The much-delayed public offering of a would-be bank holding company in California is back on course, courtesy of a rebounding stock market.

Pacific Community Banking Group - which owns no banks-said in July that it planned to raise $80 million in an IPO in the fall and buy two Riverside County banks with the proceeds. But September's market swoon diminished demand for new bank stocks, suspending Pacific Community's plans.

In an announcement last week, chairman E. Lynn Caswell said the boards of the two sellers - Bank of Hemet in Riverside and Valley Bank in Moreno Valley-have approved a revised offer from the holding company. Pacific originally intended to pay $67.7 million in cash for the two banks, which have combined assets of $375 million.

Though new terms have not been disclosed, Mr. Caswell said the deals would be financed through a public offering likely to take place in February.

"We are pleased that our three organizations have been able to keep this transaction intact, given the volatility and difficult nature of the marketplace in recent months," said Mr. Caswell, the former chairman of Western Bancorp, who formed Pacific Community last summer.

Pacific Community's decision to proceed with its original plan illustrates how far community bank stocks have rebounded.

James Hill, managing director at Sutro & Co. in Los Angeles, said stocks of California community banks with assets ranging from $150 million to $500 million are trading at roughly 13 to 14 times earnings. Though that trails mid-July highs of 17 to 19 times earnings, it is an improvement from the lows of September and early October, when the average community bank stock was trading at less than 10 times earnings.

Demand was so low that at one point last month Mr. Caswell told American Banker he might shelve the public offering and turn to private investors.

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