Mellon Bank Corp. said last week it planned to sell five million common shares to support a pair of recently announced acquisitions.
The issue would raise some $270 million at Mellon's current stock price of about $54.
The last major common stock offering by a bank came in April, a $330 million sale by First Union Corp.
Earlier this month, Mellon bought the failed Meritor Savings Bank, Philadelphia, from the Federal Depost Insurance Corp. for $181 million.
In September, Mellon agreed to buy the Boston Co. from American Express Co. for $1.45 billion in cash and stock. This purchase is expected to be completed next year.
Issue of Preferred Planned
Mellon also plans to issue $200 million in preferred stock in the first quarter, said Charles Johnston, treasury division manager for the Pittsburgh-based company.
"We would expect the capital ratios to be essentially in line with the June 30, 1992, numbers when we finish our financings and the Boston Co. acquisition," said Mr. Johnston.
|Good Business Sense'
At June 30, Mellon had leverage, Tier 1, and total capital ratios of 6.97%, 7.57%, and 11.57% respectively.
"Mellon has taken two big strategic steps one right after the other," said John Leonard, banking analyst with Salomon Brothers Inc. "They want to put the capital in position right away, and that makes good business sense."
Brent Erensel of UBS Securities said the acquisitions would enhance earnings growth and quality - "it's not just plugging a hole in the balance sheet."
"With capital, too much ain't enough these days," said Mr. Erensel, who called Mellon's 6.78% equity capital ratio at Sept. 30 "impressive."
Stock on the Rise
Investors have warmed to Mellon's stock in recent weeks, pushing the price to a 52-week high of $55.50 this month. On Thursday, the stock closed at $53.875.
Since July 1, Mellon has also raised its common equity by about $60 million, mainly through its dividend reinvestment plan, Mr. Johnston said. The bank did not name under-writers in filing the issue with the SEC.