IPO Report: Talmer Bancorp (TLMR)

Francis Gaskins |

Talmer Bancorp (TLMR) is a community bank holding roll-up headquartered in Troy, Michigan

Seven other companies are scheduled for the week of February 10, 2014.  The full IPO calendar is available at IPOpremium.

The manager and joint managers are Keefe Bruyette Woods, J.P. Morgan.  The co-managers are  Raymond James, RBC Capital Markets, Sterne Agee, Sandler O'Neill.
SEC Documents

TLMR scheduled a $210 million IPO with a market capitalization of $945 million at a price range midpoint of $13.50 for Wednesday, February 12, 2014, on the Nasdaq.

Overview

Between April 30, 2010 and December 31, 2013, TLMR successfully completed five community bank acquisitions totaling $5 billion in assets and $4.9 billion in liabilities.

In addition, on January 1, 2014, TLMR acquired Michigan Commerce Bank, which consists of four former bank subsidiaries of Financial Commerce Corporation that had, in the aggregate, total assets of $947.4 million and total liabilities of $897.1 million at September 30, 2013.

Shareholders intend to sell 76%% of the IPO.

Valuation

Glossary

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing Sept 3 mos

Cap (mm)

Net Int inc

Erngs

BkVlue

TanBV

in IPO

Talmer Bancorp (TLMR)

$945

5.4

90.0

1.5

1.5

22%

             

Conclusion

The rating is neutral to positive, because there are high regulatory barriers to competition, although 1.5 price-to-book is high, 90x Sept qtr earnings is high.  Shareholders are selling 76% of the IPO.

Business

TLMR is a bank holding company headquartered in Troy, Michigan.

Between April 30, 2010 and December 31, 2013, TLMR successfully completed five community bank acquisitions totaling $5 billion in assets and $4.9 billion in liabilities.

In addition, on January 1, 2014, TLMR acquired Michigan Commerce Bank, which consists of four former bank subsidiaries of Financial Commerce Corporation that had, in the aggregate, total assets of $947.4 million and total liabilities of $897.1 million at September 30, 2013.

In connection with the acquisition, Michigan Commerce Bank changed its name to Talmer West Bank. Through its wholly-owned subsidiary banks, Talmer Bank and Trust ("Talmer Bank"), First Place Bank and Talmer West Bank,

TLMR is a full service community bank offering a full suite of commercial and retail banking, mortgage banking, wealth management and trust services to small and medium-sized businesses and individuals primarily within Southeastern Michigan, Western Michigan and in smaller communities in Northeastern Michigan, as well as Northeastern and Eastern Ohio, Northern Indiana, South Central and Southeastern Wisconsin and Chicago, Illinois.

Given TLMR’s strong capital position, local market knowledge and experienced leadership team, management believes it has a competitive advantage in the markets that TLMR serves.

TLMR has retained a seasoned community bank management team with executive management experience in community banks located in its Midwest markets.

Growth plan
With a well-managed, financially sound and well-capitalized bank, management believes it has significant opportunities to expand in the current market environment through organic growth and strategic acquisitions of banking franchises in its concentrated markets of Michigan and Ohio, as well as other markets in Indiana, Wisconsin and in the Chicago Metropolitan area of Illinois.

Dividend policy
No dividends planned.

Competition

TLMR competes with commercial banks, credit unions, savings institutions, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds and other mutual funds, as well as super-regional, national and international financial institutions that operate offices in its market areas and elsewhere.

5% stockholders

Investment funds affiliated with Greenlight Capital, Inc. 5.1%

Howard Hughes Medical Institute  6.7%

Investment funds affiliated with Manulife Asset Management (US) LLC  9.4%

Universities Superannuation Scheme Limited  9.4%

Investment funds affiliated with WL Ross & Co. LLC  24.1%       

Use of proceeds

Shareholders expect to receive 76% of the IPO proceeds.  TLMR itself expects to net $44.2 million from its IPO. Proceeds are allocated as follows:

Talmer Bancorp, Inc. borrowed $35 million under a senior unsecured line of credit to support the acquisition and recapitalization of Talmer West Bank. The line of credit matures on December 19, 2014 and accrues interest at an annual rate of 3.0% plus the one-month LIBOR rate. TLMR will use a portion of its net proceeds from this offering to repay in full the amount TLMR drew on the line of credit, plus accrued and unpaid interest.

The remainder is allocaed to general corporate purposes, including to support organic growth, as well as possible acquisitions of depository institutions through traditional open-bank and FDIC failed-bank acquisitions, and through selective acquisitions of financial services companies or of assets, deposits and branches that TLMR believes present attractive risk-adjusted returns and provide a strategic benefit to TLMR’s growth strategy.

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
TLMR Talmer Bancorp Inc. n/a n/a n/a 0
CNMGA Canam Group Inc n/a n/a n/a 0

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