PlainsCapital to Float First Bank IPO in 2 Years

PlainsCapital Bank Holding Company (PCB), the 9th largest bank in Texas which provides banking, mortgage and advisory services, plans to price its IPO this week. It will be the first U.S. bank to go public in two years.

Business Overview (from prospectus)

We are a Texas corporation and a financial holding company registered under the Bank Holding Company Act of 1956 (as amended, the “Bank Holding Company Act”), as amended by the Gramm-Leach-Bliley Act of 1999 (the “Gramm-Leach-Bliley Act”). Five members of our senior executive team have worked together for the last 21 years. We have paid constant or increased dividends to our shareholders for each of the past 20 years and have been profitable for each of those years. For the years 1990 though 2008, our consolidated assets increased from $346.0 million to $4.0 billion and our consolidated net income increased from $2.0 million to $24.1 million, representing a compounded annual growth rate of 14% and 15%, respectively. As of September 30, 2009, we employed approximately 2,600 people in 211 locations in 36 states across our three business segments.

We provide the personalized client service and responsiveness most often associated with smaller financial institutions while offering the sophisticated products and services frequently associated with larger financial institutions. In addition to traditional banking services, we also provide wealth and investment management, treasury management, capital equipment leasing, residential mortgage lending, investment banking, public finance advisory services, fixed income sales and trading, asset management and correspondent clearing.

Offering: 15 million shares at $14-$16 per share. Net proceeds of approximately $142.0 million will be used to redeem, for approximately $92 million, our Series A and Series B Preferred Stock that the company issued to the U.S. Treasury pursuant to the U.S. Treasury’s Capital Purchase Program, at their $1,000 per share liquidation preference, plus accrued and unpaid dividends; to repay debt and for general corporate purposes.

Lead Underwriters: J.P. Morgan (JPM), Fox-Pitt Kelton

Financial Highlights:

Consolidated net income for the third quarter in 2009 was $9.7 million, or $0.25 per diluted share, compared with $8.1 million, or $0.31 per diluted share, for the third quarter in 2008... Net interest income increased $9.1 million for the third quarter of 2009 and $23.2 million for the nine months ended September 30, 2009 compared with the corresponding periods in 2008.... Noninterest expense increased $49.8 million for the third quarter of 2009 and $135.7 million for the nine months ended September 30, 2009 compared with the corresponding periods in 2008... Employees’ compensation and benefits increased $32.8 million for the third quarter of 2009 and $89.9 million for the nine months ended September 30, 2009 compared with the corresponding periods in 2008.

Competition:

We face significant competition with respect to the business segments in which we operate and the geographic markets we serve. Our lending and mortgage origination competitors include commercial banks, savings banks, savings and loan associations, credit unions, finance companies, pension trusts, mutual funds, insurance companies, mortgage bankers and brokers, brokerage and investment banking firms, asset-based non-bank lenders, government agencies and certain other non-financial institutions. Competition for deposits and in providing lending and mortgage origination products and services to businesses in our market area is intense and pricing is important.

Additionally, other factors encountered in competing for savings deposits are convenient office locations and rates offered. Direct competition for savings deposits also comes from other commercial bank and thrift institutions, money market mutual funds and corporate and government securities which may offer more attractive rates than insured depository institutions are willing to pay. Competition for loans includes such additional factors as interest rate, loan origination fees and the range of services offered by the provider. While the competition that we face for in our banking and mortgage origination segments is intense, the competition that we face varies based upon the market in which we operate. For example, our banking segment faces less competition in the Lubbock market than it does in the Dallas/Fort Worth metroplex.

Additional Resources:

• Company website
• BloggingStocks: 'Plains Capital: An IPO to payoff a TARP loan?'
• AP: 'PlainsCapital set for first US bank IPO in 2 years'