Square One Financial Inc (NASDAQ:SQBK), a financial services firm that provides banking services to venture capital and private equity firms, plans to raise $94.1 million in its upcoming IPO.
The Durham, North Carolina-based firm will offer 5.9 million shares at an expected price range of $15-$17 per share. If the IPO can find the midpoint of that range at $16 per share, SQBK will command a market value of $465 million.
SQBK filed on January 6, 2014.
Lead Underwriters: Keefe Bruyette & Woods Inc, Sandler O'Neill and Partners LP
SQBK is a financial services company and the bank holding company for Square 1 Bank, a North Carolina commercial bank. The firm focuses its financial services efforts on venture capital and private equity firms, along with the portfolio companies that they fund.
SQBK's services include term commercial loans, asset-based loans, revolving lines of credit, fee-based banking services such as credit cards and cash management, and many others. The firm provides a variety of loan products, tailored to the unique circumstances of its clients.
SQBK's short-term loan facilities are well-suited to the cycle of venture investment and company maturation, and its staff of experienced venture bankers are closely familiar with that cycle, allowing for the firm to effectively monitor the risks associated with its loans.
SQBK offers the following figures in its S-1 balance sheet for the year ended December 31, 2013:
Net Income: $22,383,000.00
Total Assets: $2,137,278,000.00
Total Liabilities: $2,137,278,000.00
Stockholders' Equity: $189,149,000.00
Total Loans Outstanding: $1.1 billion
Total Deposits: $2.1 billion
SQBK competes with other financial institutions that specialize in venture banking. The only other pure play commercial bank that serves the same market is Silicon Valley Bank (NASDAQ:SIVB), but other competing institutions include Comerica (NYSE:CMA), First Republic Bank (NYSE:FRC), City National Bank (NYSE:CNC), and Bridge Bank (NASDAQ:BBNK).
Douglas H. Bowers is President, CEO and Chairman of Square 1 Bank and President and CEO of Square 1 Financial. Mr. Bowers has nearly 30 years of banking experience with Bank of America and its predecessors. Mr. Bowers' posts with Bank of America included Head of Commercial Banking, Head of Foreign Exchange, President of Europe, Middle East and Africa, Head of Large Corporate Banking and President of Bank of America's Leasing business. He also served a brief stint as Managing Director for LoneStar/Hudson Advisors.
We rate this IPO a buy in its proposed price range.
SQBK is making money hand over fist, and should be able to continue to find opportunities for its services as the economy continues to recover, and venture capital becomes more widely available.
The firm targets an underserved market, and its experienced leadership team should be able to identify the opportunities that such a market will bear. We believe that the level of specialization that SQBK provides to venture capital endeavors makes it an extremely attractive option to those firms, which often don't mesh well with traditional commercial banking models.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SQBK over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.