Magazine article American Banker

Red-Hot Internet Thrift to Issue More Stock

Magazine article American Banker

Red-Hot Internet Thrift to Issue More Stock

Article excerpt

By AARON ELSTEIN

Now hardly seems the time for a fledgling bank or thrift to introduce new shares to the market-unless, of course, it has something to do with the Internet.

Net.Bank Inc., formerly known as Atlanta Internet Bank, is scheduled Thursday evening to price a secondary offering of 2.37 million shares.

Led by Bear, Stearns & Co., the issue consists of two million Net.Bank shares, plus 370,000 from lead stockholder Carolina First Corp. of Greenville, S.C.

The $283 million-asset Net.Bank, which made its initial public offering in July 1997, would increase its shares outstanding by one-third.

In a filing with the Securities and Exchange Commission, Net.Bank said it expects to raise $58.7 million, assuming a $31.375 per-share offering price. Net.Bank said it would use the proceeds to build its loan portfolio and expand its marketing beyond banners on Internet search engines and down such avenues as cobranded credit cards.

Given the investment community's ravenous appetite for anything related to Internet commerce, it is difficult to predict what value investors will assign the offering. "The 'Net' in their name is probably worth $10 per share alone," said one analyst.

One person familiar with the offering said its scheduling is uncertain because Net.Bank's share price has been so volatile lately.

Net.Bank's share price was $61.9375 last Thursday, a 172% increase since Christmas. It closed Tuesday at $49.50.

Unlike many Internet commerce ventures, Net.Bank actually makes money. It reported third-quarter 1998 earnings of 10 cents a share, compared with a loss of 32 cents a year earlier.

Fourth-quarter earnings have not been released yet. The company trades at 200 times estimated earnings.

Telebanc Financial Corp., an older company that has embraced the Internet banking concept, reported third-quarter income of 1 cent per share, down from 11 cents a year earlier. …

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