Magazine article American Banker

Central Fidelity Plans Share Offering

Magazine article American Banker

Central Fidelity Plans Share Offering

Article excerpt

Central Fidelity Banks plans to raise about $65 million in capital to support a big inflow of deposits from other Virginia banks and thrifts.

The new capital for the Richmond, Va., banking company will come from an offering of 1.85 million common shares. The bank filed a registration statement for the offering this week with the Securities and Exchange Commission.

18% Deposit Rise in Year

Deposits shot up 18% in the first quarter from a year earlier, to $5.6 billion. Assets grew 13.8%, to $6.9 billion, in that period.

James Campbell, the bank's controller, said loans grew only 1% in that time. Instead of lending, the bank has stocked up on investment securities, including asset-backed and intermediate-term, mortgage-backed securities, he said.

Central Fidelity has won over depositors from weak banks and thrifts, said Tony Davis, banking analysts at Wheat, First Securities Inc., Richmond.

New Customers Attracted

"There's a game of musical chairs going on down here" involving banks and their customers, Mr. Davis said, and Central Fidelity is winning new customers.

Mr. Campbell said the bank is not bidding up deposit rates. Rather, Central Fidelity touts its 17 years of growing profits and strong capitalization, he said.

At Central Fidelity's current market price, the equity sale would raise the bank's equity-to-assets ration roughly 87 basis points, to 7.3%, using March 31 data, Mr. Campbell said.

Thirty banks in the Middle Atlantic states tracked by Wheat First average 7. …

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