Shares of BCSB Bankcorp Inc. plunged Tuesday after the Baltimore mutual holding company said that its planned conversion to a 100% stock-owned company has been put on hold due to weak demand for its shares.
The $645 million-asset company, which announced its conversion plan in February, said in a statement Monday that it has asked its independent appraiser to do a new appraisal of the company's value and that, as a result, it would return any funds it has raised in its initial public offering to date.
President Joseph J. Bouffard said in a statement late Monday that he and BCSB's board were "very disappointed" that the company was unable to complete the stock offering. Though the company has no exposure to subprime mortgages, he said, turmoil in the credit markets has diminished investors' interest in financial institution stocks, and "that, in turn, has impacted BCSB's ability to complete its second-step conversion."
Late Tuesday, BCSB's shares were down 7% from Monday's close, at $6.51. Trading was nearly 20 times the typical volume.
BCSB, the parent of Baltimore County Savings Bank, had planned to sell about 3 million shares of its stock but, as of Oct. 19, had received orders for less than 600,000 shares — even after extending the IPO deadline by three weeks.
The company said Monday that it still hopes to complete the second-step conversion in the first quarter, pending the reappraisal, a regulatory review, and shareholder approval.
BCSB reported a net loss of $2.4 million in the fiscal year ended Sept. 30, compared to a loss of $7.9 million in the previous fiscal period.
