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 7.6%, Mr. Davis said.

Bank's Shares Trade Well

Central Fidelity is opting to raise capital while its stock is trading strongly. Its shares, which closed Thursday at $36.50, were trading near their 52-week high of $39.25. The stock is trading at roughly 180% of book value.

Like other banks last year, Central Fidelity was active in the securities markets. The bank realized $18 million in securities investment and trading gains in 1991, equal to 22% of its $79.3 million of pretax income, said Mr. Davis.

The SEC has been giving greater scrutiny to registration statements of banks that have taken large securities gains. In some cases, the SEC reportedly has forced banks to revalue portions of their portfolios at the lower of cost or market value to account for the active trading.

Good Earnings Outlook

Mr. Campbell declined to comment on whether the bank expected its filing to get special SEC scrutiny.

Central Fidelity earned $16.9 million in the first quarter, up 15.5% from the corresponding period in 1991. The bank did not take a big securities gain in the quarter.

"I think they can continue to report improved earnings each quarter for the rest of the year," said James Weber, an analyst at Johnson, Lemon & Co., Washington.

The bank has maintained a strong net interest margin of about 4.5% since the start of last year, sufficient credit quality, and good cost-control measures, Mr. Weber said.

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