Magazine article American Banker

Peoples Heritage Joins Offerings Parade

Magazine article American Banker

Peoples Heritage Joins Offerings Parade

Article excerpt

Wall Street continues to roll out rights offerings to shareholders for weak banking companies.

The latest is Peoples Heritage Financial Group, a $2.3 billion-asset banking company based in Portland, Maine. It plans to raise about $30 million this month through a rights offering.

Also this year, Equimark Corp., Pittsburgh, and Citizens First Bancorp, Glen Rock, N.J., increased its capital by selling stock at a discount to current shareholders, for a total of more than $100 million.

Hibernia Corp., New Orleans, also plans a rights offering, to raise about $80 million.

Aiming for FDIC's Targets

Rights offerings give shareholders a chance to maintain their stakes in companies that are forced to issue large amounts of new shares to raise capital.

Peter Verrill, executive vice president and chief financial officer of Peoples, said its offering was aimed at increasing the leverage capital ratio of the company's principal bank, Peoples Heritage Bank, above regulatory targets set in a June 1991 cease-and-desist order.

The Federal Deposit Insurance Corp. set targets of 5% for June 30, 1992, and 6% by June 30, 1993. The bank missed its 1992 target, with a leverage capital ratio of 4.2% at June 30. The ratio had risen to 4.5% by the end of the third quarter.

The FDIC took no further action after Peoples failed to meet the target. But according to statements filed by Peoples, the FDIC "is authorized to appoint itself as a conservator or receiver of any insured state depository institution if, among other things, the institution is in an unsafe or unsound condition to transact business, including substantially insufficient capital. …

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