Magazine article American Banker

Stock Sale Hurts Alaska Bank; Profits Buoy Mass. Company

Magazine article American Banker

Stock Sale Hurts Alaska Bank; Profits Buoy Mass. Company

Article excerpt

Two community banks' stocks have recently moved strongly-but in opposite directions-on news of expansion plans.

Shares of Alaska's Northrim Bank sank 12% last week after it began a secondary stock offering whose proceeds will be used to buy branches from Bank of America Corp. The shares closed Friday at $10.75 but rallied slightly Monday to close at $10.875.

Meanwhile, shares of Century Bancorp of Somerville, Mass., advanced 5% last week, to $18.8125, as Wall Street credited the company for growing last quarter.

"We were out beating the bushes in the first quarter," said Century's chairman, Marshall M. Sloane. Its stock closed Monday at $18.875 a share.

These disparate price moves came during a week when the Nasdaq bank index, a proxy for small-bank stock activity, gained 2.9%.

Northrim, a $354 million-asset banking company based in Anchorage, raised $19 million by offering shares at $11 each, compared with the $12.25 at which they had previously traded.

Proceeds of the offering went to buy eight branches in the Anchorage area from Bank of America Corp., enabling Northrim to increase its branch network to 11 offices.

The company viewed the secondary offering as the best way to finance the deal, said Chris Knudson, Northrim's chief operating officer.

The fact that Wall Street didn't want to give the company more than $11 a share was unfortunate, Mr. Knudson said, but Northrim felt the deal was too good to pass up.

"We now have a much better delivery system," with the Bank of America branches, Mr. …

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