A small Florida bank raised $70 million through an initial public offering Wednesday, in what is believed to be the first such deal in the banking sector in two years.

With another one on the way from a Texas bank, some industry observers said more privately held companies could be encouraged to test the thawing capital markets now.

Though none predict an IPO onslaught, they called the warm reception for 1st United Bancorp in Boca Raton notable, given that Florida is among the states hardest hit by the real estate meltdown. The $633 million-asset bank even had enough investor interest to upsize the offering; it initially sought $50 million.

Rudy Schupp, its president and chief executive officer, said 1st United wanted the capital immediately to buy struggling or failed banks in its home state. But he acknowledged that general market conditions for IPOs are less than ideal.

"It was probably a brave thing to do, and it is probably timing that many would not choose," Schupp said. "But from our perspective, the opportunity for growth is now."

1st United started the process of going public earlier this year, and several lawyers and investment bankers said more banks are likely to do so now that the flow of capital into the industry is picking up.

One IPO is already in the works from the $4.4 billion-asset PlainsCapital Corp. in Dallas. It filed with the Securities and Exchange Commission in August to raise up to $140 million.

PlainsCapital executives would not discuss the offering.

Before 1st United, the most recent IPO in the banking industry had been from Encore Bancshares Inc. in Houston in July 2007, according to information provided by Stifel, Nicolaus & Co. Encore raised $41.6 million.

But the capital crunch is not isolated to banks. Over the past two years the IPO market has slowed down across all industries. According to data from IPOfinancial.com, 23 IPOs have priced so far this year, versus 43 in the same period last year and 144 in 2007.

David Menlow, the president of IPOfinancial.com, said it appears the market is beginning to rebound. There were nine deals scheduled to price this week.

"This week is the kickoff to what we expect to be a fairly respectable fourth quarter," Menlow said.

Some said other banks are likely to come to market.

"We think there will be more to come," said Will Luedke, a partner in the Houston office of the law firm Bracewell & Giuliani LLP. "It is abundantly clear now, either through a couple IPOs or a number of private placements, there is capital for banks. We are convinced that capital is available."

But others contend that 1st United was an exception to the IPO freeze.

"I think they were in a unique position," said Jack Greeley, an attorney with Smith MacKinnon Pak in Orlando. "I don't think in today's environment you will start to see a trend, yet."

Most agreed that the ones who succeed in finding investors will likely have a similar profile to 1st United: a clean balance sheet, a good standing with regulators and the chance to use the capital for acquisitions.

"It is a very selective market," said Ben Plotkin, the vice chairman of Stifel, Nicolaus. "You have to have a company that is clean and has an experienced management team and has shown an ability to do deals and leverage the capital. It is a positive sign for the market, but not a green light for all." (Stifel was the lead manager and sole bookrunner for the 1st United's deal.)

Some industry observers said 1st United's stock sale does not fit the standard definition on an IPO because its shares had been on the pink sheets. However, others familiar with the IPO market disagreed with that assessment, arguing that the company has never done a public offering previously and had virtually no stock trades.

Schupp said the company had to register after it bought the $180 million-asset Equitable Bank in Fort Lauderdale last year for $55.6 million in cash and stock. That pushed the number of shareholders above the threshold for a private company.

In the offering Wednesday, 1st United sold its shares at $5 each, a slight discount to tangible book value.

On Wednesday the shares closed at $6.10.

Schupp said the management of 1st United has experience with acquisitions and plans to use it.

The company's three top executives have overseen 31 bank deals in their careers. They also have completed two acquisitions since joining 1st United in 2003, when it had $68 million of assets.

Besides Equitable, the company also acquired most of Citrus Bank from CIB Marine Bancshares Inc. in Pewaukee, Wis. 1st United took the Citrus branches, $188 million in deposits and about $40 million in loans in the deal.

Now the company intends to look for acquisitions in markets where the leadership team — which includes Warren S. Orlando, the chairman, and John Marino, the chief operating officer and chief financial officer — have operated banks before. Before joining 1st United, Orlando co-founded and was CEO and president of the former 1st United Bancorp in Boca Raton, which sold itself to Wachovia Corp. in 2002. That company had grown to $1.2 billion in assets through 11 acquisitions before being sold. Marino was the chief financial officer there.

"In our past, we stretched from the Keys to Orlando and over to Tampa — central and south Florida," Schupp said. "All those markets are appealing to us. Ideally, in this business, it makes sense to stay close to your legacy markets."

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