Magazine article American Banker

Houston Company's Debut Ends Drought of Bank IPOs

Magazine article American Banker

Houston Company's Debut Ends Drought of Bank IPOs

Article excerpt


In a sign that the moribund market for initial public offerings may be reviving, Prosperity Bancshares made one Thursday-the first by a bank in nearly two months.

The 1.7-million share offering for Prosperity, a $400 million-asset bank based in Houston, was managed by Keefe, Bruyette & Woods Inc. and priced at $12 per share. The stock closed at $12.4375.

"The market has come back for solid stories," said Craig McMahon, the Keefe Bruyette investment banker who arranged the Prosperity deal. "But still, investors got burned in the small and micro-cap sector. We were very fortunate to get this one done."

Industry watchers noted that it was first bank IPO since that of Admiralty Bancorp of Palm Beach Gardens, Fla., on Sept. 25. Between came a seven-week drought in the previously fertile sector.

But investor appetite so far is largely limited to IPOs from bigger companies offering easily tradable stocks, investment bankers said. They noted Merrill Lynch & Co.'s successfully leading an IPO this week for Fox Entertainment Group Inc., and Goldman, Sachs & Co.'s leading one for MONY Group Inc.

But any sort of IPO revival is good news for securities firms. Earnings at most firms plunged in August and September, because the IPO market evaporated amid market turmoil that forced many firms to report big trading losses.

Since the Federal Reserve cut interest rates a second time on Oct. 15, confidence has gradually returned to the capital markets, economists and analysts say. …

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