Andrew Brown of Salomon Brothers Inc. on Thursday downgraded Central Fidelity Banks Inc.'s stock to "hold" from "buy" and cut his earnings estimates following the company's restructuring announcement.

The Richmond, Va., bank announced on Wednesday that it would take a securities loss of $30 million in the fourth quarter, joining a long list of banks that have taken hits to adjust for higher interest rates.

"The charge is a positive step, but it does not cure their interest rate sensitivity," Mr. Brown said.

He reduced his 1994 earnings estimate to $2.27 per share from $3.05. For 1995, Mr. Brown reduced his estimates to $2.70 from $3.35. For 1996, he forecast earnings per share at $2.85.

The bank's stock fell 25 cents to $18.75 on Thursday.

The bank said its balance sheet restructuring should reduce its one-year sensitivity from negative 15% to negative 11%.

Even Central Fidelity's announcement that it will hold its remaining securities to their maturities, reducing its sensitivity to negative 6% by the end of 1995, did not placate the Salomon Brothers analyst. "This will help," Mr. Brown said, "but their sensitivity will still be relatively high."

More optimistic about Central Fidelity's prospects for recovery is Merrill Ross of Wheat First Butcher & Singer, who upgraded her long-term rating to "buy" from "neutral," citing the announcement. For the short term, she is maintaining her "hold" rating.

Ms. Ross also reduced her earnings estimates for 1994 to $2.30 per share and her 1995 estimates to $2.80. The analyst argued that the restructuring showed that Central Fidelity is on the right track.

"Their balance sheet is looking better," she said. "What this restructuring does is make the bank look more interesting to a potential acquirer." Ms. Ross said Central Fidelity has been frequently mentioned as a possible acquisition candidate, though market conditions now are not favorable for such a deal. "At this point no one has the currency to buy anything," she said.

New Jersey-based First Fidelity Bancorp. is "near the top of everyone's list" of potential acquirers of Central Fidelity, she said. "They just came into Baltimore. First Fidelity has made a business of acquiring other institutions."

Ms. Ross also said that she would not be surprised to see Chemical Banking Corp. make a play for Central Fidelity sometime in the future.

"If they ever venture out to buy again, they will be looking to pick up market share," she said. "Chemical may not be so far-fetched."

Chemical announced it would shed the majority of its New Jersey branches, but Ms. Ross said she wouldn't bet against Chemical acquiring branches elsewhere.

Ms. Ross said the move -- part of a cost-cutting initiative -- was prompted by Chemical's failure to gain a significant market share in New Jersey. Chemical's stock up 25 cents to $36.625 on Thursday.

Salomon Brothers' Mr. Brown, meanwhile, said he doubted Central Fidelity would be a takeover target anytime soon. "Management's strategy is one of continued independence," he said.

He noted, however, that Central Fidelity's management will do what's in the best interests of the shareholders, even if that includes shopping the bank around sometime in the future.

Separately, bank stocks for the most part followed the Dow downward Thursday. The Dow Jones industrial average fell 38.36 to 3,700.87. Among the bigger losers was Boatmen's Bancshares, St. Louis, which ended the day down 87.5 cents to $27.

The stock of Northern Trust Corp., Chicago, also was off, falling $1.25 to $32.50.

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