BankAtlantic Bancorp Inc.'s chief executive said it has postponed its initial public offering of Ryan Beck & Co. Inc., because of the unit's poor second-quarter results and the lackluster demand for investment banking stocks in general.
Ryan Beck lost $2.1 million in the second quarter, after turning in a $13 million profit in the same quarter last year, BankAtlantic said in its second-quarter earnings report, which was released late Wednesday.
The loss at the investment banking and brokerage unit helped drag the Fort Lauderdale, Fla., parent company's consolidated second-quarter earnings down 66%, to $8.4 million.
BankAtlantic acquired the New Jersey investment bank in 1998, but analysts have long argued that Ryan Beck's erratic earnings have hobbled the company's overall performance and urged BankAtlantic to spin it off or sell it.
In April the $6 billion-asset BankAtlantic said it would take Ryan Beck public but retain a controlling stake.
Investors, though, are not too bullish on investment banking stocks these days. Last week's IPO for Cowen Group Inc., an investment bank and brokerage firm in New York, failed to meet expectations when its shares were priced at $16, well short of the $19-$21 range that had been projected.
In a conference call Thursday with analysts, Alan B. Levan, BankAtlantic's chairman and CEO, said that if Ryan Beck's earnings had been strong or the Cowen IPO had generated more interest, "then I would say we probably would have executed the IPO anyway." However, "the fact is that both of them have disintegrated … and that just doesn't make for a strong coming out party."
Mr. Levan said that he was unsure when Ryan Beck might go public.
Theodore P. Kovaleff, an analyst at Sky Capital LLC in New York, said he was not surprised by BankAtlantic's decision to postpone the Ryan Beck IPO.
"They had to see the writing on the wall after the Cowen deal," Mr. Kovaleff said.
BankAtlantic's retail bank also turned in a less-than-stellar quarter; its earnings decreased 14%, to $12.8 million.
The company said that its lower quarterly earnings resulted from investments in its aggressive marketing campaign for low-cost deposit accounts and a branch expansion program. BankAtlantic plans to open 47 branches by the end of next year.
During the conference call, BankAtlantic acknowledged that such initiatives would come at the expense of short-term earnings, but Mr. Levan said it is "building very strong long-term franchise value in terms of the deposits that we are generating."
BankAtlantic said the number of low-cost deposit accounts opened during the second quarter rose 19% from the same quarter last year, to 58,000.
But Barry McCarver, an analyst at Stephens Inc., pointed out that the account openings had fallen 25% from the first quarter, when 77,000 were opened.
"I was surprised to see it down that much," Mr. McCarver said.
