Magazine article American Banker

FDIC's Stock Conversion Process under Fire in N.Y. Thrift Case

Magazine article American Banker

FDIC's Stock Conversion Process under Fire in N.Y. Thrift Case

Article excerpt

A planned mutual-to-stock conversion by New York's Roslyn Savings Bank is refocusing attention on the speed and efficiency of the Federal Deposit Insurance Corp.'s approval process.

The conversion by the $1.6 billion-asset thrift, announced late last month, would be the second largest in history, behind GreenPoint Savings Bank's 1994 conversion. Roslyn, with $232 million in capital, is expected to offer about $450 million in stock to the public.

But its officials have opted to have Roslyn remain a state chartered institution - a move that puts the thrift's fate in the hands of the FDIC. Most of the mutuals that have converted in last two years have chosen federal charters because they say the Office of Thrift Supervision understands the applications better and moves more quickly.

New York State officials are hoping Roslyn will persevere because, like their counterparts in other states, there is concern about losing state banks.

"Roslyn sort of focuses everybody on it," said Richard Schaberg, banking attorney with Thacher Proffitt & Wood in Washington. "When you have a $100 million-asset institution that's state-chartered and debates flipping, that doesn't get people's attention. But it's a big loss to the state if Roslyn were to flip its charter."

An application has yet to be filed, and Roslyn officials declined to comment further.

"It's a gutsy move that they're trying to do it through the FDIC," said Bob Freedman, managing partner of Silver Freedman & Taff in Washington.

Since 1994, when the FDIC first began reviewing conversions, the agency has received 99 applications and has approved 62. By contrast in the same period, the OTS has received 157 applications and has approved all but four.

Recent attempts by other large thrifts, particularly in New York, met with disaster when they tried going through the FDIC. …

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