Summary
- MetroCity Bankshares has filed proposed terms for its $30 million IPO.
- The bank operates a network of branches in the south and eastern regions of the U.S.
- MCBS has produced enviable results, but I'm concerned about the ultra-low interest rate environment and poor stock performance of other public community banks.
- I'll be watching this IPO from the sidelines.
- Looking for more stock ideas like this one? Get them exclusively at IPO Edge. Get started today »
Quick Take
MetroCity Bankshares (OTCQX:MCBS) has filed to raise $30 million in a U.S. IPO, per an amended registration statement.
The company operates a network of bank branches in the south and east U.S. regions.
MCBS has promising prospects and appears to be a well-managed bank, but I’m skeptical of the consolidating community bank sector in an ultra-low interest rate environment for the foreseeable future.
Company & Business
Doraville, Georgia-based Metro City was founded in 2006 and operates 19 full-service branch locations in multi-ethnic communities in the states of Alabama, Florida, Georgia, New York, New Jersey, Texas and Virginia with a primary focus on the Asian-American communities in these markets.
Management is headed by Founder, Chairman and CEO Nack Y. Paek, who was previously President of Government Loan Service Corporation.
As of the end of H1 2019, MetroCity had total assets of $1.52 billion, total loans (including loans held for sale) of $1.25 billion, total deposits of $1.30 billion and total shareholders’ equity of $184.3 million.
The firm offers a suite of loan and deposit products designed to answer the needs of the already-established businesses and individuals, as well as first generation immigrants who desire to establish and grow their own company, purchase a home or educate their children.
The firm originated $716.1 million of residential mortgage loans in 2018 compared to $581.2 million in 2017.
The firm’s total profit on sale of loans grew with $913,000 to $10.3 million in 2018, an increase of 9.7% over $9.4 million for the year 2017.
Management says that the bank has maintained exceptional credit quality, citing that there have been only five foreclosures out of 7,520 residential mortgage loans originated between 2015 and mid 2019, ‘none of which resulted in a loss.’
