Commercial Bancgroup seeks IPO funds for expansion
Commercial Bancgroup is seeking to become the latest commercial bank to go public in the US after filing documents for a Nasdaq IPO.
The Tennessee-based community bank, which operates 34 branches and one loan office, would be the third bank to go public in the US this year, marking the busiest level of funding for the sector since 2020, according to LSEG data.
“Enthusiasm for bank stocks has increased in the past couple of months,” wrote analysts at S&P Capital IQ in a report on the sector last week. “An anticipated reduction in interest rates, which would help lower the cost of funds, is contributing to that excitement.”
Hovde Group, a Chicago-based investment boutique focused on financial services, is sole bookrunner on the offering, which comprises a mix of new and secondary shares.
Commercial Bancgroup is using the proceeds from the IPO to accelerate expansion into Charlotte, North Carolina, following its purchase last year of AB&T Financial for US$23.8m.
That acquisition established a footprint of five branches in Charlotte, with the bank planning to open a new branch in 2026.
In addition to funding the expansion, Commercial Bancgroup is planning to use primary proceeds from the offering to repay US$26.9m of debt. There is also a secondary allotment from undisclosed selling shareholders.
Commercial Bancgroup is mostly owned by its directors and officers, who hold 85.1% of shares outstanding, with chairman J. Adam Robertson owning 42.6%.
The AB&T acquisition and a series of earlier purchases have boosted Commercial Bancgroup’s total assets to US$2.3bn, deposits to US$1.8bn, and net loans to US$1.77bn as of June 30.
The bank’s Tier 1 risk-based capital stands at 13.6%, making it well capitalised ahead of the IPO.
Commercial Bancgroup represents only the third US regional bank IPO (over US$50m) this year, after Michigan-based NorthPointe Bancshares (US$151.1m) in February and California’s AvidBank earlier this month.
Including small deals, like Atlanta-based Coastal Bancshares (US$43.8m) in July, Stephens FIG banker Frank Sorrentino told S&P analysts he thinks six bank IPOs could price by the end of this year.
Commercial is on track to go public in mid-September, just before the next FOMC meeting scheduled for September 16–17. Futures markets are pricing in an 87% chance of a 25bp rate cut next month, the first of two potential rate cuts expected this year.