Venture Financial scraps its $46 million IPO plan
Venture Financial has finally decided to scrapped its $46 million initial public offering (IPO) plan, citing ‘adverse market conditions’.
The latest move was announced by the Washington banking company due to financial crisis and housing market downturn, a day before it is expected to release sharply reduced earnings for the third quarter.
A top company official stated that, Venture IPO filing, made in July 2007, had expired and the bank has made no move to renew it due to recent troubled market scenario.
In addition, Venture has no immediate plans to attempt another IPO, he added.
Venture Bank, which operates 18 branches across the Puget Sound region, has been hit hardly by the housing market downturn and its investments in struggling mortgage giants Fannie Mae and Freddie Mac.
Venture had bought preferred shares of the mortgage giants, having a book value worth $42.3 million but by the beginning of September, the value of those securities had dramatically dropped to about $3.9 million. As a result, the bank expects a loss of $38.4 million in the third quarter.
Recently, the bank has notified that it would delay filing its third quarter earnings report as it tries to figure out how worsening market conditions and declining income have affected its intangible value — including its brand name and reputation, among other factors.
The market experts feel that, the company would report “significantly lower revenues” and “a large loss in the quarter,” due to ownership of Fannie Mae and Freddie Mac stock.
The bank expected to announce its third-quarter earnings on Wednesday.