IPO activity has been a little scarce lately, particularly since Facebook's (Nasdaq: FB) ill-fated debut. There have been a few gems coming onto the big board this year, however -- such as online bank EverBank (NYSE: EVER), which has been public for all of two months now. Being a newbie hasn't slowed the company down, though, as its recent announcement regarding its plans to purchase a portion of General Electric's (NYSE: GE) GE Capital division clearly shows.
Other companies' cast-offs are treasures to EverBank
GE has been parsing and selling bits of its financial arm for some time, as its investors encourage its exit from the banking business. The decision to go further and sell larger slices has complemented EverBank's desire to expand and to increase its asset base. The $2.5 billion acquisition will provide EverBank with GE Capital's $2.4 billion commercial loan portfolio, as well as servicing rights on another $3 billion worth of loans.
Companies anxious to shed their loan businesses have been a real boon for EverBank. A month before going public on May 2, the company closed on a deal with MetLife (NYSE: MET), buying its warehouse finance division. The transaction added about $350 million to EverBank's stable of assets, as it takes over MetLife's residential-loan finance business, which caters to mid-sized mortgage companies nationwide. MetLife has been concentrating on insurance and selling off its banking business to avoid new regulations that are being placed on the financial industry.
Fool's take
EverBank's ambition makes it a good candidate for long-term growth, in my opinion. The bank is expanding quickly but seems to be choosing its acquisitions wisely, purchasing from companies that desire to exit the loan business for reasons other than a simple profit motive. For example, though GE's shareholders have been nervous about the company's huge banking presence, the mortgages that were sold to EverBank were performing loans. In fact, the division was quite profitable for GE, and its commercial lending facility was doing quite nicely as of late.
In addition, it looks as if the Internet-based banking business might be ready to pop. Although many still feel the connection to brick-and-mortar bank branches, I think that as more people come to rely on Internet and mobile banking, convenience will eventually win out over nostalgia. Meanwhile, online banks are creating bridges for their customers. For example, Capital One Financial (NYSE: COF) recently purchased ING Direct, ING Groep's online banking platform. To make customers more comfortable with the Internet-based bank, the company maintains Internet cafes to engender a kind of social media-like environment, while keeping a physical presence.
Will EverBank need such a real-world presence? Perhaps not, as it already has a network of independent financial advisors all over the country, as well as financial centers in its home state of Florida. The bank's strategy seems to be working, and as long as EverBank keeps to its current expansion plan, I can't see much downside to this company.
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