In a bid to shore up its ailing balance sheet, Fidelity Federal Bank has notified thrift regulators of plans to raise about $110 million of capital through a public stock offering.
The offering would mark the third time in as many years that the $3.5 billion-asset thrift and its previous parent, Citadel Holding Corp., have tapped investors for substantial infusions of capital.
A recapitalization and public stock offering last year raised $108 million from some of the country's savviest bank and thrift investors, including Michael Price's Mutual Series Fund, and Harry V. Keefe Jr.'s Keefe Partners.
So far, the money has failed to turn Fidelity Federal around. As a result, the Glendale, Calif.-based thrift could face a difficult sell with its coming offering, investment bankers and stock analysts said.
"Let's just hope that three is the prize," said Charlotte A. Chamberlain, a stock analyst with Wedbush Morgan Securities.
Fidelity Federal suffered heavy losses in 1993 and 1994 and expects steep losses again this year after posting a $1 million profit in the first quarter. The thrift's common stock, which sold for $5.25 a share last year, has recently been trading for around $1.50.
In the new offering, Fidelity Federal plans to sell up to 27,500 shares of common stock at a price to be set. Shareholders will be given the right to invest in the new offering before other investors.
Fidelity Federal also aims to raise capital by selling an option that would give another company the right to buy it.
Many of the thrift's investors have said they hope the company is acquired by another thrift. But so far Fidelity's continuing asset problems have kept potential buyers at bay.
Fidelity Federal is raising capital to comply with a supervisory agreement it signed in June with the Office of Thrift Supervision. As part of the agreement, Fidelity Federal was required to establish a plan for becoming well-capitalized. It was adequately capitalized in the second quarter but has warned that third-quarter losses could cause it to become undercapitalized.
However, one positive for the thrift is that its coming offering is being handled by the investment banking firm Friedman, Billings, Ramsey & Co. Inc., which has a solid reputation among investors because of its other successful recapitalizations, at Crossland Savings, Glendale Federal Bank, and California Federal Bank.
Along with the announcement of the new public offering, Fidelity Federal said it expected to record a $45 million restructuring charge in the fourth quarter. It has also been making staff cutbacks.
Fidelity Federal also reported that its chief financial officer, Mark K. Mason, had resigned effective Dec. 1 to join an undisclosed privately held mortgage banking company.
Mr. Mason joined Fidelity Federal in September of last year from Deloitte & Touche, where he had worked on the thrift's recapitalization.
