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About the Author IPOdesktop

During the IPO season Francis Gaskins, editor of IPOdesktop.com & director of research for Equities.com, regularly appears on CNBC TV, Bloomberg, thestreet.com & other financial cable channels. On the day of the Visa IPO he appeared on four cable TV financial shows including Bloomberg & CNBC. Over the past five years he has been quoted over 500 times by such financial media as the Wall Street Journal, Bloomberg, Reuters, Associated Press, USA Today among others. Those quotes are available at IPOdesktop.com. His varied personal interests include violin playing. For example, he is concertmaster of the Palisades Symphony. He also holds an MBA from Harvard Business School (finance) and an AB from Princeton University (economics).

IPO Preview: Avenue Financial Holdings


Based in Nashville, TN, Avenue Financial Holdings (OTC:AVNU) scheduled a $30 million IPO on Nasdaq with a market capitalization of $120 million at a price range midpoint of $12 for Wednesday, Feb. 11, 2015.

The full IPO calendar is available at IPOpremium

SEC Documents

Manager, Joint-managers: Keefe, Bruyette & Woods
Co-managers: Sandler ONeill & Partners, Sterne Agee & Leach

End of lockup (180 days): Monday, August 10, 2015
End of 25-day quiet period: Monday, March 8, 2015

Summary
AVNU is headquartered in Nashville, Tennessee. AVNU was formed as a single-bank holding company in October 2006 and operate primarily through its subsidiary, Avenue Bank.

AVNU’s operations are concentrated in the Nashville MSA and provide a range of financial services through its five locations (four of which are retail branches) and a limited deposit courier service (mobile branch) for select commercial banking clients.

Valuation
Glossary

Accumulated deficit ($mm)..-$6
Per share dilution..-$3.83
———————————————-
Valuation RatiosMrkt Cap ($mm)Price /SlsPrice /ErngsPrice /BkVluePrice /TanBV% offered in IPO
annualizing Sept 9 mos
Avenue Financial Holdings (OTC:AVNU)$1204.121.41.41.525%

Conclusion
Neutral

Small bank

Rev +25% to $29.3mm

Net income +37%

Price-to-book 1.4

P/E 21.4

53% to selling shareholders

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.

Business
AVNU is headquartered in Nashville, Tennessee. AVNU was formed as a single-bank holding company in October 2006 and operate primarily through its subsidiary, Avenue Bank.

AVNU’s operations are concentrated in the Nashville MSA and provide a range of financial services through its five locations (four of which are retail branches) and a limited deposit courier service (mobile branch) for select commercial banking clients.

Founded by a team of executives and banking professionals having substantial experience with large regional institutions in the middle Tennessee market, AVNU’s strategy is to serve Nashville’s rapidly growing need for local banking services.

AVNU’s growth strategy focuses primarily on commercial and private banking.

AVNU provides products and services that compete with large, national competitors, but with the personalized attention and nimbleness of a community bank.

AVNU believes it provides unparalleled levels of client service through the talent and expertise of its people, the responsiveness of its credit processes, and the efficiency with which AVNU conducts business.

This leads to the development of significant, long-term relationships with many of Nashville’s leading individuals and businesses. Despite its relative size in the Nashville banking industry, AVNU has been ranked in the top three banks in Nashville for the last three years by the readers and voters in the Nashville Scene’s “Best of Nashville” poll, ranking second in 2014.

As a company of more than 130 employees, AVNU is woven into the very fabric of its community, through the widespread service and leadership of its employees in non-profit and civic engagement. AVNU believes this genuine passion and engagement in its community, across the board in its company, provides it with the ability to capture a disproportionate amount of business.

Competition
AVNU competes with commercial banks, credit unions, savings and loan associations, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds, and other mutual funds, as well as other community banks and super-regional and national financial institutions that operate offices in its service area.

5% shareholders pre-IPO
Global Strategic Investment Partners Master Fund, L.P. 9.56%

Keefe Bruyette and Woods 8.76%

Endicott Opportunity Partners II, L.P. 6.38%

David Ingram5.58%

Dividends
No dividends are planned.

Use of proceeds
AVNU expects to receive $14 million from its IPO and use it for the following:

to redeem in full all of its outstanding Series C Preferred Stock (which currently has a dividend rate of 1% per annum that will increase to 9% per annum on March 15, 2016)

and to transfer the balance to its bank for general corporate purposes, which may include to support balance sheet growth,

to acquire other banks or financial institutions or other complementary businesses to the extent such opportunities arise, and to maintain its capital and liquidity ratios, and the ratios of its bank, at acceptable levels.

Although AVNU may, from time to time, evaluate potential acquisitions, it does not have any arrangements, agreements or understandings relating to any acquisitions at the current time, and it is not engaged in any negotiations to make any acquisitions.