we've got to get the damned thing out."

As federal regulators worked on the new rules, pending deals often stagnated. They were slowed at the OTS and nearly ground to a halt for a time at the FDIC as its staff debated various approaches to stopping insider abuses. One such FDIC discussion draft, dubbed the "white paper," drew about 1,500 negative comment letters.

In mid-June, Mr. Colaco said, converting thrifts had a hard time winning approval from the FDIC. "The ratio of completed to terminated [deals] is very high compared to any time in the last few years," he noted.

The OTS in May stripped insider benefits from most deals for a year and made more stock available to local depositors under an interim rule. Under a separate proposed rule, the OTS said converting institutions must meet the convenience and needs of their communities.

Since February, the FDIC has been treating conversions under an interim rule that uses OTS rules to review deals on a case-by-case basis.

In June, the FDIC proposed a rule specifically adopting most of the revised OTS rules. But the same day, the agency released a discussion paper that proposed a radically different approach that is opposed by most thrifts. That idea now seems likely to be dropped.

Deals are now wending their way slowly through the FDIC which is the primary federal regulator for state-chartered savings banks.

Of the 45 conversion applications filed at the agency since spring, roughly a third were rejected or withdrawn, a third were approved, and the other third are still pending, an FDIC spokesman said.

At the OTS, 23 of the 26 deals pending in early May - when the agency issued its interim rule - have since begun trading. Three are still pending, and none have been rejected.

Of the 26 deals filed since then, just over half have been approved and the rest are still under consideration, an OTS spokesman said.

Acting OTS director Jonathan L. Fiechter said his agency expects to finalize its new conversion rules by the end of the month, and would try to release its rule together with the FDIC regulation. "Our ultimate goal is to try to ensure that depositors get a fair shake," Mr. Fiechter said.

Newly confirmed FDIC Chairman Ricki R. Tigert is a wild card in the debate, however. Ms. Tigert is still studying this issue and has not yet expressed an opinion

There are still some key differences in the OTS and FDIC versions of the new rules.

First, the OTS will require converting institutions to meet the "convenience and needs" of their communities, unlike the FDIC. Second, the agency plans to require detailed disclosure to potential investors, though the FDIC rule is silent on that point.

Third, the two agencies still disagree on whether one kind of mutual conversion, called a merger conversion, should be permitted.

The OTS has banned deals in which healthy mutual thrifts go public as they merge with publicly traded companies. Critics charge that those merger conversions have provided windfalls to the acquirers in the past, and the FDIC has rejected at least two such deals because the FDIC board found "the insiders have breached their fiduciary duty to the institution." An FDIC spokesman said the agency does not plan to charge those thrifts with any violations. despite the board's remarks.

The OTS' Mr. Fiechter said, "There will be a presumption that for the typical, healthy thrift, a merger conversion would not be something we would approve." However, the agency may allow some limited exceptions to that standard, he said.

The FDIC's Mr. Hove said, "Our staff and I have not seen the problem with merger conversions that would cause me to put a moratorium on them." But he also expressed support for final rules "very similar" to those the OTS uses.

Mr. Fiechter said, "To the extent that we can wrestle to the ground any differences, I think that would be the best of all worlds."

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