Overview
The quiet period for Byline Banc (BY), which made its market debut June 26, is scheduled to expire on 7.25.
At that time, its underwriters will be able to conduct analyses and release their detailed reports and recommendations for the first time since the IPO. These reports tend to be very positive and often lead to a temporary boost in stock price.
An influential group of underwriters for the IPO include: Keefe Bruyette Woods, Bank of America Merrill Lynch, Piper Jaffray, Sandler O'Neill, and Stephens Inc.
Our firm has studied price movement around IPO quiet period expirations and found abnormal positive returns in the day (-5) to day (+2) window, surrounding the quiet period expiration event day (0).
We first covered Byline Corp. ahead of its IPO and recommended caution, given its lack of profitability and somewhat high valuation compared to similar banks.
However, the company has a loyal customer base and offers a strong suite of products and services. We see an opportunity now for event-driven traders ahead of the 7.25 expiration date.
Business overview
BY is a full service commercial bank headquartered in Chicago. The company has 56 branches in the Chicago metropolitan area and is the fifth largest branch network in Chicago. The bank serves small to medium sized businesses, financial sponsors and commercial real estate companies, as well as consumers who work or live near its branches. Services provided include traditional commercial banking services, as well as small ticket equipment leasing solutions.
(S-1/A)
As of its IPO, BY had total assets of $3.3 billion, total gross loans and leases outstanding of $2.1 billion, total deposits of $2.6 billion and total stockholders' equity of $389.7 million.
Management
Alberto J. Paracchini serves as CEO and President, positions he has held since 2013. He has more than 20 years of experience in financial services.
Lindsay Corby serves as Executive Vice President and Chief Financial Officer of Byline, positions she has held since July 2015. She has been with the company since 2013 and previously held senior executive roles at several financial firms, including: Principal at BXM Holdings, Inc. and Vice President in the investment banking group of Keefe, Bruyette & Woods, Inc.
Performance since IPO
Byline Corp. went public on 6.29, raising $108M through its offer of 5.7M shares. Shares priced at $19, the low end of its $19 - $21 price range. The company then saw its shares increase 5.5% on its first day of trading. Since then share price has climbed gradually. Currently shares are trading at $21.13 (market close 7.18).
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Conclusion & Summary of Buying Opportunity
Byline has built a loyal customer base in the Chicago area, is run by an experienced management team, and offers a comprehensive range of commercial loan products and services.
We predict underwriters will be highly motivated to share with the investors reasons to be bullish on this stock once restrictions are lifted on 7.25.
To benefit from this likely flood of positive information, we recommend event driven traders consider buying in ahead of that date.
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