IPO Report: C1 Financial (BNK)

Francis Gaskins |

C1 Financial (BNK) is based in St. Petersburg, Florida and operates from 28 banking centers and one loan production office on the West Coast of Florida and in Miami-Dade and Orange Counties.

Three other companies are scheduled for the week of Aug. 11, 2014.  The full IPO calendar is available at IPOpremium.

The manager and co-managers are Keefe Bruyette Woods, Raymond James.  The joint managers are Sandler O’Neill + Partners, Wunderlich Securities, Hovde Group, Monroe Financial Partners.

BNK scheduled a $50 million IPO with a market capitalization of $303 million at a price range midpoint of $19 for Thursday, August 14, 2014 on the NYSE.  SEC filings

C1 Financial's IPO Overview

BNK is based in St. Petersburg, Florida and operates from 28 banking centers and one loan production office on the West Coast of Florida and in Miami-Dade and Orange Counties.

BNK is near the top 1% of the fastest growing banks in the country as measured by asset growth, increasing assets from $260 million at December 31, 2009 to $1.4 billion at June 30, 2014.

Valuation of BNK's IPO

Glossary

 

Retained earnings

.

.

$18

     

Per share dilution

.

.

-$7.47

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /net int inc

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

annualizing June 6 mos

       

C1 Financial (BNK)

$304

5.7

56.3

1.6

1.6

26%

             

Conclusion on BNK's IPO

Well regarded, nicely growing regional bank

P/E is relatively high at 56
The price-to-book is moderately attractive at 1.6.

The rating is neutral.

C1's Business

BNK’s name expresses its ideals to put its Clients 1st and its Community 1st. BNK is focused on serving the needs of entrepreneurs, tailoring a wide range of relationship banking services to entrepreneurs and their families, including commercial loans and a full line of depository products.

BNK is based in St. Petersburg, Florida and operates from 28 banking centers and one loan production office on the West Coast of Florida and in Miami-Dade and Orange Counties.

Now the 20th largest bank in the state of Florida by assets and the 19th largest by equity, having grown both organically and through acquisitions, BNK is near the top 1% of the fastest growing banks in the country as measured by asset growth, increasing assets from $260 million at December 31, 2009 to $1.4 billion at June 30, 2014.

Most of Revenue From Loans

BNK generates most of its revenue from interest on loans. BNK’s primary source of funding for its loans is deposits. BNK’s largest expenses are interest on those deposits and salaries plus related employee benefits.

BNK measures its performance through its net interest margin, return on average assets, and return on average common equity, while maintaining appropriate regulatory leverage and risk-based capital ratios.

Economic Overview

BNK’s financial performance is affected by economic conditions generally in the United States and more directly in Florida.

The following discussion summarizes recent economic developments in the United States and Florida in the areas in which BNK operates.

The United States economy grew at a modest pace through the year ended December 31, 2013, accelerating in the second half of 2013, though with very modest growth in economic output in the first quarter of 2014.

Real gross domestic product, or GDP, for the year ended December 31, 2013 grew at an annualized rate of 2.6%, compared to a rate of 2.8% for the year ended December 31, 2012, as indicated by the Bureau of Economic Analysis report published by the U.S. Department of Commerce.

According to the U.S. Bureau of Labor Statistics, the seasonally adjusted unemployment rate for the quarter ended June 30, 2014 was 6.1%, compared to 7.4% for the year ended December 31, 2013 and 7.8% for the year ended December 31, 2012.

Total home sales in the United States, as indicated by the National Association of Realtors, showed signs of weakening with existing home sales at a seasonally adjusted 5.0 million for the rolling twelve months ended June 30, 2014, down from the rolling twelve month total of 5.1 million as of December 31, 2013, and down from 5.2 million for the rolling twelve months ended June 30, 2013.

Inventory levels are up to a 5.5 months’ supply, or 2.3 million units, as of June 30, 2014 from a 5.2 months’ supply as of June 30, 2013. New home sales have increased to a seasonally adjusted annual rate of 504 thousand as of May 31, 2014 from 437 thousand for the year ended December 31, 2013.

Home values, as indicated by the seasonally adjusted Case-Shiller 20 city index, showed an increase of 10.8% from April 30, 2013 to April 30, 2014. Bankruptcy filings, per the U.S. Court Statistics, also improved with total filings down 11.3% for the twelve months ending March 31, 2014, compared to the same period in 2013, with business filings down 15.7% and personal filings down 11.1%, for the twelve months ending March 31, 2014, compared to the same period in 2013.

BNK's Dividend Policy

No dividends are planned.

Intellectual Property

BNK obtained its right to use the “C1” trademark pursuant to an October 2013 trademark assignment agreement; however, BNK is subject to certain geographic restrictions preventing it from using the mark in Maryland, Delaware, the District of Columbia and Virginia through February 2015.

BNK has filed seven non-provisional patent applications with claims directed to certain aspects of its technology and expect to file additional applications in the future.

C1's Competition

BNK competes with numerous commercial banks, savings banks and savings and loan associations, many of which have assets, capital and lending limits larger than those that BNK has or will have upon completion of this offering. While much of BNK’s competition is in the form of local community banks, others competitors have statewide or nationwide presence.

However, C1 Bank’s ability to cultivate profitable complete banking relationships helps to differentiate C1 Bank amongst its competitors.

BNK also competes with large banks in major financial centers and other financial intermediaries, such as consumer finance companies, brokerage firms, mortgage banking companies, insurance companies, securities firms, mutual funds and certain government agencies as well as major retailers, all actively engaged in providing various types of loans and other financial services.

BNK believes that its banking professionals, the personalized service BNK provides for its entrepreneurial clients, and its emphasis on doing what’s right for its clients, community and employees is what distinguishes C1 Bank from its competition.

5% Stockholders

Marcelo Faria de Lima 30.56%

Erwin Russel    16.42%   

Marcio Camargo  13.44%

Trevor R. Burgess         9.49%

                                   

Use of Proceeds

BNK intends to use the $45 million in proceeds from its IPO as follows:

for working capital and other general corporate purposes, including to finance its expected growth, fund capital expenditures, or expand its existing business through investments in or acquisitions of other businesses, although at present BNK does not have any current plans, arrangements or understandings to make any material capital investments or make any material acquisitions.

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
BNK C1 Financial Inc. n/a n/a n/a 0
PPO:CX2 Passport Energy Ltd. n/a n/a n/a n/a

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