FDIC premium cuts prompt TCF to seek bank charters

The Journal staff

TCF Financial Corp. now a savings and loan company has applied to create four national bank charters, in response to coming cuts in deposit-insurance premiums for banks.

Several Wisconsin thrifts said they were considering doing the same, to avoid paying higher insurance premiums that would put them at a big competitive disadvantage to banks.

Minneapolis-based TCF now pays the same insurance premiums as banks 23 cents for every $100 of deposits to the Federal Deposit Insurance Corp., said Robert E. Evans, vice chairman of TCF. But unless legislators step in, banks will begin paying just 4 cents for every $100 of deposits in December, he said.

That would mean thrifts would pay insurance premiums six times higher than those paid by banks unless thrifts followed the lead of TCF and several others and applied for charters that would allow them to operate as banks.

TCF said it would not make any location or staffing changes in Wisconsin if approved for the national bank charter, but it would be able to operate as both a bank and a thrift. TCF also has applied for new charters in Illinois, Michigan and Minnesota.

"We think the service will be unchanged for our customers, but we'll be able to pay higher interest on deposits," Evans said.

TCF would not be able to move customer accounts to its bank counterpart without customers' consent. However, customers probably would choose bank accounts because the bank accounts would be paying higher interest, he said.

Great Western Financial Corp. in Los Angeles was the first thrift in the country to apply for a bank charter on March 1. Thrifts are applying for bank charters "in case the regulators and Congress don't come up with a good resolution of this issue," said Ben B. Crabtree, bank analyst at Dain Bosworth Inc. in Minneapolis.

The state has not had many inquiries from thrifts about applying for new charters, said Harold Lee, Wisconsin savings and loan commissioner. He believes this is a big issue for thrifts, but it's too new to generate much interest yet.

"We're investigating it and have been for several weeks now," said John Seramur, president and chief executive officer of First Financial Corp., Stevens Point.

Nationally chartered First Financial also is considering applying for a state thrift charter, with approval to pay into the FDIC's bank insurance fund, rather than its thrift insurance fund, he said.

Mutual Savings Bank has "no plans under consideration," but is keeping its options open, said Michael T. Crowley Sr., chairman.

St. Francis Capital Corp. is "not necessarily thinking about doing it," said Thomas R. Perz, president. But he thinks if a big number of thrifts start applying for new charters, those that don't will have an even bigger problem.

"I feel like I'm the last guy at the dinner table and I'm going to be left with the check," Perz said.

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