Another thrift is trying to make itself more appealing to suitors by reducing its capital through a seldom-used "modified Dutch auction."

Pulse Bancorp, a $450 million-asset South River, N.J., institution, said last week that it would ask its shareholders to sell back to the company up to one million shares, or 26% of its total stock outstanding.

The move is meant to reduce the thrift's tangible equity-to-asset ratio from its current 11.89% to about 9%, its lawyer said. The lower capital level should improve Pulse's chances of selling, said George T. Hornyak Jr., chief executive.

"That's basically it," he said. "We had announced last October that we were seeking strategic alternatives, but when that didn't materialize, we undertook this plan."

High capital levels can make a company unattractive to potential acquirers because of the dilution to earnings that results.

Under the modified Dutch auction, Pulse is offering to buy stock within a price range of $16 to $17.75. Shareholders will choose prices within the range at which they would be willing to sell. The company will then decide what price it must offer in order to get one million shares. It must pay the same price to all sellers, even those willing to settle for less. No brokers are involved.

The thrift's shares have traded recently around $16.75.

Pulse chose the auction method over a traditional stock buyback because such a large operation would be more difficult to conduct on the open market and would more dramatically affect the stock price, said Samuel J. Malizia, Pulse's lawyer. Brokerage fees would also be large.

A straight Dutch auction, which is not allowed in this country, allows the buyer to pay different share prices based on what the sellers offer.

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