|
Case Studies California Federal Bank
Conversion of this mutual savings bank in 1983 became the
largest initial public offering in history, with the sole exception of Ford Motor Company.
The total offering was $375 million. We sold $45 million in 45 days through a direct
offering to the bank's customers. The balance was then sold by an underwriting syndicate
managed by four large Wall Street brokerage firms.
We started out to use direct marketing media to announce
the offering in the Los Angeles area, where 80% of the bank's customers lived. Print,
radio and television ads were all prepared, with marketing experts and lawyers teaming up
to make them as effective as possible. Two days before the campaign was to begin,
management was warned that any advertising could trigger an "investigation" by
the SEC, causing a delay in the underwritten portion of the offering. The consequences of
that, management was told, could be to miss "the window of opportunity"
presented by the institutional investors "appetite" for savings bank shares. The
announcement phase of the Direct Public Offering was canceled. (The project manager, Lloyd
Dunn, formerly the bank's general counsel, later wrote his belief that the direct offering
could have sold half the total offering if the announcement program had been used.)
All other efforts were concentrated on helping the
customers who expressed interest, getting in their share subscriptions before the
deadline. Several dinner training meetings were held, to which all the employees were
invited. Everyone participated in small-group training sessions. A telephone room was
staffed with constant training and supervision. Television monitors and VCRs were placed
in every branch, with a continuous message playing about the offering. Tellers were
trained to mention the offering to customers and direct them to where they could get more
information. Cookie-and-coffee and wine-and-cheese gatherings (some with decorations and a
live band) were held for customers to come with their questions.
California Federal Bank was one of the survivors of the
industry shakeout that was to follow. As of the end of 1996, it was to be merged with
another large institution. |