The largest mutual thrift in the country, which is also the biggest mortgage lender in Kansas, is going public but not all the way.
Capitol Federal Savings and Loan, Topeka, plans an initial public offering in the first quarter of 1999 and has tapped Charles Webb & Co., a Columbus, Ohio, division of Keefe, Bruyette & Woods Inc., as its investment banker.
Capitol Federal will use a multi-tier structure in which it creates a mutual holding company and a mid-tier stock company.
The mid-tier company sells a minority stake to the public; the majority of shares is owned by the mutual holding company, which is owned by the thrift's depositors.
In this way, the thrift can raise capital without ceding control to public shareholders, a fickle constituency. "Our intent is to still maintain control of our institution," said John C. Dicus, chairman and chief executive officer of Capitol Federal.
And unlike a full conversion, the mutual holding company structure does not run the risk that the thrift will be left with too much capital to put to work, said Kevin Timmons, bank analyst at First Albany Corp.
Thrifts have been using the mutual holding company structure for more than a decade, said Pat McJoynt, executive vice president at Charles Webb. But with its $5.3 billion of assets, Capitol Federal is one of the largest to go that route, she added.
The oldest and largest mutual holding company, People's Bank in Bridgeport, Conn., has $11.3 billion of managed assets. When it went public in 1988 it had $6.3 billion.
The Office of Thrift Supervision began permitting federal mutual holding companies to create mid-tier stock companies in April.
Today, Capitol Federal's only access to capital is through retained earnings.
"Until recently the reception had been extremely good" for thrift IPOs, said Mr. Timmons of First Albany. But in the last three months, with bank stocks under pressure, many thrifts have been trading at or below their IPO prices, he noted.
For example, Hudson River Bancorp, which went public in July, briefly dipped below its IPO price of $10 a share early last week. However, Capitol Federal's IPO is six months away, and "who knows what the marketplace will be like then," the analyst said.
