Value of ConnectOne shares rises 5.9 percent after an IPO that raised nearly $45 million.
An Englewood Cliffs bank said Tuesday that it raised nearly $45 million in an IPO, the first initial public offering by a New Jersey-based commercial bank in 10 years.
Shares in ConnectOne Bancorp, formerly known as North Jersey Community Bancorp, were sold to investors at $28 each -- within the expected range of $26 to $29 -- and climbed 5.9 percent to $29.65 on Tuesday, their first day of public trading on the Nasdaq Stock Market. At one point they were being traded at $31 a share.
"I guess I should have bought more," said investor Theodore Kovaleff after seeing the modest first-day pop. The offering included 1.6 million shares, with more available based on demand. Kovaleff, president of the investment advisory firm Informed Sources Service Group, which has offices in New York City and Vermont, said he was "a small subscriber" in the offering.
"They seem to have found themselves a niche and will be able to utilize the funds that are raised," Kovaleff said.
The 8-year-old, politically well-connected bank has a history of successful capital raises from private investors to help fund growth, even when bank funding has been hard to come by.
The nine-member board includes East Rutherford public relations executive Michael Kempner, a campaign donations "bundler" for President Obama; Mayors Joseph Parisi Jr. of Englewood Cliffs and Frank Huttle III of Englewood; and Steven M. Goldman, a former state commissioner of banking and insurance.
Early last year the company raised $7.5 million by selling 7,500 preferred shares at $1,000 a share in a private sale. About 65 investors bought in, at a $25,000 minimum. That was one of nine private capital raises prior to the IPO, Chairman and CEO Frank Sorrentino said Tuesday on the phone.
The market for U.S. bank IPOs has been iffy recently, with a sluggish economy and low interest rates depressing earnings.
The ConnectOne IPO prospectus filed with the federal Securities and Exchange Commission said proceeds of the stock sale will be used to make loans and other investments, "to acquire other banks or financial institutions to the extent such opportunities arise" and "for general corporate purposes."
The commercial real estate lending specialist has grown to more than $880 million in assets and eight offices in Bergen, Hudson and Monmouth counties, in part by taking market share from lenders that suffered serious loan problems and clamped down on credit.
It has been able to keep a relatively clean balance sheet through the financial crisis and recession, with low levels of problem loans.
Sorrentino said Tuesday that the ConnectOne offering "shattered the illusion" that there is little appetite for bank stocks.
"I think we've shown if you have a good story and a well-run organization, you can have a multiple to book value," Sorrentino said.
The book value of the shares was $22.27 as of Sept. 30, according to the prospectus. The initial price of $28 was 1.3 times that book value.
"It's a validation that a New Jersey-owned bank has been able to grow in a difficult environment and be able to attract quality capital at a time when few banks are able to do it," Sorrentino said.
Bank consultant Jim Angleton, president of Aegis Financial Services in Miami, was one industry observer who was not impressed by the results of the offering.
"Usually you'd want 2 to 2.2 times book. That would be a successful launch," he said.
ConnectOne Bancorp changed its name from North Jersey Bancorp in the fall, as it was pitching its IPO plan to potential investors. The name of its bank subsidiary North Jersey Community Bank was changed to ConnectOne Bank on Monday.
According to SNL Financial, the last New Jersey-based commercial bank to go public was Liberty Bell Bank in Evesham. It completed its IPO in August 2003.
ConnectOne has granted the underwriters a 30-day option to purchase up to 240,000 more shares, to cover any overallotments, and expects to close the offering on Friday.
Stifel, Nicolaus & Co. Inc. is the sole book-running manager for the offering, Keefe, Bruyette & Woods Inc. is lead manager and Sandler O'Neill & Partners L.P. is a co-manager.
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