Ailing Suburban Bancshares has won a new lease on life by raising $5.6 million in a stock offering to recapitalize the company.

Winfield M. Kelly Jr., a self-made millionaire and Maryland's former secretary of state, led the fund-raising effort.

In March, he took over as the Greenbelt, Md.-based company's chairman and chief executive.

"It was not an easy time out there," Mr. Kelly said in an interview. "We did it with a lot of personal contact."

Suburban offered 4 million to 7 million shares at a price of 95 cents a share for current stockholders and $1 for the public.

The stock offering was extended for two weeks to raise an additional $500,000 to $600,000. A transferable warrant to buy 35 shares of common stock comes with every 100 shares.

Mr. Kelly reportedly bought 200,000 shares during the offering that expired on Sept. 28, said Lew Sosnowik, a banking analyst with Koonce Securities Inc., Rockville, Md. "I personally bought 30,000 shares because of Mr. Kelly," Mr. Sosnowik said, "I'm sure a lot of other people did too."

Mr. Sosnowik was so convinced of Suburban's future under Mr. Kelly that he recommended the share in a local newspaper's stock-picking content as having "turnaround potential."

Mr. Sosnowik said his endorsement may have triggered a buying spree that pushed Suburban's shares up by 20% in Monday's trading. The stock, which sometimes goes untraded for several days, saw 287,000 shares traded on Monday.

Despite the euphoria, the 57-year-old Mr. Kelly has his work cut out for him. Suburban operates two banks, in Maryland and Virginia, with combined assets of $106.2 million as of June 30. The company has had significant operating losses in each of the last three years, amounting to negative retained earnings of $14 million as of June 30, according to Suburban's prospectus.

Suburban's Virginia subsidiary failed to meet any of the government's capital tests. The Maryland bank met all of the tests. "If it were not for the successful offering the Virginia bank would have been in imminent danger of being closed down by the Feds," Mr. Kelly said.

With the fresh capital infusion, Mr. Kelly expects to revive the Virginia bank, and scrub clean its troubled loan portfolio. In the past, the bank feasted on commercial real estate loans, which got it into trouble.

In addition to the new capital and new management, Suburban's prospectus outlined its plans to counter financial and regulatory problems. They include: Improving credit administration, augmenting loan review and workout efforts, cost cutting, decreasing real estate loan concentrations, and establishing significant reserves for possible losses.

Mr. Kelly also plans to target for loans small businesses - particularly those owned by minorities or women. Mr. Kelly, after all, got his start by setting up his own small business - delivering food to construction job sites.

Prominent in both public and private circles in the Washington area, Mr. Kelly was Maryland's secretary of state from 1987 until this year. He also served as a director at First American Bank of Maryland from 1985 to 1993.

He flirted with the idea of running for governor of Maryland, but landed a job as president and chief executive of Dimensions Health Corp., a $235 million company that runs two hospitals and three health care facilities in Maryland.

"They have a real mover and shaker out there," Mr. Sosnowik said. "It's a different ball game."

Ms. de Guzman writes for the Medill News Service.Suburban BancsharesAt a GlanceHeadquarters Greenbelt, Md.Assets $106 millionROA 1.50%ROE 29.74%Net loans $58.6 millionTotaldeposits $98.8 millionCEO Winfield M. Kelly Jr.Data as of June 30

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