Talmer Bancorp Inc (TLMR), a bank holding company seeking to create a regional banking franchise in the Midwestern United States, plans to raise $210 million in its upcoming IPO on Wednesday.
The Troy, Michigan-based firm will offer 15.6 million shares (including 76% insider shares) at an expected price range of $12.50-$14.50 per share. If the IPO can find the midpoint of that range at $13.50 per share, TLMR will command a market value of $1.0 billion.
TLMR filed on January 10, 2014.
Lead Underwriters: J.P. Morgan Securities LLC, Keefe Bruyette & Woods Inc
Underwriters: Raymond James and Associates Inc, RBC Capital Markets LLC, Sandler O'Neill and Partners LP, Sterne Agee and Leach Inc
Summary of Talmer Bancorp Business
TLMR is a bank holding company attempting to establish a Midwestern United States banking franchise through organic growth, as well as the acquisition of other banks. Between April 30, 2010 and December 31, 2013, TLMR completed five bank acquisitions, which totaled $5.0 billion in assets and $4.9 billion in liabilities. TLMR also acquired Michigan Commerce Bank on January 2014; it has since changed its name to Talmer West Bank. The firm now owns three subsidiary banks, including Talmer Bank and Trust and Talmer West Bank, both Michigan state-chartered banks, and First Place Bank, a federal savings association. These banks operate through 94 branches and 14 lending offices.
WL Ross is a significant shareholder in TLMR which we believe is a big positive on getting this IPO launched.
TLMR offers the following figures in its S-1 balance sheet for the nine months ended September 30, 2013:
Net Income: $86,005,000.00
Total Assets: $4,741,945,000.00
Total Liabilities: $4,135,114,000.00
Stockholders' Equity: $606,831,000.00
Net income for the nine months ended September 30, 2013 included a one-time bargain purchase gain of $71.7 million resulting from the acquisition of First Place Bank. As of September 30, 2013, TLMR's total loans were approximately $2.9 billion, and total deposits were approximately $3.7 billion.
TLMR must compete to make loans and for deposits with numerous other financial institutions present in its areas of operation. These include both banking and non-banking competitors, many of which are more established and have greater financial resources than TLMR. Competitors include other regional banks, like Huntington Bancshares (HBAN) and Fifth Third Bancorp (FITB), as well as national banks like Bank of America (BAC) and JPMorgan Chase (JPM).
President and CEO David Provost has served in his current positions since 2009, and was also appointed CEO of Talmer Bank in early 2008. He previously served as Chairman and CEO of The PrivateBank-Michigan, then a subsidiary of PrivateBancorp Inc, as President and CEO of Bloomfield Hills Bancorp, and as Chairman and CEO of The Private Bank. He also worked for 13 years in various capacities at Manufacturers National Bank of Detroit and Manufacturers National Bank of Novi, now known as Comerica Bank. Mr. Provost serves as a member of the Board of Directors and Chairman of the Audit Committee for Plastipak Holdings, Inc.
We're optimistic about this IPO and rate the deal a buy in the proposed price range of $12.50 to $14.50.
TLMR's income figures have been inflated by its recent acquisition of First Place Bank; however, discounting this one-time gain, the company is firmly in the black. We're encouraged by the firm's management team and WL Ross' involvement , which have significant experience both in the banking world at large-and specifically in the region in which TLMR operates. Though the 76% insider shares offered in this IPO are somewhat troubling, we believe that TLMR will be able to continue its thus-far successful expansion in the Midwest, and deserves serious consideration from investors.