George Mason Bankshares has filed a preliminary prospectus with the Securities and Exchange Commission to raise as much as $10 million in a secondary offering of stock.

The Fairfax, Va.-based bank, with $335 million in assets, will use $2 million of the procEeds to acquire or open as many as five branches. A million dollars would be used to purchase equity in the Federal Home Loan Bank of Atlanta, and another $1 million to expand the bank's residential mortgage portfolio.

The rest of the proceeds would be used for future growth and general corporate purposes.

Arnold Danielson, president of Danielson Associates Inc., a bank and thrift consulting firm in Rockoille, Md., said the market for secondary issues is strong for both healthy and troubled banks.

"It's never been this hot," he said. In the past nine months "everything that has come out has invariably sold out."

Offerings by small banks are in particular demand, he said. "The big banks are clearly overpriced, and that is why some of these smaller issues are going."

Many Washington-area banks have failed or fallen on hard times in recent years. George Mason is "just taking advantage of the market while everybody else [in Washington] is falling apart," Mr. Danielson said.

George Mason has been on a growth tear. Assets surged 32% in the first quarter. Loans and deposits each jumped 28%, to $159 million and $282.7 million, respectively. The bank earned $763,578, nearly 14% more than a year earlier.

A Doubling of Employment

In the past 18 months, the bank bought about $20 million 4n deposits from a failed institution and acquired two buildings to house an operations and customer-service center, a branch, and its mortgage operations.

From September 1991 to this March, employment more than doubled, to 154 employees on a full-time-equivalent basis.

George Mason plans to offer 500,000 shares. The first 1 00,000 are now being offered at $16.50 to stockholders on record as of April 22. Shares not subscribed by June 17 will be offered to the public beginning June 21 at a price expected to be in the range of $16 to $20. The offering will be underwritten by McKinnon & Co., Norfolk, Va.

Two neighboring bank companies are also trying to raise funds, both to shore up weak capital ratios.

Washington Federal Savings Bank, Herndon, Va., plans to raise $10 million to $15 million in a rights offering. The Office of Thrift Supervision is expected to sign off on the offering any day, said Dave Ritter, controller of Washington Federal, which has $655.8 million in assets.

"We feel like the time is right," Mr. Ritter said.

The thrift is raising the funds because it didn't meet the risk-based capital test on March 3 1.

Mr. Ritter said that if Washington Federal raises the maximum amount it will be phased in with all capital regulations.

Shareholders of record as of June 3 will receive the right to buy 2.2 new shares of common stock at $2.25 a share for each existing share.

Meanwhile struggling Suburban Bankshares of Greenbelt, Md., filed a prospectus with the SEC on May 25 to raise $4 million to $7 million.

In the first quarter, $105 million-asset Suburban lost $64,000. It lost $383,000 in the year-earlier quarter.

Suburban runs two banks: one in Maryland, one in Virginia.

The Maryland bank met all regulatory requirements in the first quarter, but the Virginia bank did not. Its Tier 1 capital was below the 5% minimum and its total ratio of capital-to-risk-weighted assets was 5.68%, versus a minimum of 9.25%.

Management said it believes that the Virginia bank will meet all regulatory tests if the minimum number of shares are sold.

Mr. Danielson said investors especially like banks because they had record earnings last year. He expects more institutions across the country to raise capital. "Everybody who needs it is coming out."

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