Being "midsize" is just not enough for a thrift to compete in the New York metropolitan area, according to John M. Tsimbinos, chairman and chief executive officer of T R Financial Corp.

That is why his $4 billion-asset institution agreed to sell to longtime rival Roslyn Bancorp, Mr. Tsimbinos said in a recent interview.

"The safest course is to go with a bigger and stronger institution," he said.

The 61-year-old executive said his company's decision did not come easily and, "personally, I have mixed feelings. We're putting out a brilliant flame."

Garden City, N.Y.-based T R Financial announced May 26 it would merge with $3.7 billion-asset Roslyn, based in the nearby Long Island town of Roslyn. The new Roslyn Bancorp would have $7.7 billion of assets and 23 branches in Long Island, Brooklyn, and Queens.

Mr. Tsimbinos insisted the $1.1 billion deal would go through by the end of the fourth quarter, despite a recent dip in Roslyn's stock price. "We are very optimistic," he said.

Analysts view the deal as a logical pairing of traditional thrift companies, each with a heavy emphasis on residential mortgages funded by sales of certificates of deposit.

Market watchers agreed the deal would probably get done even if Roslyn's share price languishes below the threshold set in the merger agreement.

"I think it's a safe bet the deal will go through, but it may have to be renegotiated," said James Acker, an analyst at Tucker Anthony Inc.

T R Financial had been touted as an acquisition candidate for at least a year as other metropolitan area thrifts went to larger competitors.

Many former mutual thrifts-those owned by depositors-converted to stock ownership to raise equity for these deals, analysts said. They include Roslyn, which went public last year, and T R Financial, which first offered shares in 1993.

Mr. Tsimbinos guided his company from the brink of failure in 1982 to healthy profitability, with a 16% return on equity and an efficiency ratio of 46% for 1997.

But analysts said Mr. Tsimbinos probably could not refuse Roslyn's rich offer, valued at 3.9 times book value.

"I think he recognized that an entity his size would have difficulty over the long run," Mr. Acker said. "They were going to hit a wall where further revenue growth and profit gains would be difficult if not impossible to achieve."

Mr. Tsimbinos, a son of Greek immigrants who grew up in New York, took his first job in banking as a teller at the now defunct Union Dime Bank in Brooklyn 39 years ago.

He joined Roosevelt Savings Bank, the principal operating unit of T R Financial, in 1982 as executive vice president and chief administrative officer.

Mr. Tsimbinos said the company's operating philosophy has been "hard work and basic banking." He said he will continue that strategy as chairman of the new Roslyn. "One way or the other, we are going to grow that bank."

Speculation had long been that Astoria Financial Corp., North Fork Bancorp, Dime Bancorp, or Greenpoint Financial Corp. would buy T R Financial.

Mr. Tsimbinos said his board considered "all alternatives," but he relished the fact that he chose a merger partner few, if any, had predicted.

"We shocked everyone," he said. "That's good." u

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