IPO Report: Radius Bancorp (RADB)

Radius Bancorp (RADB) is the holding company for First Trade Union Bank, which is headquartered in Boston, Massachusetts.

Ten other companies are scheduled to IPO for the week of Nov. 3, 2014.  The full IPO calendar is available at IPOpremium.

SEC Documents

Manager, Joint-managers: Baird, Sandler O’Neill + Partners, L.P.
Co-managers: Janney Montgomery Scott, Wunderlich Securities

End of lockup (180 days):
End of 25-day quiet period:

RADB scheduled a $64 million IPO with a market capitalization of $71 million at a price range midpoint of $12.75 for the week of November 3, 2014 on Nasdaq.

RADB IPO Summary

RADB is the holding company for First Trade Union Bank, or the Bank, which is headquartered in Boston, Massachusetts.

RADB Valuation

Glossary

Conclusion for RADB IPO 

Neutral plus, C+, 6.5

P/E of 27

1 times book is attractive

Price to net interest income of 3.6

Bank conversion, selling 91% on the IPO

RADB's Business

RADB is the holding company for First Trade Union Bank, or the Bank, which is headquartered in Boston, Massachusetts.

RADB provides financial products and services on a regional and nationwide basis, including through its website, www.ftub.com, and mobile banking and payment apps. RADB engages in commercial and consumer banking but its business is different from most community banks because:

RADB’s retail banking growth strategy is based on providing financial products and services through virtual banking solutions, including online and mobile banking, to meet emerging consumer banking demands, rather than on traditional branches.

RADB’s virtual banking solutions allow it to develop consumer client relationships nationwide without the need for physical branch locations and include a paperless account opening process, unlimited ATM rebates, overdraft protection and transaction-oriented mobile banking apps for smartphones and tablets.

RADB uses affinity-based strategic marketing partnerships to pursue large numbers of deposit relationships utilizing sophisticated marketing analytics in combination with its virtual banking solutions.

RADB attracts deposits from and offer related treasury management services to pension fund, union, municipal and not-for-profit entities. RADB’s sophisticated treasury management services, coupled with the deep knowledge and capabilities RADB has developed through its historical provision of such services, position it to continue to penetrate these markets to access high quality, low cost deposit funding.

RADB’s diverse base of loan clients, which includes traditional community bank clients, such as commercial and commercial real estate borrowers, is enhanced by its commitment to specialty financing areas, including SBA lending, lending to high net worth individuals for the purchase of luxury yachts, and other types of lending.

RADB’s virtual banking strategy will allow it to achieve increased economies of scale as RADB grows its business.

Competition

RADB’s competition in making loans comes principally from nationwide, regional and large community banks.

Many of these have a significant number of branch offices in the areas in which RADB operates. Aggressive pricing policies by competitors and terms of RADB’s competitors’ loans, especially during a period of prolonged low interest rates, may result in a decrease in its loan origination volume and affect the yields on loans. RADB competes for loans principally through the quality of its responsive service, products and services RADB provides, competitive interest rates, loan fees and other loan terms.

5% Shareholders pre-IPO

New England Carpenters’ Pension Fund             32.1%    

New England Carpenters’ Guaranteed Annuity Fund        17.9% 

Empire State Carpenters’ Pension Fund 50%     

RADB Dividends

No dividends are planned.

Use of Proceeds

RADB expects to receive $14 million from its IPO and use it for the following:

for general corporate purposes, which may include maintaining liquidity at the holding company, providing equity capital to the Bank to fund balance sheet growth or working capital needs and its working capital needs. In addition, RADBintends to retire the indebtedness relating to its junior subordinated debentures, which are redeemable, at RADB’soption, on any quarterly dividend payment date beginning December 22, 2014.