Touted as the world's first Federal Reserve Board-approved internet bank, Security First Network Bank (SFNB) was one of 1996's hottest internet IPOs. The $48.8 million deal, sole-managed by Friedman Billings Ramsey, a Virginia-based investment-banking boutique, was priced at $20 a share. Some early investors may have done well, as the share price more than doubled to $45 soon after launch. But the virtual bank, which had garnered only about $55 million in deposits by the end of 1997, was just a little too far ahead of its time. The Atlanta-based company focused on developing its widely acclaimed software, and didn't have anything left over to build the bank. Losses for 1996 and 1997 totalled $50 million, $3 million more than SFNB had raised during the public offering. The stock sank into the single digits last year.
Royal Bank of Canada came to SFNB's rescue last month, agreeing to buy the banking assets for $13 million, a small premium above book value, but little comfort to investors in the IPO. Shares only managed to climb back to just over $13, on news that a sale was planned. SFNB's software-development subsidiary, Security First Technologies (S1), will retain its independence.