On Oct. 4, the Dreyfus Corporation, a mutual fund complex, had its biggest day ever: Some 850 people walked into the fund's headquarters and deposited $9.5 million in Dreyfus's money market fund.
Where did the money come from?
Maturing All-Savers certificates.
Despite the success at Dreyfus and other money market funds in attracting some of the All-Savers money, thrift industry officials say most of the $50 billion that was deposited in thrift institutions is not walking out the door.
Officials at 10 savings-and-loan associations and mutual savings banks scattered across the nation said in interviews that they are retaining at least 60 to 70 percent of the money. In most cases, depositors are placing the funds in six-month or 30-month certificates of deposit.Since the cost of these funds for the thrifts is substantially lower than it was a year ago, it should help them in their battle to survive.
''I haven't heard any disaster stories yet,'' noted James Christian, chief economist for the US League of Savings Associations in Chicago, referring to the ability of its members to retain the All-Savers money. ''I think it's going very well.''
Officials at thrifts around the country generally agree. In New York, Robert Steele, chairman of Dry Dock Savings Bank, comments, ''We are retaining between 67 and 70 percent of the All-Savers money . . . we were shooting for 70 percent and we've basically achieved that, although the process is not over.'' Through the first 18 days of October, Mr. Steele notes, 40 percent of the bank's All-Savers accounts matured - indicating that the 70 percent retention level could be a good indication of future retentions.
At the Lincoln Savings Bank, also in New York, vice-president Michael Lyons says the bank also has kept 67 percent of the funds invested in All-Savers accounts.
''We're basically pleased with the retention,'' he states. ''It's about what we thought it would be.''
In New York, both bankers point out there was heavy advertising when All-Savers came out, and banks offered special deals, such as 25 percent interest rates on deposits made in the month of September in anticipation of the All-Savers accounts. Thus, the bankers had braced themselves for a flood of outgoing funds as so many deposits came due in early October.
In the South, at the Naples Federal Savings & Loan in Naples, Fla., Susan MacAllister, executive vice-president, says the bank has been able to keep a substantial portion of the $20 million in All-Savers funds so far. Like most thrifts, Naples Federal sent out mailers to customers informing them what their options were. The bank also set up phone solicitations in the battle to keep the funds.
In Florida, she notes, the battle to capture funds from the All-Savers was intense, with stockbrokers, money funds, and banks trying to attract them.
In the Midwest, some bankers have been quite successful at keeping the funds in the bank. Roland Barstow, the chairman and chief financial officer of Bell Federal Savings in Chicago, says his institution has kept 90 percent of its maturing All-Savers funds. But he says the bank originally expected to lose a lot more.
''We were scared,'' he said in an interview. ''We had $60 million maturing in two weeks. Historically, when we have maturing certificates we lose 10 percent, since people want to buy a car or house or something. But they couldn't renew into a tax-exempt fund. So we built up our liquidity by $25 million.'' As it turns out, the bank hasn't needed the extra money yet, since it has lost only $6 million.
Mr. Barstow isn't certain how long the funds will remain in the bank, because most of the money has been deposited in passbook savings accounts yielding 51/4 percent. The same is true at Lincoln in New York, where Mr. Lyons says a lot of money has gone into checking accounts. ''People are parking their money,'' he said, ''waiting to see where interest rates go.''
At Columbia Savings Association in Emporia, Kan., Joseph C. Morris, president , finds depositors are placing their money in the bank over a longer term. He says about 30 percent of its retained All-Savers deposits has gone into the bank's ''sweep account,'' 30 percent into the six-month money market account, and 30 percent into 30-month savers certificates. Only 10 percent has been rolled back into All-Savers certificates by individuals who have not used their total tax-free interest exemption. And he says the bank has kept a substantial portion of the deposits.
In the West, at Great Western Financial in Beverly Hills, Calif., a spokesman says the bank ''is not experiencing a big decline'' in the $300 million in All-Savers deposits. William Lemon, a vice-president, says he believes most of funds have gone into either IRA accounts or the bank's Superchecking Accounts, which is a ''sweep product.'' In a sweep account, a customer is required to deposit a fixed amount in a 51/4 percent savings account. Then, any deposits above that are ''swept'' into an account paying market interest rates.
Even some mutual funds that got into the act by offering All-Savers certificates through commercial and savings banks have been able to keep their deposits.
At the Fidelity mutual fund group, a spokeswoman says 85 percent of the $72 million that matured in the first six days of October were reinvested in the group. Most of the funds, which originally came from Fidelity customers, went into Fidelity's two money market funds. Much smaller percentages were invested in the tax-exempt bond fund and the stock fund.
Most bankers say they had hoped that Congress would renew the program. Mr. Lyons of Lincoln says the bank began lobbying its congressman early in the summer to extend the program. But he said that ''with the deficit as large as it is, I guess they felt they couldn't do it.'' Ms. MacAllister of Naples Federal says she would have liked a program to compete with the tax-exempt bonds the brokers were offering.
Mr. Steele of Dry Dock, however, says he feels the program was not successful and should not have been extended. ''It diverted attention from the real long-term problems faced by the thrifts, '' he said. ''It didn't create nearly as many deposits as the industry expected.''
He continued, ''One year after the program we are all faced with significant runoffs, since we don't have an account that replaces the All-Savers. The aid it gave us was only temporary.''