Ailing Equitable Federal Savings Bank, Wheaton, Md., is seeking to raise $6 million in a public offering.

The $196 million-asset mutual is converting to a federal stock savings bank under close government supervision because it does not meet two out of three capital requirements set by the Office of Thrift Supervision.

The thrift will use proceeds from the sale to bring itself into capital compliance.

"Our investment bankers... say it's [the offering] going quite well," said Equitable president Gordon N. Luckett. "I do not think we will extend it."

Shares Offered at $10

Equitable began offering 600,000 shares at $10 each on Aug. 10. It expects to net from $4.5 million to $5.2 million from the sale. The offering expires Aug. 31. Stock is being sold to management, employees, depositors, and the community. The offering is being underwritten by Capital Resources Inc.

As of June 30, Equitable was $1.13 million short in meeting the core capital test, and $4.30 million short on the risk-based capital requirement. Equitable needs $4.5 million to reach capital compliance.

The thrift is operating under government agreements because of its capital deficiencies.

|Watching the Store'

"Government regulators are watching the store," Mr. Luckett said. "They have been good to us so far."

He hopes Equitable will follow other area thrifts that have successfully raised funds. Washington Federal Savings Bank, Herndon, Va., recapitalized itself in June by raising $15.3 million, and Ameribanc Savings Bank, Annandale, Va., raised $35 million last December.

"I would be surprised if it [Equitable's sale] wasn't immensely successful," said Ameribanc president David Campbell.

Investor Confidence Rising

Mr. Campbell said public offerings he is aware of in the area are oversubscribed because investors have more confidence in the economy and the industry.

Lewis Sosnowik, a broker with Koonce Securities Inc., Rockville, Md., said there are better deals than Equitable.

He recommends Home Federal Savings Bank, a healthy Washington-based thrift that is selling for $9.50 a share.

"Basically, what they [Equitable] are saying is let's see if the public will bail us out," Mr. Sosnowik said.

Hurt by Construction Loans

Equitable's problems stem from commercial construction lending. Nonperformers climbed to $19 million in 1991, or 7% of assets. The thrift lost $718,000 for its fiscal year ended Sept. 30, 1992, and $3.1 million in fiscal 1991.

Because of the problems, Equitable's auditors last year raised doubts about the institution's ability to survive.

Equitable's management has made strides in correcting problems. The thrift earned $315,000 for its six months ended March 31. Nonperforming assets have been trimmed to $11.7 million, or 5.17% of total assets. And construction and development lending has been discontinued.

Mr. Luckett said Equitable will focus on one-family to four-family home loans. "I think we are going to be fine," he said. "We still have to work out the balance of our problem assets. Like anybody else, we have to go forward from here."

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