Mutual savings bank managers who are considering taking their institutions public can breathe easier after state regulators forced Republic New York Corp. to abandon its hostile bid for Green Point Savings Bank.
On the other hand, Republic's offer and the depositor lawsuits it spawned have focused public attention on the windfall profits sometimes harvested by insiders and a few others when such conversions take place.
New York State's superintendent of banks, Derrick D. Cephas, made it clear that a mutual's trustees have nearly absolute control over the manner and timing of a conversion to shareholder-owned status.
|Special Interest Payment'
Republic last week withdrew its offer of a $250 million "special interest payment" to Green Point depositors if the thrift would agree to be acquired by Republic in a merger-conversion.
The bank said Mr. Cephas' position "made it impossible" to successfully solicit proxies against Green Point's own conversion plan at a meeting of the depositors set for Dec. 10.
The state regulator said the interest offer was "unlawful and improper." He also said he will ask the state banking board next week to approve "on an emergency basis" stringent rules against outside interference in conversions.
Had Republic succeeded, it would have acquired the nation's largest mutual savings bank, with $6.4 billion of assets, at a bargain price. The bank said Friday it is still interested in someday acquiring Green Point.
Close Scrutiny
But meanwhile Green Point's own plan for conversion to stock status is now under scrutiny.
Mr. Cephas sharply criticized the thrift's management for saying its proxy and offering materials have been "carefully reviewed by the [State Banking] Department and cleared for distribution." While the banking department has studied the materials, the regulator apparently believes the statement made about this is misleading.
He directed the thrift by last night to amend its prospectus and proxy notice with regard to, among other things, "disclosure of management and trustee stock awards, stock option, and employee stock ownership plans" and the "likely outcome of the [stock] subscription process."
Republic had contended that only a minority of depositors subscribe to stock in such conversion offerings, and that a big portion of the offering proceeds benefit the managers and trustees themselves.
A federal court lawsuit filed by depositors charges that Green Point chief executive Thomas S. Johnson and other trustees "plan to enrich themselves" through the thrift's proposed employee stock ownership plan and "recognition and retention plans and trusts."
These entities will acquire 14.9% of the thrift's stock, according to its prospectus.
The trustees and some managers will also get options to buy more than a million of Green Point's shares at an initial public offering price of $11.10 to $15 a share.
Low Initial Price
Some critics have contended that initial offering prices for thrift stocks have been set too low and thus quickly create vast profits when the stock prices typically rise in the secondary market.
According to its prospectus, Green Point's trustees and others plan to spend $4.1 million to buy up to 373,4000 shares in the public offering.
Mr. Johnson, 52, the chairman, who is a former president of Manufacturers Hanover Corp. and Chemical Banking Corp. has subscribed $500,000.
The largest trustee-buyer will be Robert P. Quinn, 57, a former Salomon Brothers managing partner, who has subscribed $1.2 million. He has been on Green Point's board since 1986.
Another big buyer, committed to $500,000, is Charles B. McQuade, 52, president and chief executive officer of Securities Industry Automation Corp.
Alvin N. Puryear, 56, a professor of management at Baruch College, City University of New York, has committed $275,000.
The biggest potential stake by an executive officer not a trustee is by Bernadette Arias, Green Point's executive vice president for retail deposit banking, who has committed $200,000.The Biggest BuyersShare-buying plans by Green Pointofficers and directors Subscription price in millions Robert P. QuinnRetired partner, $1.20Salomon Brothers Inc. Thomas S. JohnsonChairman, 0.50Green Point Charles B. McQuadePresident,Securities Industry 0.50Automation Corp. Alvin N. PuryearProfessor,City University 0.27of New York Source: Green Point Savings Bank
