Durham-based Square 1 Bank enjoyed an upbeat debut Thursday, with its shares rising 14 percent on its first day of trading on the Nasdaq exchange.
Shares of Square 1 Financial, the bank’s corporate parent, closed at $20.60, up $2.60 from it initial public offering price of $18. That IPO price, set late Wednesday, was in turn a higher-than-anticipated price that indicated strong demand from investors.
Earlier this month, the Durham-based financial institution more than doubled its expectations of how much money it could reap from its IPO. At that time, the company reported that it anticipated its shares would fetch between $15 and $17 each.
Pricing the shares was the final step before Square 1 could begin trading under the SQBK symbol. The shares began trading midmorning Thursday, which is typical for an IPO stock.
As part of its IPO, Square 1 sold 3.1 million shares of stock at $18 each, reaping $56 million before deducting fees and expenses. In addition, a group of major shareholders sold an additional 2.7 million shares at the IPO price. Square 1 won’t receive any of those proceeds.
Bank 1 spokeswoman Dee McDougal, citing the advice of the company’s securities counsel, declined to comment on the company’s IPO.
Founded in 2005, Square 1 has a dozen offices nationwide that provide banking services to venture capital and private equity firms and the businesses they invest in. When Square 1 makes a loan to a business, it often receives warrants to acquire the borrower’s stock.
In 2013, the bank reported, “31 of our portfolio company clients in which we had taken warrant positions had successful liquidity events.”
The bank’s sole Triangle presence is its headquarters office in downtown Durham’s American Tobacco campus.
Last year, Square 1 generated net income of $22.1 million, up from $14.1 million in 2012. Net operating income totaled $36.1 million, up from $10.8 million in 2009, and loans have been expanding at a compound annual growth rate of 22 percent.
The bank intends to use the net proceeds from its IPO primarily to support future growth. That includes bolstering its capital ratio in light of higher standards adopted by regulators, known as Basel III.
Square 1’s underwriters also have options to purchase an additional 468,750 shares from the company at the IPO price, as well as an extra 398,417 shares from major shareholders.