K-Fed Bancorp in Covina, Calif., has received conditional approval from the Office of Thrift Supervision to commence its second-step conversion from a mutual to a stock company.

The $864 million-asset K-Fed plans to raise up to $86.3 million in fresh capital through the conversion.

K-Fed, the parent company of Kaiser Federal Bank, is offering between 6.3 million and 8.3 million shares of common stock at $10 a share. It could increase the number of shares sold by up to 15%, to 9.9 million shares. The number of shares sold is based on an independent appraisal. The approval was announced Wednesday.

The mutual holding company now owns 66.7% of K-Fed's outstanding stock. In the second-step conversion, that stock would be offered to deposit holders and investors as common stock. It must sell a minimum of 6.3 million shares to complete the offering.

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