Keefe, Bruyette & Woods Inc. plans to announce today that it has acquired Charles Webb & Co., making a significant push into the mutual thrift conversion advisory business.
Keefe also is expected to announce it has hired Robert Adams, a former partner of the defunct Adams Cohen, which in the early 1990s dominated the business of advising mutual thrifts that converted to stock status.
The moves reflect the view among bank advisers like Keefe that mutual thrift conversions will be dominated by larger advisory firms, not the small niche advisers used over the past decade.
Keefe, Bruyette is betting it can cash in on an industry that, with $173 billion in assets and $11 billion in capital, is rapidly converting to stock status. Just as in the public thrift industry, regulatory uncertainty is driving consolidation among the mutuals.
"We have been watching with envy the deals that have taken place over the last few years, and had in the back of our mind for some time that we should play some sort of a natural role in this field," said Charles H. Lott, chairman of Keefe, who declined to disclose the acquisition price.
Keefe's effort will center on the largest mutuals. To date, the largest conversion was Greenpoint Savings Bank's offering earlier this decade, which raised just over $800 million.
But Mr. Adams estimated there are seven mutuals that could raise more than that, and three that could raise more than $1 billion.
Keefe is hoping that acquiring Charles Webb and hiring Mr. Adams will make a powerful combination with its own marketing and research muscle.
Keefe also has a strong presence in New England and New York, where roughly half the unconverted mutuals are located.
Headquartered in Columbus, Ohio, Charles Webb was the second-ranked adviser to converting mutuals in 1995, according to SNL Securities.
Last year it formed an advisory relationship with Friedman, Billings, Ramsey & Co., but that partnership will be disbanded.
The need to reach into New England and the requirement for a big institutional firm that could handle major capital offerings led to Charles Webb's decision to sell, said Patrica McJoynt, co-founder of the firm and senior vice president.
"We either had to cede the Northeast to other firms or decide we needed a strong affiliation," she said.
Charles Webb, which has 18 employees, will become a subsidiary of Keefe, but will maintain its name for marketing efforts in the Midwest and other areas.
Mr. Adams will work out of an office in Port Washington, N.Y., with Michael Iannaccone, who also was hired.
Keefe's primary competitor in this arena is now Sandler O'Neill, which last year hired much of the disbanded Adams Cohen team, including its co- founder, Mark Cohen.
That deal appears to have paid dividends for Sandler O'Neill, which in 1995 was the No. 1 mutual thrift adviser in terms of capital raised.
But Keefe could have difficulty translating its new hires into immediate success, one observer said.
"There is a learning curve in creating a capital market effort tied to becoming an effective adviser to mutual thrifts," said Ben Plotkin, director of corporate fiance at Ryan Beck & Co.
"There is a big difference between larger transactions and the smaller transactions" in which Charles Webb specialized, he said.
The president of the nation's largest mutual thrift said, however, that Keefe was now more attractive.
"There are about four or five firms that dominate mutual thrift advisory, and it seems that Keefe, with a name familiar to most thrifts and banks, probably has rounded out its services," said Leonard Gudelski, president of Hudson City Savings, which has $5.2 billion of assets.
