Anyone who lives life on the go immediately understands the advantages of doing business with big banks. Wherever you may find yourself, chances are that a physical branch and especially an ATM machine are never too far away. However, large financial institutions are not necessarily the best choice for everyone, incentivizing the case for community-based financial services provider U.S. Century Bank.
Mainly, big banks must cater to high-net-worth stakeholders, thus gearing networks to major metropolitan areas. In addition, institutions like U.S. Century Bank help democratize access to financial tools, thereby making its stock socially relevant.
When Did U.S. Century Bank IPO?
U.S. Century Bank IPO’d on July 22, 2021, pricing its stock at $10 per share and raising $40 million in the process.
According to its filings with the Securities and Exchange Commission, U.S. Century Bank intended to offer 3.55 million shares of its Class A common stock during the proceedings. Further, management granted the IPO underwriters a 30-day option where they could purchase up to an additional 533,333 shares. The community bank expects the new issues to price between $10 and $12.50 per share.
Keefe, Bruyette & Woods was the sole bookrunner for the IPO. Co-managing the offering were Raymond James Financial (NYSE: RJF) and Piper Sandler (NYSE: PIPR).
U.S. Century Bank Financial History
While the term “community bank” conjures up images of rural service providers with limited product offerings, this definition undercuts the vast diversity of this financial category. According to American Banker, the U.S. today “has nearly 5,000 community banks, which is more than the number of banks of any size in any country in the world.” That’s an impressive statistic, serving to place both the misconceptions and challenges of community banks in the proper context.
For U.S. Century Bank specifically, the institution is “one of the largest community banks headquartered in Miami, and one of the largest community banks in the state, with assets exceeding $1.6 billion,” per its IPO prospectus. Further, BauerFinancial, an independent bank rating firm, awarded U.S. Century a 5-star rating, giving its clients confidence in the company’s competency and rigor. Moreover, with 11 branch locations and an online banking platform, U.S. Century provides local residents with excellent coverage.
Better yet, these attributes translate into meaningful fiscal performances. In 2020, the community bank generated net income of $10.1 million, within a mere 3% of 2019’s tally of $10.4 million. However, net interest income last year totaled $43.6 million, up 13% compared to the prior year. Additionally, total assets increased by $188.3 million to $1.5 billion by the end of 2020, while loan growth for the period was $36.6 million, culminating in a total of $1.04 billion.
According to Luis de la Aguilera, President and CEO of U.S. Century Bank, the end-of-2020 statement reflected the “vitality and resilience” of the organization’s business model, particularly amid the COVID-19 impact. Just as importantly, U.S. Century maintained strict control of its credit quality, with loans past due 30 to 89 days amounting to $5.1 million less than the year-ago comparison.
U.S. Century Bank Potential
In many business scenarios, investors find larger institutions more desirable due to their expansive asset base and greater capacity to acquire capital. But in the banking world, bigger isn’t always better. For instance, community banks understand their customers better because they are involved in local initiatives. Specifically for U.S. Century, the financial firm has close ties with the South Florida Hispanic Chamber of Commerce and received awards and accolades for its philanthropic leadership.
According to a survey conducted by The Harris Poll on behalf of CNBC, approximately one-third of millennials often or exclusively elect investments that take environmental, social and governance (ESG) factors into account. That compares to just 2% of baby boomers who feel the same about how they direct their resources. And because millennials represent the largest generation in the U.S. workforce, USCB commands the potential to attract a sizable audience of young investors.
To be sure, community banks find themselves outgunned by their larger counterparts which routinely take home billions in profit from ultra-high-dollar services and international coverage. Still, big banks have their problems, especially because they’re overwhelmingly profit-driven. This dynamic led to extremely regrettable controversies, such as the phony account scandal of Wells Fargo (NYSE: WFC).
Finally, one factor that may tip the scales in favor of U.S. Century Bank and its ilk is the pandemic itself. With the shift to remote operation allowing people to work virtually anywhere, many have chosen to live away from the hustle and bustle of city life. Naturally, this bolsters the investment narrative of community-driven financial services providers as they’re more adaptable and responsive to local needs.
How to Buy U.S. Century Bank (USCB) Stock
The process is easy if you already know how to buy stocks. If not, just follow the simple steps below.
Step 1: Pick a brokerage.
Back when the internet was more of a novelty than an everyday platform, investors primarily based their online brokerage decisions on cost. Nowadays, almost everyone offers commission-free trading on stocks listed in major exchanges. Therefore, investors should focus on access.
For instance, some platforms allow their members to buy pre-IPO shares of certain companies going public. If you’re interested in expanding your portfolio, you should consider some of Benzinga’s best brokers.
Step 2: Decide how many shares you want.
You’ll want to acquire a balanced share count that won’t keep you up at night. A higher count affords you greater profitability potential but at the cost of higher risk potential.
Step 3: Choose your order type.
Before placing your trade, familiarize yourself with these key market concepts:
- Bid: The maximum price a buyer will extend, the bid is always lower than the ask.
- Ask: The minimum price a seller will take, the ask is always higher than the bid.
- Spread: The difference in the bid-ask price, the spread offers information regarding liquidity and risk. Tighter spreads imply bulls and bears’ willingness to negotiate, indicating higher liquidity and lower risk. The opposite is true for broader spreads.
- Limit order: A transaction that only fulfills at a predetermined rate, limit orders offer total transparency but no execution guarantee.
- Market order: In contrast, a market order guarantees fulfillment at the going rate. However, it fills at unfavorable terms (i.e. buy orders on the ask).
- Stop-loss order: Designed to mitigate downside volatility, stop-loss orders will fulfill at either a predetermined price or any price lower than the requested rate.
- Stop-limit order: For greater control, stop-limit orders only exit your position at a predetermined price. However, such orders can be rendered useless if the target stock never reaches the desired exit price.
Step 4: Execute your trade.
To execute a market order, follow these steps:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Use the same sequence above for limit orders, except that you enter your desired execution price.
Small Bank, Big Profits
Although big banks grab headlines, some of the stories are not exactly flattering, symbolizing the operational divide between profit-driven and community-focused financial services. Simply, institutions like U.S. Century Bank know their customers well. Moreover, the influx of potential new clients to rural areas bodes well for USCB stock.