IPO Report: Equity Bancshares (EQBK)

Francis Gaskins |

Equity_Bank.jpgEquity Bancshares (EQBK) is a bank holding company headquartered in Wichita, Kansas. EQBK’s wholly-owned banking subsidiary, Equity Bank, provides a broad range of financial services primarily to businesses and business owners as well as individuals through its network of 25 full service branches located in Kansas and Missouri.

Five other companies are scheduled for the week of Nov 9. The full IPO calendar is available at IPO Premium.

SEC Documents

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

End of lockup (180 days): Monday, May 9, 2016
End of 25-day quiet period: Sunday, December 6, 2015

EQBK scheduled a $41 million IPO with a market capitalization of $154 million at a price range midpoint of $23 for Wednesday, Nov. 11, 2015 on Nasdaq.

Summary

EQBK is a bank holding company headquartered in Wichita, Kansas. EQBK’s wholly-owned banking subsidiary, Equity Bank, provides a broad range of financial services primarily to businesses and business owners as well as individuals through its network of 25 full service branches located in Kansas and Missouri.

Valuation

Glossary

Accumulated deficit (mm)

.

.

-$2.4

     

Per share dilution

.

.

-$7.96

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Equity Bancshares (EQBK)

$154

3.5

15.4

1.1

1.5

27%

annualizing June 6 mos

       
             

Conclusion

Neutral Plus

Price to book of 1.1

Price to tangible book of 1.5

P/E of 15.4

9% top rev growth

5% net income growth

Business

EQBK is a bank holding company headquartered in Wichita, Kansas. EQBK’s wholly-owned banking subsidiary, Equity Bank, provides a broad range of financial services primarily to businesses and business owners as well as individuals through its network of 25 full service branches located in Kansas and Missouri.

As of June 30, 2015, EQBK had, on a consolidated basis, total assets of $1.4 billion, total deposits of $1.0 billion, total loans of $828.5 million (net of allowances) and total stockholders’ equity of $121.7 million. EQBK has been profitable nine out of the last ten years and each of the last five years.

EQBK’s principal objective is to increase stockholder value and generate consistent earnings growth by expanding its commercial banking franchise both organically and through strategic acquisitions.

History

EQBK was founded in November 2002 by its Chairman and CEO, Brad S. Elliott. Mr. Elliott believed that, as a result of in-market consolidation, there existed an opportunity to build an attractive commercial banking franchise and create long-term value for its stockholders.

Following thirteen years’ experience as a finance executive, including serving as a Regional President for a Kansas bank with over $1.0 billion in assets, Mr. Elliott implemented his banking vision of developing a strategic consolidator of community banks and a destination for seasoned bankers and business persons who share EQBK’s entrepreneurial spirit.

In 2003, EQBK raised capital from 23 local investors to finance the acquisition of National Bank of Andover in Andover, Kansas.

At the time of EQBK’s acquisition, National Bank of Andover had $32 million in assets and was subject to a regulatory enforcement agreement with the Office of the Comptroller of the Currency, or the OCC.

Subsequent to its acquisition of National Bank of Andover, EQBK changed its name to Equity Bank and instilled in its commercial and retail staff its entrepreneurial spirit and disciplined credit culture. Within eight months of the acquisition, the enforcement action with the OCC was terminated.

Intellectual Property

Nothing

Competition

EQBK competes for loans, deposits, and financial services in all of its principal markets. EQBK competes directly with other bank and nonbank institutions located within its markets, Internet-based banks, out-of-market banks, and bank holding companies that advertise in or otherwise serve EQBK’s markets, along with money market and mutual funds, brokerage houses, mortgage companies, and insurance companies or other commercial entities that offer financial services products.

Competition involves efforts to retain current customers, obtain new loans and deposits, increase the scope and type of services offered, and offer competitive interest rates paid on deposits and charged on loans.

Many of EQBK’s competitors enjoy competitive advantages, including greater financial resources, a wider geographic presence, more accessible branch office locations, the ability to offer additional services, more favorable pricing alternatives, and lower origination and operating costs.

5% Shareholders Pre-IPO

Entities affiliated with Patriot Financial Partners, L.P.      9.6%

Endicott Opportunity Partners III, L.P.     9.6%

Entities affiliated with Compass Island Investment Opportunities Fund A, L.P.      9.6%

Brad S. Elliott   7.6%

Wayne K. Goldstein       9.6%    

Dividends

No dividends are planned.

Use of Proceeds

EQBK expects to receive $30 million from its IPO and use it for the following:

$16.4 million of the net proceeds to redeem, as promptly as practicable following the completion of this offering, the outstanding 16,372 shares of Series C preferred stock that EQBK issued to the U.S. Department of Treasury in August 2011 in connection with the Small Business Lending Fund Program.

Although EQBK intends to use a portion of the net proceeds of this offering to redeem all outstanding shares of its Series C preferred stock as promptly as practicable following the completion of this offering, the redemption is subject to regulatory approval, and accordingly, no assurance can be given as to when EQBK will be able to redeem such shares, if at all. EQBK intends to use the remaining net proceeds (which will be approximately $14.2 million) to support its organic growth and for other general corporate purposes, including to fund potential future acquisitions of bank and non-bank financial services companies that EQBK believes are complementary to its business and consistent with its growth strategy and to maintain its capital and liquidity ratios at acceptable levels, including following acquisitions or as a result of organic growth.

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

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