Square 1’s profits jumped 57% last year

Posted by David Ranii on March 6, 2014 

Square 1 Bank, a Durham-based company that is planning to go public, posted a 57 percent increase in net income in 2013, according to the company’s latest securities filing.

The new filing by the bank’s corporate parent, Square 1 Financial, contains updated financial information for the full year 2013 – an indication that the bank remains intent on raising up to $57.5 million in an initial public offering of stock.

Square 1 has 10 offices nationwide that provide a broad range of financial services to venture capital and private equity firms and the businesses they invest in. Its local footprint is confined to its headquarters office in downtown Durham’s American Tobacco Campus.

The bank’s net income for 2013 totaled $22.1 million, up from $14.1 million in 2012.

The increase was driven by a $9.8 million, or 15 percent, increase in net interest income stemming from its expanded loan portfolio and deposits; and a $9.7 million, or 63 percent, increase in noninterest income. The latter was driven by additional fee income, including fees that are contingent on “customer success events” such as an IPO or merger, and a $3.8 million increase in income from warrants.

When Square 1 makes a loan, it often receives warrants to acquire the borrower’s stock, mostly venture-capital-backed life science and technology companies.

Square 1 reported that “31 of our portfolio company clients in which we had taken warrant positions has successful liquidity events in 2013.” An IPO or sale of the business would be a liquidity event.

Staff writer David Ranii

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