PAB Bankshares Inc. in Georgia says it plans to raise $85 million through a common stock offering.

The $1.2 billion-asset parent company of Park Avenue Bank announced Wednesday that it has filed an amendment to its registration statement notifying the Securities and Exchange Commission of the offering. PAB plans to use the proceeds to improve its regulatory capital position, according to a press release.

Yet competition for capital remains fierce, and raising it has proven tough for banks like Park Avenue with less-than-stellar balance sheets.

The Valdosta, Ga., bank signed an agreement with the Federal Reserve in July requiring it to strengthen its credit-risk management practices and improve assets. At Dec. 31 it was "adequately capitalized," with a total risk-based capital ratio of 8.24% and a Tier 1 risk-based capital ratio of 6.96%, according to the press release. Park Avenue Bank lost $49.4 million last year and has had just one profitable quarter since mid-2008.

Its capital problems stem from nonperforming assets, which at Dec. 31 totaled $188 million, or 15.28% of total loans, according to Federal Deposit Insurance Corp. data. More than half the nonperforming credits were construction and development loans.

Nonperformers had grown by 57% from the third quarter, though the bank charged off $21.7 million in problem loans. Park Avenue's loss provision was $16 million, up 88.2% from a year earlier.

With chargeoffs exceeding the provision, the bank's overall allowance for loan losses fell 13.8% from the third quarter, to $34.4 million, or 4.25% of total loans at Dec. 31.

"We have allocated significant resources to manage our credit problems," Jay Torbert, the company's president and CEO, said in the press release, "and I am pleased with our progress through this phase of our overall plan to resolve these problems."

On Feb. 25, PAB announced a deal to sell five branches to Heritage Financial Group in Albany, Ga. Heritage, a $573.2 million-asset mutual holding company, is to pick up $52 million in loans, $72 million in deposits and $26 million in certificates of deposit in the deal. The sale is expected to close in the second quarter.

Walter G. Moeling 4th, a partner in the Bryan Cave LLP law firm in Atlanta, said plenty of money is available to invest in capital-raising efforts and it is encouraging that investors are interested in PAB.

"Some investment bankers have spent a lot of time and money and effort working on this," he said. "So some fairly sophisticated people must think they can raise the money, or they wouldn't waste their time on this."

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