Anchor BanCorp Wisconsin sets terms for $10 million IPO

Anchor BanCorp Wisconsin, the third largest commercial bank headquartered in Wisconsin with 54 full-service locations, announced terms for its IPO on Friday. The Madison, WI-based company plans to raise $10 million by offering 372,000 shares (33% insider) at a price range of $25 to $27. At the midpoint of the proposed range, it would command a fully diluted market value of $247 million.

TARP program
In 2009, Anchor BanCorp Wisconsin owed $184 million under a credit facility that it was unable to repay, and took part in the US Treasury's Troubled Asset Relief Program to restructure its debt. In 2013, it filed for chapter 11 bankruptcy and implemented its plan of reorganization by selling stock to institutional investors. Under its recapitalization, the bank received $175 million in gross proceeds (implying a $20 purchase price per share), exchanged TARP preferred stock for common stock and paid $49 million to the US Bank National Association (recognizing a $135 million gain on extinguishment of debt).

Financials
As of June 30, 2014 on a consolidated basis, Anchor BanCorp had total assets of $2.1 billion, total loans of $1.6 billion, total deposits of $1.9 billion, and total stockholders’ equity of $212 million.

For the six months ended June 30, 2014, net interest income increased 28% to $36 million. Net income swung positive to $4.5 million from a $19 million loss. Its efficiency ratio was 91% for the six months ended June 30, 2014, compared to 144% during the prior year period. Its return on average assets improved to 0.43% from -2.53%. 

Small float
The Wisconsin bank is offering a small float compared to its market cap. It is expected to be the year's second smallest IPO by deal size, but its proposed market cap is larger than 64 others at the time of the offering. The smallest bank so far, Veritex Holdings (VBTX), priced during the week of October 6 and is now the best-performing of the group, up 14.5% and slightly ahead of the year's other Texas bank, Green Bancorp (GNBC). Texas is seen as an attractive geography, and the outlook of Wisconsin's economy could play an important role in Anchor BanCorp's success.

Shareholders
Primary shareholders include Wellington Management, Capital Z Partners, Castle Creek Capital, EJF Capital and FJ Capital Management.

Anchor BanCorp Wisconsin, which was founded in 1992 and booked $66 million in net interest income for the 12 months ended June 30, 2014, plans to list on the NASDAQ under the symbol ABCW. The company first filed for an IPO in December 2013. Sandler O'Neill and Baird are the joint bookrunners on the deal. No pricing date was disclosed.