The stocks of thrift institutions going public for the first time have recently been so hot that regulatory alarms may be going off.

Indeed, over the past month the shares of converting mutual thrifts have rocketed as much as 59% above their initial public offering price on the first day of trading.

Some market sources attribute the big gains to a general bull market in financial stocks, but others acknowledge that such a huge first-day pop in share prices could also mean initial valuations were not set properly to begin with.

Three years ago, Congress and federal and state regulators grew concerned that thrifts were being underpriced in their market debut to give their shares more room to swing up in value. The big beneficiaries were insiders.

At the time, such thrift stocks were soaring about 30% on their first day of public trading.

Regulators responded by encouraging investment firms to raise their valuations of companies for initial public offerings. That eventually slowed the rise of mutual thrift prices, leaving the gate to about 15% on average.

Thrift industry advisers active in conversions deny that any problems now exist. "This round of conversions are opening over book value, which we haven't seen in a long time," said Martin Friedman of Friedman, Billings & Ramsey, Arlington, Va.

But Mr. Friedman said that officials in the Office of Thrift Supervision and Federal Deposit Insurance Corp. may be watching closely. "The risk is that primary regulators may look at these openings and decide there needs to be a move in the appraisal value," he said.

Indeed. Of the five mutuals that have converted in the last month, three-FirstBank Corp. in Lewston, Idaho; Community First Banking Co. in Carrollton, Ga.; and Security Bancorp in McMinnville, Tenn.-opened 45% to 59% higher than their offering price. And Sisterville (W.Va.) Bancorp in Sisterville opened 37.5% above its offering price. Stock of Montgomery Financial Corp. in Crawfordsville, Ind., rose 11.25%, according to Ryan Beck & Co.

But the surging thrift stock prices have even raised a few eyebrows on Wall Street, where some critics suspect management of underpricing their companies again.

One industry analyst who asked not to be identified noted that it is easier to underprice mutual institutions going public than almost any other company.

"Unlike other private companies, no one owns stock in a mutual, so the incentive is to make the price of the company as low as you can and buy stock at the offering" the analyst said.

Since the situation can be hard to prove, regulators may be hesitant to proceed. "The only time it comes up is if someone can show losses, as with GreenPoint," he said.

Republic New York Corp. sued GreenPoint Financial Corp. when GreenPoint went public four years ago, contending that the New York thrift had underpriced its stock. Republic had wanted to acquire the company.

When asked to comment, the FDIC was noncommittal about recent conversion activity.

"Our concern is more with the appraisal of the conversion deal," FDIC spokesman David Barr said. "We cannot control the extreme public interest in the institution," he said, "and if the demand far outweighs the supply, that doesn't mean that the institution was undervalued when it hit the street at its offering price."

A lawyer active in the conversion area, Kip A. Weissman of Silver, Freedman & Taff, Washington, maintained that mutuals are being fairly priced.

"I think current conversions are properly priced, especially when you consider their price-earnings ratio. But the market right now is so high people are looking for a place to put their money," Mr. Weissman said. For example, tech stocks that are going public "are languishing at this moment."

However, Mr. Weissman doesn't doubt that surging prices could have regulators on guard. "The OTS and FDIC do not like to see large pops" in the stock prices of mutuals, the attorney said.

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