A rights offering launched last week has clobbered the stock price of New Jersey's Citizens First Bancorp.

Shares of Citizens First, based in Glen Rock, have fallen about 36% since the rights offering was unveiled, and 45% in the past two weeks. The stock closed at $3.25 on Monday, down 25 cents on the day.

The stock's fall has sharply reduced the advantages of the offering, which makes available an additional share at $2.50 for each share owned as of last Wednesday, when the price was $4.75.

Analysts said a generally less favorable environment for bank equities, coupled with concerns about dilution, are likely causes of the drop. Bank officials were not available for comment.

Standby Purchase Agreements

"It is too soon to say if the existing shareholders will exercise their rights," said Elizabeth A. Summers, a banking analysts for Ryan, Beck & Co., West Orange, N.J. "If they don't, the bank has standby purchase agreements with 14 buyers" that will probably ensure the success of the offering.

"This bank has a lot of negatives, but it has a good franchise," she noted.

It also has heavy ownership of shares by its directors, who have a combined 17% stake and are committed to buying more shares through the offering, she said.

Ms. Summers attributed Monday's slide to an article in Barron's that said the stock should be sold short. But the analyst said short-selling at current low levels would be inadvisable.

Capital-Raising Vehicle

Rights offerings are more dilutive than regular secondary offerings since they offer additional shares at a discount. But they are an important capital-raising vehicle for companies unable to muster the investor confidence to float standard offerings.

Successful offerings were accomplished early this year by Equimark Corp., Pittsburgh, and Riggs National Corp., Washington.

At the time, banking issues were much in demand by investors looking to benefit from declining interest rates. That led some on Wall Street and within the banking industry to anticipate a string of such offerings.

But bank stocks have receded during the past few weeks as a steep fall in the dollar has foreclosed any further rate cutting by the Federal Reserve. Meanwhile, the summer economic upturn expected last winter has not materialized.

"The timing for Citizens First was not early as good, but nobody owns a crystal ball," said one analyst. "When they started down this road in early July, the banks were doing very well in the market."

High Realty Exposure

The bank, which has assets of $2.4 billion, hopes to raise at least $53.5 million to satisfy a capital-bolstering agreement with the Office of the Comptroller of the Currency.

Citizens First's problems stem from real estate lending. On Dec. 31, the bank's realty exposure was equivalent to 80% of its equity, which was the 15th -highest ratio among the nation's banks.

At midyear, nonperforming loans were 10.7% of loans plus other real estate owned, down from 12.6% a year earlier, and the loan-loss reserve covered 64.5% of nonperformers, up from 50.9% a year before.

After a $102.4 million loss in 1990, the bank tallied modest earnings of $3 million last year. In the second quarter of this year, it earned $1.2 million with no securities gains as a factor, an early sign the bank is on its way back to health.

If the offering is not deemed as successful as those of Equimark ad Riggs, prospects for future offerings could be impaired.

Hibernia Corp., New Orleans, which has also suffered earnings reverses, said several months ago that it was planning a rights offering, but has yet to announce any details.

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