Within a day after the common stock of the parent company of Reno-based Nevada Security Bank started trading at $11 last week, investors had bid it to near $15.
And executives of The Bank Holdings said they were overwhelmed by demand for the company's initial public offering and now face the challenge of getting money back to investors who weren't able to buy stock.
The issue underwritten by D.A.
Davidson & Co.
of Lake Oswego, Ore., grossed $14.85 million.
After underwriting commissions, proceeds to The Bank Holdings totaled $13.8 million.
The initial offering apparently could have raised far more for the company, which operates a branch in Incline Village along with its headquarters location in South Meadows.
Hal Giomi, chairman of The Bank Holdings, said in a statement that the demand for the shares "far exceeded" the supply.
Along with the shares underwritten by D.A.
Davidson & Co., The Bank Holdings also sold shares directly to buyers who sent a check along with their subscription agreement.
"Unfortunately, we can only sell the number of shares registered in the offering, which made the allocation long and difficult with nearly 500 subscription applications to consider for those shares being sold directly by us," Giomi said.
As a result, Giomi said, the company decided to reduce the number of shares available for each approved purchaser.
Some subscribers were turned away, meanwhile, because they live in states where securities law didn't allow sale of The Bank Holdings stock.
The bank's escrow agent Pacific Coast Banker's Bank of San Francisco last week was preparing to mail back money to disappointed buyers.
"The escrow agent will have to return excess funds to a lot of people," Joe Bourdeau, president of The Bank Holdings, said in the company's statement.
"We certainly are unhappy about that, but there's nothing we can do."
Company officials declined to discuss the oversubscription beyond their prepared statement, citing the advice of their securities counsel.
The fast run-up of the stock put holders of warrants to buy the company's common stock in the money almost immediately.
In the initial public offering,The Bank Holdings sold one warrant along with each five shares of common stock.
The warrant allows the holder to buy a share at $11 two years from now.
The stock is traded on NASDAQ's Small Cap Market under TBHS.The warrants trade under TBHS.
