After a two-year delay, Columbia First Federal Savings & Loan Association, the largest thrift institution based in the District, will sell stock to the public.

Columbia First wanted to go public in late 1983, but decided to put its offering on the shelf for two reasons: First, interest rates were turning up, and the climate for new S&L stock issues appeared to be unfavorable. Second, Columbia First was still very deep in red ink.

Now, Columbia First has had two profitable quarters and, with interest rates down, the climate for financial-institution stocks is much improved. This is especially true in the Washington area, where mergers and merger speculation have given a vigorous boost to the share prices of any institution that might be a player in the takeover game.

The financial problems faced by Columbia First were typical of the S&L industry. Thrifts had made long-term real estate loans at low interest rates and then watched those loans go underwater when general interest rates -- and the cost of money -- skyrocketed.

As interest rates have dropped, the spread between what banks pay for money and what they can earn on it has improved greatly, and has helped put S&Ls back on the road to profitability.

The bitter experience of the early 1980s is not lost on Columbia First, which showed fiscal-year losses of $5.9 million in 1981, $14.9 million in 1982, $8.8 million in 1983 and $4.1 million in 1984. For the 1985 year, ending Sept. 30, Columbia First showed a profit of $1.9 million. Of that, $1.5 million was recorded in the last quarter of July, August and September.

On June 30, Columbia First had $1.28 billion in assets, deposits of $935 million and a net worth of $27.6 million.

Dewitt T. Hartwell, president of Columbia First, said the thrift has taken a number of steps to reduce its sensitivity to interest-rate fluctuations. One of those steps was to trade many of its fixed-rate, low-interest loans for Federal Home Loan Mortgage Corp. (Freddie Mac) certificates. Columbia First can use the certificates, in effect, as collateral to obtain money that can be recycled into adjustable-rate loans, on which the institution can turn a profit.

Columbia First also has begun to grant second-mortgage and home-improvement loans. It has expanded its mortgage-lending and loan-servicing activities (increasing its fee income) through First Washington Mortgage Corp., which Columbia First owns jointly with Washington Federal Savings and Loan.

Columbia First still has its problems. Even with the drop in rates, its interest-rate spread between assets and liabilities on Sept. 30 was only 1.3 percent. While that figure has been rising steadily, securities analysts note that it is below the 2 percent, or even 3 percent, shown by other savings and loans.

One other problem is Columbia First's $5 million investment in mortgage-backed certificates issued by EPIC, the Falls Church real estate syndicator whose partnerships have filed for bankruptcy. Only a portion of the underlying mortgages is covered by private mortgage insurance.

One plus for Columbia First is its recent acquisition of Family Federal Savings and Loan Association of Springfield, which was $15 million in the red when Columbia First took it over with assistance from the Federal Savings and Loan Insurance Corp. (FSLIC).

The acquisition gave Columbia First five offices in Virginia and unlimited branching powers in that state. The S&L already has 14 offices in the District and one in Bethesda. That makes Columbia First only the second thrift -- the other is Perpetual American Savings Bank -- that is able to operate in all three area jurisdictions.

As part of selling stock to the public, Columbia will convert from a federal mutual savings and loan association, which is owned by its depositors, to a federal stock savings and loan, which is owned by shareholders.

First preference on buying stock goes to depositors and management. Stock that remains will be sold to the general public through Merrill Lynch and Legg Mason. The thrift estimates that 15 percent of the stock will be sold to depositors and management, 85 percent to the public.

Among the 20 officers and directors, Hartwell is expected to make the largest individual investment, about $100,000. The others have indicated they will spend from $60,000 to $5,000 for shares.

Columbia First initially will offer shares to depositors and members of management at $11.50 each. The final price will be set Nov. 14, with a possible range of $8.50 to $11.50. If the price is less than $11.50, the excess will be returned to the purchasers. Columbia First hopes to sell 1.9 million shares. An $8.50 price would produce $15.7 million, while an $11.50 price would produce $21.3 million.

Clearly, one of the major benefits of going public is that it will add an estimated $18 million or so to Columbia Federal's net worth, enabling the thrift to expand its operations and, potentially, to improve its profits.

However, Columbia First is in a very close race with interest rates. The thrift appears to be coming out of the interest-rate squeeze somewhat later than other institutions, and it needs time to strengthen its financial situation. Any sudden rise in interest rates could deal a severe blow to Columbia First's hopes for continuing profitability.

Best Products of Richmond, which has had its troubles, is in the midst of a turnaround effort that makes the stock attractive for aggressive growth-oriented accounts, according to Michael L. Mead, research director at Scott & Stringfellow of Richmond. Trading at about $14, Best's shares are off about 21 percent since Jan. 1. For the first half of its 1986 fiscal year, Best reported a 2.9 percent sales gain to $880.8 million but a net loss of $10.2 million (38 cents a share loss). Sales were mixed during August and September as Best distributed its new 466-page catalogue and continued its three-year, $90 million to $100 million store remodeling program.

Mead bases much of his hope for the stock on a new management team headed by Bob Huntley, president of Best, and Bernie Cohen, president of the catalogue showrooms. With the stock selling below the $15.06 book value, Mead says he sees only a moderate amount of risk.

Raymond "Chip" Mason, the president of Legg Mason of Baltimore, is to become the new head of the Securities Industry Association when the SIA holds its annual meeting Dec. 6 in Boca Raton, Fla. He will succeed Robert Shapiro of Wertheim and Co. of New York.

Student Loan Marketing Association, better known as "Sallie Mae," is on Drexel Burnham Lambert's priority selection list because of the company's "superior growth characteristics," according to DBL analyst John E. Keefe. Sallie Mae shares, which have moved up 23 percent so far this year, are selling at about $32.75, only slightly below their five-year high of $35.75.

Keefe said he lowered his 1986 earnings estimate slightly from $3.10 to $3 because he was overly optimistic about the company's asset acquisitions. Keefe calls Sallie Mae "an important holding in financial services" with "strong growth independent of economic trends, insensitivity to changes in interest rates, high credit quality and a stable legislative outlook."

A falloff in September passenger traffic and higher costs caused USAir Group's third-quarter earnings to decline nearly 30 percent. That, in turn, caused Dean Witter analyst Mark E. Daugherty to cut his 1985 earnings projection for USAir from $4.25 to $3.50. The 1986 estimate was reduced from $4.75 to $4.50 a share. Even so, Daugherty sees hope for the stock. "Despite some disturbing trends affecting USAir's fare and cost levels, we believe the company's earnings and stock price will rebound over the next year," he said.

Geico Corp. has extended until Nov. 15 its offer to buy back stock from anyone who owns 99 shares or less. Geico is paying $1 above the closing market price on the day the shares are received . . . Syscon Corp. of Washington will split its stock 3 for 2 on Nov. 30 for shareholders of record Nov. 15 . . . Hotel Investors of Chevy Chase also split its shares 3 for 2, payable immediately to shareholders of record Oct. 15.