Beneficial State Bank (B): Evaluating Financial and Social Returns for Investors

By Charles Ewald, Heidi Krauel-Patel, Jaclyn Foroughi
2016 | Case No. SI134B | Length 22 pgs.

In the fall of 2015, Beneficial State Bank was set to mark its third successive year of normalized profitability while continuing to fulfill its mission to promote social justice and environmental sustainability.  At the same time, husband and wife creators of the bank, Tom Steyer (MBA ’83) and Kat Taylor (JD/MBA ’86), found themselves at a crossroads.  As the sole providers of capital to the bank during formation and, as a result of the bank’s unique organizational structure, the couple remained the only investors in the bank almost a decade since its founding.  With assets of $420 million, the team envisioned scaling the business for both economic viability and impact to over ten times the current size in the coming years.  In order to achieve this goal, however, the founders would have to consider the introduction of additional investors. 

This case describes the motivating factors for changing the bank’s existing capital structure, and potential investment options to fulfill these goals.  It includes a discussion of prospective investors, existing capitalization and growth prospects, and the role of mergers and acquisitions.

Also see SI134A: Beneficial State Bank (A): Organization and Measurement of Social Impact.

Learning Objective

Provide students with an opportunity to analyze the financial position of a triple bottom-line bank in order to value the entity, determine which governance factors are critical, and due diligence a potential capital raising transaction.
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