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Non-Tech : USAB - USABancShares.com -- Ignore unavailable to you. Want to Upgrade?

To: Kevin McKenzie who wrote (1560)	7/17/1999 3:18:00 AM
From: Tom Borst	Read Replies (2) \| Respond to of 2419

Why does anyone think that a secondary offering is dilutive? If the (insiders) are the largest shareholders, and Tepper is the single largest . . . why would he want to de-value his stock? If you sell stock at a premium to book value, it's immediately appreciated. Simple rule of accounting. Current shareholders would experience material appreciation to their book value . . . rather than dilution. This offering is likely to be sold to internet investors who will value USAB as an internet company . . . not as a traditional bank. Sure a traditional valuation would be dilutive at current prices . . . but Tepper wouldn't offer USAB to anyone under such terms. Maybe some of you are seriously confused with other types of offerings that are brought to market cheaply in order to sell the stock (generally troubled companies). It is not permissible to disclose pricing expectations in a filing and USAB will not do so until a few days before closing. Anything USAB can accomplish prior to that will obviously have an important effect on final pricing. Adding at least $30,000,000 in new (no cost) funding will give USAB one heck of an arsenal. No arsenal, no national brand. If this isn't an important step in the right direction, I don't know what is. Wall Street is telling us that USAB is a marketable company . . . ever heard of any other "community" bank that filed an offering for more than the entirety of their existing capital? Investors would laugh if anyone ever did . . This is USAB's third time to market. Their first capital raise was at an adjusted price of approximately $2.75; their second was at $4.00 (accretive to the first shareholders); their third offering filed today will reflect their performance in the marketplace over the coming weeks and can be incredibly appreciative. Most of NetB@nk's earnings come from the reinvestment of their capital (they keep doing offerings), each at higher and higher prices. This offering would almost double USAB's earnings if they did nothing else at all . . . The fact that a major (one of the country's largest) investment banking firm is underwriting USAB is also important. Major institutional investors won't get involved with a limited float, and they prefer to get in early rather than late. If they want to own a piece of USAB, they will have to pay for it. Then it's USAB's job to make sure their investment was a good one . . . Remember, $30,000,000 in new capital adds about $2,500,000 to the bottom line for USAB (at an 8% reinvestment rate) This is twice what NetB@nk earned last year (without any tax advantage). It will give USAB over $50,000,000 in capital and a lot of room to grow (under current FDIC rules, USAB will almost be able to grow to one billion in assets as a result). This new capital will be a great thing, and obviously couldn't be mentioned yesterday because of SEC limitations. If Ken could have mentioned it, he would have because it's critical to USAB's ongoing growth and business plan and investors would have been (or should have been) thrilled. When a day trader sees major institutional interest in a dot com company, it should suggest something . . .