Square 1 Bank sells 3.1 million shares in IPO

by Meghan Mahar
April 11, 2014

[ibimage==27007==Original==none==self==ibimage_align-center]NASDAQ Opening Day from Square 1 Bank's Twitter Page

For the past two weeks Square 1 Bank, the Durham, North Carolina-based bank for entrepreneurs with a strong Colorado tech presence, has exhibited a strong debut on the stock market.

On March 27 Square 1, which, in Colorado, is led by founder and managing director Ken Fugate, officially went public on NASDAQ under the symbol “SQBK."

The 230-person company announced March 26, their initial public offering would include 5,781,126 shares of its stock at $18.00 a share; 3,125,000 of that to be sold by Square 1 and the rest by certain shareholders. By the IPO closing date, March 31, they sold all available shares, closed their share price at $20.10 (12 percent more than the opening price). Then two days later announced the underwriters exercised their option in full by buying all 867,167 shares subject to the underwriters' option at the initial public offering price of $18.00. That comes out to $56 million for Square 1 before deducting fees and expenses.

Square 1 Bank, later to become a subsidiary of Square 1 Financial, was founded back in August 2005 by experienced venture bankers, commercial bankers and entrepreneurs. They offer a full range of banking and financial products and pride themselves on being “Entrepreneurs serving Entrepreneurs.”

With this highly profitable IPO showing, Square 1 surpasses yet another goal just as they’ve done in earlier milestones. Before even opening their doors in August 2005, Square 1 Bank raised $105 million in private placement capital raise and were profitable within 15 months of opening. They reached $500 million in assets by the end of 2006, gained over 500 clients by August 2007, and achieved $1.5 billion in total controlled deposits by the start or 2010.

Ten different Square 1 offices are scattered across the U.S. hitting major cities in every region. In 2008, they opened their Rocky Mountain office in Boulder, now located in Denver. Ken Fugate, the Managing Director of this office, has helped sign local startup clients such as PeakColo who secured a debt facility of $3 million from Square 1 Bank in June 2013.

Since Square 1’s passion is helping early stage entrepreneurs build successful companies, coming to Boulder was another smart decision by their team. The technology startups found here line up nicely with Square 1’s breakdown of clients, with 53 percent of them coming from the technology industry.

 

[ibimage==27006==Large==none==self==ibimage_align-center]

Investments by Industry for Square 1 Bank as reported by CNBC on 3/31/2014

Not many banks will invest in startups because they fear there’s no guarantee the new product will bring in revenue, but Square 1 repeatedly displays confidence in their startup investment decision: “We have the guts and the prowess, the capability, to lend to very small, young startups," Doug Bowers, CEO and President, said in an interview with News Observer. "Our money leverages capital that allows (startups) to build out their products, build out their brand, hire people and create prosperity. Ain’t that what it’s all about?”

Not only that, they know how to respond quickly to the ever changing technology trends and market needs that influence startups and can find value in more than just the dollar sign. 

“There's almost always a degree of value no matter what happens to these companies. Whether it's the intellectual property, a degree of receivables, a smart set of engineers, any number of factors create value,” Bowers said in a recent interview with CNBC.

This confidence and decision-making brought in a net income of $22.1 million last year with a net operating income totaled at $36.1 million and now an extra $56 million from the IPO before deducting fees and expenses.

The market is strong as of late for IPOs. According to Renaissance Capital, 75 companies have gone public nationwide in the last three months, up 83 percent more than the same period last year, and the amount of money raised by the IPOs rose 71 percent to $32.4 billion.

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