When the Federal Deposit Insurance Corp. announced a premium cut for banks, but not for thrifts, the agency may have unleashed an unexpected wave of mergers and acquisitions.

While a handful of large thrifts have stirred the waters by announcing a charter change to avoid paying higher premiums, others have quietly pursued another course, buying or planning to buy small thrifts or banks insured by the Bank Insurance Fund.

Sovereign Bancorp, a $6.6 billion-asset thrift based in Wyomissing, Pa., this month announced a letter of intent to buy a tiny Delaware bank for $6.25 million.

Within weeks Sovereign, which is insured by the Savings Association Insurance Fund, announced that it intended to shift all its deposits into the bank as a way to reduce its deposit insurance premium.

Last week, Northwest Savings Bank, Warren, Pa., took a $5 million majority equity stake in a small new BIF-insured savings bank, Jamestown Savings of Jamestown, N.Y.

And also last week, two similar-size Massachusetts savings banks merged, one BIF-insured and one SAIF-insured.

"The prices being paid for smaller commercial banks indicate that we will have a continued supply of potential sellers, and any large SAIF institutions will be able to avoid the premium increases," said Ben Plotkin, director of investment banking at Ryan, Beck & Co.

Sovereign paid 190% of book value, compared to the average 170% of book value paid for similar-sized institutions, Mr. Plotkin said.

While the market has not fully recognized the significant competitive advantage BIF companies enjoy over SAIF institutions, he said, BIF thrifts as of March 17 were trading at a 3% advantage to their SAIF counterparts.

Although deals are already being made, some troublesome questions loom over the strategy of sidestepping thrift premiums through acquisitions. For example, should a thrift be able enjoy the benefits of both a BIF and SAIF charter?

And as Mr. Plotkin asked, what happens to the smaller SAIF-insured thrifts that do not have the financial wherewithal to buy other companies?

Sovereign's chief executive, Jay S. Sidhu, agreed in an interview this week that smaller thrifts would be hurt, but disagreed there was anything wrong with his strategy of moving deposits out of the SAIF.

"We are choosing to be proactive," he said. The government has created an uneven playing field, and Sovereign is doing what is best for its shareholders, Mr. Sidhu added.

Sovereign will decide this week whether to keep the $45 million-asset Colonial State Bank's state bank charter, or transform it into a BIF- insured savings bank, as Mr. Sidhu said he favored.

Either way, Colonial within two years will house all of Sovereign's deposits, and the remaining SAIF company will have the assets and investments.

The stakes are high for Mr. Sidhu. One of his main competitors in New Jersey, where more than half of Sovereign's 127 branches are located, is Bankers Corp., which is BIF-insured.

And his other large thrift competitor there, Collective Bancorp, plans to file for a bank charter.

If the FDIC cuts premiums for BIF-insured companies from 23 cents to 4 cents, as it said it would do by midsummer, then companies that are SAIF- insured would be at a tremendous disadvantage.

But by buying Colonial, Mr. Sidhu said Sovereign will save $10 million annually.

"The question is whether regulators will allow him to have his cake and eat it too," said John Heffern, an analyst with Natwest Markets.

He essentially wants to operate under both a BIF and SAIF charter, he said. For example, SAIF charters allow companies to sell insurance, but BIF charters do not.

"Mr. Sidhu is clearly willing to push the edge of the envelope because of the importance of the issue," he said.

Mr. Sidhu said after preliminary conversations with the Office of Thrift Supervision, he anticipated no problems.

Some observers say that Mr. Sidhu's gambit, and moves by Great Western Financial Corp., TCF Financial Corp., and H.F. Ahmanson & Co. to change charters to avoid the premium disadvantage, is just posturing to influence the political debate on whether to grant relief to thrifts.

"This is just window dressing to influence the politicians," said Emmett Daly, an investment banker with Keefe, Bruyette & Woods Inc., which advised Lexington Savings Bank, Lexington, Mass., a BIF-insured thrift, on its recent merger-of-equals with Mainstreet Community Bancorp, the holding company for a SAIF thrift.

But Mr. Sidhu retorted it is not window dressing, and said he intended to close on the Colonial deal.

"As recently as February, I had a chance to talk to Sen. (Alfonse) D'Amato, who basically told me he was very sympathetic, but said in all honesty the chances of the Senate or Congress doing anything about it this year were practically zero," he said.

Sen. D'Amato, a New York Republican, is chairman of the Senate Banking Committee.

Meanwhile, other thrifts hoping to avoid potentially higher premiums must soon decide to change their charters, or like Sovereign, buy a BIF company.

Standard Federal Bank, Troy, Mich. is mulling chartering a de novo bank.

Golden West Financial, Oakland, Calif., bought a small BIF-insured thrift in Watchung Hills, N.J., a few months ago, but has not announced its plans for addressing the premium disparity.

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