Richmond County Financial Corp. in Staten Island, N.Y., is planning to nearly double its equity stake in a competing thrift, according to documents filed with the Securities and Exchange Commission this week, possibly the first step in an outright acquisition of the company.

The $3.2 billion-asset parent of Richmond County Savings Bank said in the filing that it intends to apply with the Office of Thrift Supervision to increase its equity investment in Pamrapo Bancorp of Bayonne, N.J., from 5.1% to 9.9%. If the application is approved, Richmond would be the first to take advantage of new regulations that let federal thrifts own up to 9.9% of competing thrifts.

If Richmond's last two acquisitions are any indication, its equity stake in $455 million-asset Pamrapo could foreshadow an acquisition bid. Thomas Cangemi, Richmond's chief financial officer, would not say that is his plan, but he did not rule it out.

"We've done it before - it's part of our investment strategy to make investments in local banks for our investment portfolio or for a business combination," Mr. Cangemi said. Indeed, Richmond owned a 4.9% stake in both South Jersey Financial Corp. of Turnersville and Bayonne Bancshares before it acquired them outright. South Jersey was bought last year and Bayonne in 1999.

But William Campbell, Pamrapo's president and chief executive officer, said that if his company is a takeover target, it knows nothing about it. He said he was perplexed by Richmond's announcement. "I'm trying to figure it out as well as anyone else."

Mr. Campbell said that he received numerous phone calls inquiring about Richmond's intentions. "They're not two miles from me," but "they never talk to me."

Mr. Cangemi and Mr. Campbell said they have not discussed any possible business combination, but analysts said they find that hard to believe.

"I'd be surprised if they haven't talked," said Richard D. Weiss, an analyst at Janney Montgomery Scott LLC in Philadelphia, who follows Richmond County. Given the proximity of their offices and Richmond's interest in the Bayonne market, it "seems strange" that a combination "just never came up in conversation at a conference or wherever," he said. "M&A is just a fact of life."

Title XII of the American Homeownership and Economic Opportunity Act of 2000, a mixed package of banking measures, repealed the prohibition of a savings and loan from acquiring, purchasing or retaining more than 5% of the voting shares of another thrift. With OTS approval, an S&L can acquire up to 9.9% of another institution.

The OTS said that it has received some inquiries regarding the new law, but it has not received any applications.

Some observers praised the new regulations and said it levels the playing field among thrifts and commercial banks, which are not subject to a similar restriction. But the regulatory change is significant in other ways, not least of which is how it could open some doors for thrifts interested in acquiring a competitor, the observers said.

Stuart Stein, a partner and the head of financial services at the Washington law firm of Hogan & Hartson, said that he has seen recent interest in the new law for several reasons.

Obviously, an increased equity stake means increased voting shares in a company, and more importantly, should a company decide to acquire a competitor, the purchase price could be much less if a significant percentage of shares were purchased below the usual sale premium, Mr. Stein said. Also, a potential buyer with a significant equity stake could have a competitive advantage in a bidding war, he said.

"The people that are interested in taking advantage of it are people that see much greater consolidation occurring in the thrift industry," and thrifts that are trying to grow from local institutions into more regional ones are particularly interested in the new regulation, Mr. Stein said. "To the extent that they can get a jump on it with a stake-out investment, many executives see an advantage in that."

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