Armed with fresh capital, Southwest Banks Inc., Naples, Fla., is carrying out a major expansion.

Earlier this month the $210 million-asset parent of First National Bank of

Naples raised $15 million in a rights offering, a large sum for a company of that size.

Southwest plans to use about $3 million of the funds to open three branches, adding to its current two-branch setup. The company expects to use another $4 million of the proceeds to capitalize a new independent bank in Cape Coral, which is expected to open in June. The rest of the money will be used to support asset growth.

"We are in a very rapid expansion," said Gary L. Tice, Southwest's chairman of the new bank called Cape Coral National Bank.

Booming Cities

Mr. Tice said the company is also looking at either acquiring existing banks and savings and loan associations in other nearby cities, or starting institutions from scratch.

Southwest is opening the throttle because Naples and Cape Coral are booming cities and management wants to gain market share quickly. Cape Coral, which is 125 miles south of Tampa, is one of the nation's fastest-growing cities and southwest Florida's largest. It has a pouplation of 75,000 full-time residents. What's more is that there is plenty of room for development and the city has a deposit base of $646 million.

Another reason for the rush to expand is that community banks in the Naples market are being acquired by superregionals. Mr. Tice thinks he can capitalize by operating locally owned institutions that make consumer, business, and real estate loans.

"There is a big window of opportunity," said Mr. Tice, who was president of Citizens National Bank of Napels, which was acquired by AmSouth Bancorporation this year, "We truly believe there will always be a need for an independent community bank."

Local Funds

Southwest has proved that it has the backing of the locals in Naples. It raised the $15 million in just over a month's time. Mr. Tice said about 80% of the funds were raised locally in an offering that was not underwritten.

"The fact that they have been able to sell $15 million worth of stock is remarkable," said Benjamin C. Bishop Jr., chairman of Allen C. Ewing & Co., a Jacksonville-based investment banking firm. Mr. Bishop said he is not aware of a banking company the size of Southwest raising that much money in an offering.

Mr. Bishop's firm was one of three companies hired as a sales agents. He said the Naples and Cape Coal markets have huge potential because more retirees are bringing their money and business to the cities.

Naples "is very compelling. It is a vary affluent," he said.

Since Southwest was formed in 1988, it has focused on growth instead of earnings. Over the last five years the bank has increased its assets more than fivefold. Last year, assets jumped to $178.5 million, up 22% from the prior year, while deposits grew to $157.4 million, up 19%,

Mr. Tice said assets should grow to $250 million by yearend 1994, and reach at least $325 million by the end of 1995. Once he and the board are comfortable with the company's size then earnings will be a priority, Mr. Tice said.

Last year, the bank earned $1 million, up nearly 40% from the prior year. But Southwest's return on average assets was just 0.63% in 1993, and its return on average equity was 8.13%.

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