Cardinal Bancshares, Lexington, Ky., is spinning off its Internet banking unit, Security First Network Bank.

The thrift, which set up Security First last year, has filed a prospectus with regulatory agencies to offer 2.4 million shares of common stock.

Investment bank Friedman, Billings, Ramsey & Co., Arlington, Va., is underwriting the deal, which should close within three weeks. Shares are expected initially to cost $17.

Huntington Bancshares, Wachovia Corp., and Area Bancshares each plan to buy a mix of common and preferred stock. Huntington and Wachovia expect to invest $2 million each, to acquire 4.6% stakes. Area plans to invest $1 million.

A fourth financial institution, Synovus Financial Corp., plans to buy about $2 million in common shares.

Security First, with $46 million in assets, has about 2,300 customers. It currently offers Internet-based demand deposit and bill payment services, and it plans to expand its service offerings.

"We strongly believe that over the next five years, the vast majority of aditional banking that occurs will be done over the Internet," said Robert F. Stockwell, chief financial officer at Security First.

As part of the spinoff, Security First, which is based in Pineville, Ky., plans to buy Five Paces Inc.

Atlanta-based Five Paces makes Virtual Financial Manager, the software upon which Security First's services are based.

Huntington is installing Five Paces software at its Huntington Direct telephone banking centers.

"We are just absolutely delighted from an investor's point of view," said William Randle, senior vice president at Huntington.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.