Silver State slices stock offering

The luster is coming off the proposed initial public stock offering for $1.38 billion asset Silver State Bancorp, as the number of shares and the price of the shares is cut.

The Henderson-based banking company was planning to sell 3.2 million shares at $22 to $24 a share.

On Friday, Silver State whittled the planned offering price range to $19 to $21 a share. It also slashed the number of shares offered to 1.5 million.

The total gross proceeds at $21 a share would be $31.5 million, less than half of the $76.8 million proceeds at the top of the price range quoted for 3.2 million shares.

Silver State was proposing to sell as many as 3.8 million shares for as much as $90 million earlier this month.

Analysts attribute Silver State’s stock offering woes in large part to terrible timing.

Stock prices of small banks have been on a downhill slope this year. Wall Street is worried about a subprime mortgage loan debacle around the country and in Las Vegas. And Las Vegas, real estate brokers are struggling to unload a large and stagnant inventory of single-family houses amid fears that housing prices must fall before stabilizing.

"There’s no secret to the fact that Wall Street has been concerned about the real estate companies. They have been concerned about problem loans," said David Ehlers, chairman of Las Vegas Investment Advisors.

No one knows how big the losses will be for subprime loans, which are loans to borrowers with weak credit ratings. Nor does anyone know how much further real estate prices will drop in Southern Nevada, Ehlers said.

Corey Johnson, CEO of Silver State, did not return calls for comment about the stock offering. But in an unusual move late Friday, the Silver Sate announced that preliminary results showed its second-quarter net income increased 20.7 percent, to $6.2 million from $5.1 million in the second quarter. Earnings per share were 44 cents for the quarter, compared with 37 cents a year ago. The company said it would announce its "final financial results" later this month.

"We continued to benefit from the strong commercial real estate environment in both the Las Vegas and the Phoenix/Scottsdale markets," Johnson said in a statement.

Silver State has focused on construction and land development loans, counting $620.2 million at the end of last year, compared with $369.2 million a year earlier.

Single-family residential loans at Silver State totaled $80.3 million at the end of last year, up from $13.7 million a year ago. Commercial real estate loans totaled $206.7 million, about the same as a year earlier.

Wall Street, meanwhile, is hammering the shares of all three publicly held banking companies based in Southern Nevada.

Silver State shares, which trade in the over-the-counter market, have collapsed 19 percent this year. Las Vegas-based Western Alliance Bancorp, a $4.7 billion asset holding company for banks in Nevada, Arizona and California, has watched its stock price fall 22 percent. Shares in Community Bancorp, a $1.7 billion Las Vegas banking company, have plunged 8 percent this year.

The Nasdaq Bank Index, which reflects the price of small regional banks, also has fallen 8 percent this year.

In addition, Silver State is dealing with a special problem of its own: Southwest Exchange, a financial services company with accounts at Silver State, failed in January and owes clients a $95 million. Silver State is named as a defendant in some lawsuits against Southwest Exchange. While Silver State says the lawsuits lack merit, the lawsuits could cause substantial legal fees.

Shares Silver State edged down 4 cents, or 0.19 percent, to close at $20.95 on Friday. The Nasdaq Bank Index was off 8.28, or less than 0.3 percent, at 3,144.68.