TowneBank stock offering delivers almost $60 million

TowneBank said Wednesday that it raised almost twice the amount of capital it had sought from a public stock offering announced in July.

The Portsmouth-based community bank said the sale of more than 598,000 convertible preferred shares to its existing stockholders and depositors brought in $59.8 million. The bank announced plans late last month to raise as much as $30 million of fresh capital to help fund a surge in loan demand.

One week after the announcement, TowneBank expanded the size of its offering to $55 million, citing heavy demand for the shares from existing stockholders. Investor interest in the offering came amid a slump in the prices of many bank stocks and concern about the outlook for banks' earnings.

TowneBank, which sold the new preferred shares for $100 each, conducted the offering on its own rather than using an investment banking firm. Because of the demand from existing shareholders and depositors, the bank didn't make the offering available to the general public, something it had considered doing.

One attraction of the convertible preferred shares was an 8 percent annual dividend, which TowneBank said will be paid quarterly beginning Dec. 1.

The bank said it set the price for converting the preferred shares to common shares at $18.56, the closing price of its common stock on Tuesday. This is the equivalent of 5.388 common shares for each of the new convertible preferred shares. TowneBank said any preferred shares still outstanding on Sept. 1, 2013, will automatically be converted to common stock regardless of the price of its common shares.

The bank's common shares closed Wednesday at $19.06, up 50 cents.

Tom Shean, (757) 446-2379, tom.shean@pilotonline.com