IPO Report: Allegiance Bancshares (ABTX)

Francis Gaskins |

Allegiance Bancshares IPO, Allegiance Bancshares IPO date, Allegiance Bancshares IPO price, stocks to buy now, IPOs this week, small-cap stock

Allegiance Bancshares (ABTX) is a Texas corporation and a registered bank holding company headquartered in Houston, Texas.

Six other companies are scheduled to IPO for the week of Oct. 5. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Baird and Stephens

Co-managers: Keefe, Bruyette & Woods, Sandler O’Neill + Partners, and L.P.

End of lockup (180 days): Tuesday, April 5, 2016

End of 10-day quiet period: Sunday, October 18, 2015

ABTX scheduled a $60 million IPO with a market capitalization of $286 million at a price range midpoint of $23 for Thursday, Oct. 8, 2015 on Nasdaq.

Allegiance Bancshares (ABTX) IPO Summary

ABTX is a Texas corporation and a registered bank holding company headquartered in Houston, Texas. Through its wholly-owned subsidiary, Allegiance Bank, ABTX provides a diversified range of commercial banking services primarily to Houston metropolitan area-based small to medium-sized businesses and individual customers.

Allegiance Bancshares (ABTX) IPO Valuation

Glossary
Pre-IPO grade-score summary
http://gaskinsco.com/scr-rate.htm
Many IPOs in today’s environment are graded C+ and scored 7.
If the pre-IPO grade is below C+ or the score is below 7,
then our analysts may have some concerns about the company’s
outlook and/or its market segment.
If the pre-ipo grade is above C+ or the score is above 7,
then our analysts believe the company’s overall business outlook is very favorable.
C = unprofitable, C+ = profitable

Accumulated earnings (mm)

.

.

$26

     

Per share dilution

.

.

-$6.93

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Allegiance Bancshares (ABTX)

$285

4.0

17.8

1.2

1.4

21%

             

Allegiance Bancshares (ABTX) IPO Conclusion

Neutral plus, C+, 6.5

Price to book of 1.2

P/E of 18 based on 2014, no financial updates

Price to sales of 4

No dividends

Allegiance Bancshares (ABTX) Business

ABTX is a Texas corporation and a registered bank holding company headquartered in Houston, Texas. Through its wholly-owned subsidiary, Allegiance Bank, ABTX provides a diversified range of commercial banking services primarily to Houston metropolitan area-based small to medium-sized businesses and individual customers.

ABTX believes the size, growth and increasing economic diversity of the Houston metropolitan area, when combined with its super-community banking strategy, provides us with excellent opportunities for long-term, sustainable growth.

ABTX’s super-community banking strategy is designed to foster strong customer relationships while benefitting from a platform and scale that is competitive with larger local and regional banks.

ABTX believes this strategy presents a significant market advantage when serving small to medium-sized business customers and enables ABTX to attract talented bankers.

ABTX currently operates 16 full-service banking locations in the Houston metropolitan area and two full-service banking locations in Central Texas.

ABTX has experienced significant growth since ABTX began banking operations in 2007, through both organic growth, including de novo branching, and two whole-bank acquisitions.

Most recently, on January 1, 2015, ABTX completed the acquisition of Farmers & Merchants Bancshares, Inc. (“F&M Bancshares”) and its subsidiary bank, Enterprise Bank (“Enterprise Bank”). As of June 30, 2015, ABTX had total assets of $1.95 billion, total loans of $1.56 billion, total deposits of $1.63 billion and total stockholders’ equity of $201.8 million.

ABTX’s History and Growth

ABTX commenced banking operations as Allegiance Bank in October 2007. ABTX is led by its co-founder, Chairman and Chief Executive Officer, George Martinez, and co-founder and President,

Steven F. Retzloff, who founded Allegiance Bank on the premise that a significant opportunity existed for a bank employing their super-community banking strategy in the Houston metropolitan area. Mr. Martinez is an experienced banker who previously co-founded and led Houston-based Sterling Bancshares, Inc. (“Sterling Bancshares”), a multi-billion dollar in assets publicly traded bank holding company acquired by Comerica Bank in 2011.

Mr. Martinez led Sterling Bancshares from its inception in 1980 to 2001 serving as its Chief Executive Officer, and continued as Chairman of the Board until 2004.

Mr. Retzloff served on the board of directors of Sterling Bancshares from 1987 to 2006, including as Chairman of the Board from 1990 to 1992 and 2004 to 2005.

Messrs. Martinez and Retzloff oversee an experienced senior management team, many of whom they worked with at Sterling Bancshares, including Ramon A. Vitulli, III, the President of Allegiance Bank, and Daryl D. Bohls, the Chief Credit Officer of Allegiance Bank.

Since ABTX began operations in 2007, ABTX has expanded its footprint to 18 branch locations and developed a strong lending team of approximately 60 lenders.

ABTX experienced strong growth from its formation and achieved profitability beginning in 2010, its third full year of operations.

From December 31, 2007 to June 30, 2015, ABTX’s book value per common share has increased from $9.62 to $19.37 per share, and its tangible book value per common share has increased from $9.62 to $14.79 per share.

Allegiance Bancshares (ABTX) Intellectual Property

Nothing

Allegiance Bancshares (ABTX) Competition

The Bank faces strong direct competition for deposit funds, lending opportunities, talented lenders, acquisition candidates and other financial-related services. ABTX compete with other commercial banks, thrifts and credit unions.

ABTX competes for loans primarily with other commercial banks, savings banks, savings and loan associations, credit unions, finance companies, mutual funds, insurance companies, brokerage and investment banking firms, asset-based nonbank lenders and certain other nonfinancial entities, including retail stores which may maintain their own credit programs and certain governmental organizations, all of which are actively engaged in providing various types of loans and other financial services that may offer more favorable financing than ABTX is able to offer.

Although some of ABTX’s competitors are situated locally, others have statewide or nationwide presence. ABTX believes that it is able to compete effectively with other financial institutions because of its banking professionals, the range and quality of products that ABTX offers, its responsive decision-making with respect to loans and its emphasis on customer service, establishing strong customer relationships and building customer loyalty that distinguishes us from its competitors.

Allegiance Bancshares (ABTX) 5% Shareholders Pre-IPO

None

Allegiance Bancshares (ABTX) Dividends

No dividends are planned.

Allegiance Bancshares (ABTX) IPO Use of Proceeds

ABTX expects to receive $54 million from its IPO and use it for the following:

in part, to repay $28.1 million of outstanding indebtedness under a revolving credit facility, plus accrued and unpaid interest, which outstanding indebtedness was $28.1 million as of June 30, 2015.

On December 22, 2014, ABTX entered into a $30.0 million revolving credit facility to refinance its existing term loan and for certain costs related to the acquisition of F&M Bancshares and to repay approximately $18.0 million of debt owed by F&M Bancshares to certain of its shareholders.

ABTX’s revolving credit facility matures in December 2021 and its borrowings bear interest at the Prime Rate minus 25 basis points per annum, which equated to approximately 3.00% at June 30, 2015.

ABTX plans to use any remaining net proceed from this offering to support its long-term growth by enhancing its capital ratios to permit growth initiatives and future strategic acquisitions and for general working capital and other corporate expenses

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
ABT Abbott Laboratories 37.90 0.30 0.80 7,252,818

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