OTC Markets Newsletter
OTC Markets Group News           MARCH 2016
Celebrating the 1st JOBS Act Regulation A+ “Mini IPO” on Our Markets

[photo]
OTC Markets Group EVP Jason Paltrowitz, StartEngine Crowdfunding CEO Ron Miller, Elio Motors CEO Paul Elio and OTC Markets Group CEO Cromwell Coulson at the February press conference held by Elio Motors at the OTCQX Market Center.
On Friday, February 19, shares of Elio Motors Inc. (OTCQX: ELIO), a Phoenix-based automotive startup company, began trading on the OTCQX Best Market in the first JOBS Act Regulation A+ IPO, marking a historic day in the future of finance and capital raising. For the first time ever, companies can efficiently raise capital online and make their securities publicly tradable.

Elio Motors raised nearly $17 million from 6,000 investors at $12.00 per share entirely online. Its shares have traded more than $2.5 million in dollar volume since joining the OTCQX market.

Elio Motors' Regulation A+ IPO was the culmination of months of effort by the company as well as its partners who helped make the day a reality. They include:

StartEngine Crowdfunding, Inc. - the online equity crowdfunding portal that ran Elio Motors' Regulation A+ offering

FundAmerica - the SEC registered FINRA/SIPC member broker-dealer that provided the backend escrow and other services for Elio Motors' Regulation A+ offering on StartEngine

CrowdfundX - the digital marketing agency that helped market Elio Motors' Regulation A+ offering to the public

[photo]
OTC Markets Group EVP Jason Paltrowitz sits down with Ron Miller, CEO of StartEngine, to discuss Crowdfunding and Elio Motors (OTCQX: ELIO), the first company to go public through Regulation A+.
WR Hambrecht + Co - the investment bank and broker-dealer that sponsored Elio Motors' securities on OTCQX and which serves as Elio Motors capital markets advisor and OTCQX Advisor

VStock Transfer - the SEC-registered transfer agent and record keeper for over 6,000 individual Elio shareholders that helped deposit Elio’s shares into brokerage accounts

We'd like to commend Elio Motors on its successful Regulation A+ offering and IPO. We are thrilled the company chose to have its securities traded on our OTCQX market, which will allow Elio Motors to grow its business and visibility with investors by providing transparent trading and convenient access to its news and financial disclosure.

We look forward to inviting more crowdfunded companies to take the next step for their investors.

Capital Raising 2.0

Join OTC Markets Group and industry experts for an afternoon discussion on the changing landscape of financing and the emergence of online, data-driven platforms and crowdfunding. We will take a look at how financial technology and recent regulatory changes have redefined ways for emerging, growth companies to gain access to the capital markets.

Featured Speaker: Barry Silbert, Founder and CEO of the Digital Currency Group and Founder of SecondMarket

REGISTER

Wednesday, April 6, 2016
5:00PM - 7:00PM

OTCQX Market Center
304 Hudson Street // New York, NY 10013
COMMUNITY SPOTLIGHT
[photo] Cenk Göksan, Head of Investor Relations for Akbank Turk Anonim Sirketi (OTCQX: AKBTY)

"With a free float of 51% - one of the highest in the Turkish banking system - and a clear and defined investor targeting plan, we were happy to have our shares traded on an international platform which will pave the way for a more diversified and broad investor base." Head of Investor Relations Cenk Göksan talks to us about Akbank’s strategy for growth and the company’s decision to upgrade to the OTCQX market last year.

OTC Markets Group (OTCM): Akbank is one of the largest Turkish banks with USD$86 billion in assets. Tell us more about your operations.

Cenk Göksan: With a robust capital base, reliable deposit structure, solid asset quality and ability to raise foreign financing on favorable terms, Akbank maintains its leading position in the Turkish banking sector. Akbank’s core business banking activities consist of consumer banking, commercial banking, SME banking, corporate banking, private banking, foreign currency exchange, money markets and securities trading (Treasury transactions), international banking and wealth management services. In addition to traditional banking activities, the Bank also carries out insurance agency operations through its branches on behalf of Ak Insurance (in general insurance) and AvivaSA Pensions & Life Insurance.

With a strong and extensive domestic distribution network of over 900 branches and around 14,000 employees, Akbank operates from its Head Office in Istanbul and 23 regional directorates across Turkey.

Click here to read the full interview.
In addition to providing services through its branches, the Bank's traditional delivery channel, Akbank also serves customers through the Akbank "Direkt" Consumer and Corporate Internet Branches, Akbank "Direkt" Mobile, the Call Center, 4,150 ATMs and more than 420,000 POS terminals, as well as other high-tech channels.

Continuing its operations with a responsibility to create value for the Turkish economy, Akbank was recognized by Brand Finance as the "Most Valuable Banking Brand in Turkey" for the fourth consecutive year in "The Global Banking 500-2015" report. Akbank was also the first bank to win "Turkey's Most Valuable Brand" in 2015 by Brand Finance.

A digital banking pioneer in Turkey, Akbank gathered all its efforts in this burgeoning area under the Akbank "Direkt" umbrella. This allows the Bank to meet the financial solutions needs of its customers, provide services in the most convenient manner possible and deliver an excellent client experience. In today's world, where technology advances at lightning speed and customers are ever more demanding, Akbank "Direkt" strives to satisfy client needs without time or physical location limitations while pioneering technological innovations in both the sector and in Turkey. Widely known for anticipating changes in trends and customer dynamics and developing new products and channels to meet the individual financial needs of its clients, Akbank has introduced many innovations to the Turkish banking industry.

Akbank also verified its quality and superiority by winning such prestigious awards as Global Finance Magazine's "Best Digital Bank" and in the consumer banking category for "Best Digital Bank of Western Europe."

Harvard University's Kennedy School of Government (Harvard KSG) documented Akbank's highly successful turnaround story and growth strategy in the aftermath of the 2001 crisis in the form of a case study. Akbank management had implemented "The New Horizons Restructuring Program" after the 2001 Turkish economic crisis at a time when the Turkish economy and banking industry were desperately searching for ways to leave the crisis behind. The management changes and growth strategy that the Bank implemented also made the Bank a lecture topic and a reference case on how to manage and grow through times of economic crisis.

Additionally, Harvard Business School documented the steps Akbank has taken in digital banking. This report underscored that digital banking will be more widespread and there will be a shift from traditional branch banking to digital banking due to a young population with high smartphone and internet usage. It also mentioned that this new banking model heralds a new era that will affect the way organizations do business. It is predicted to be more profitable and to offer control over transactions and eliminate human mistakes.

OTCM: What differentiates Akbank from its competitors?

Mr. Göksan: At Akbank, we believe that we have certain strengths that differentiate us from our competitors. We classify these strengths into topics mentioned below.

Main Shareholder
A single, local and strong major shareholder is a significant advantage for Akbank which allow the Bank to have an agile decision-making process and effective management, especially in turbulent macro environments.

Corporate Governance
Corporate Governance at Akbank supports sustainable, long-term profitable growth and focuses on generating long-term value rather than short-term successes.

Corporate governance, transparency and commitment to ethical values have always been a top priority for the Bank.

We were the first bank to disclose our dividend policy in 2003 and also the first bank to state our Corporate Governance Principles in our Annual Report and website in 2003 and 2004.

Being highly sensitive regarding transparency, Akbank provides the most detailed budget guidance with the involvement of its CEO and Akbank's upper management every year and is also the first and only bank that shares a three-year strategic plan with investors.

Akbankers
The quality of its most important resource, its employees, helps Akbank stand ahead of the competition. Akbank has the highest percentage of university graduates at 94%, compared to a sector average of 77%, and 8% of its employees hold master's and doctorate degrees. Akbankers move the Bank forward through their welcoming, dynamic, agile, creative and self-motivating work, putting utmost customer satisfaction as their top priority to create "nextgen Akbank".

Capital Adequacy
While Akbank CAR and Tier-I ratios stand at 14.5% and 13.3%, respectively, peer averages are 13.9% and 11.9%.

Peer CAR calculations also include real-estate revaluation. Akbank's Tier-I ratio would have increased to 14% with the same revaluation.

Accordingly, Akbank has the highest and the best quality Tier-I ratio among its peers.

Considering the fact that banks' minimum Tier-I ratios are required to be 10.5% by 2019, Akbank's competitive advantage to its peers can be seen more clearly.

Balance Sheet Structure and A&L management
Effective risk management, managing its maturity mismatch, interest rates and liquidity better than the peers, and positioning its balance sheet to weather the increasing interest rate environment have been the major factors differentiating Akbank from the competition.

Akbank was cautious and selective in loan growth, anticipating interest rates to be higher in 2015 and 2016. The Bank increased customer deposits with effective cost management, lengthened maturity of its liabilities, decreased maturity mismatch from 6.5 months to 5.3 months, reduced short-term FX repo funding and its FX-TL swap book, and minimized the negative carry in securities. Thanks to all these efforts, Akbank was well-prepared for the increasing rate environment.

Akbank has the lowest loan-to-deposit ratio among its peers at 103% and and a low TL loan-to-deposit ratio as well, which is becoming more and more important.

On the other hand, despite the cautious stance in A&L management, Akbank's profitability evolution outperformed the competition.

Asset Quality
Akbank has a well-balanced loan portfolio regarding credit type and segments. The Bank manages its loan portfolio by taking into account the maturity composition, risk-return balance and product concentration in line with its sustainable growth strategy.

Akbank's NPL ratio is 2.2%, lower than the sector NPL ratio of 3.1%.

Akbank continues with its 100% coverage policy. This conservative approach acts as a cushion and will be a differentiating factor for Akbank in the case that asset quality deteriorates. While Akbank's specific coverage ratio is currently 96%, the peer average stands at 75%. Including the general provisions, Akbank's total coverage ratio is 171% versus 130% for its peers.

Akbank's higher coverage policy comes with a cost of 1% ROE. This is an important hidden reserve for Akbank.

Efficiency
Akbank has the most efficient business model. Akbank has preserved this quality for many years and continues to outperform the competition. Akbank's CIR of 39% and cost-to-assets ratio of 1.7% are one of the best, not only in Turkey but also in emerging markets. Akbank will continue to perform the competition thanks to its low-cost culture and lean banking model.

Akbank is the one and only private bank in the last four years to have increased its income higher than its OPEX ("Jaws Ratio").

While digital banking used to be a complimentary sales channel, it is now a major sales channel and business model in Akbank's new strategy. Digital channel strategy is designed and executed not only for efficiency purposes but also for increasing revenue and sales.

Akbank's awards and independent research stating Akbank is the #1 bank in Turkey and top ranked in Europe are testimony to the large difference between Akbank and its peers in digital banking.

Akbank Direkt was awarded "Best Mobile Application" worldwide by the prestigious finance magazine Global Finance. Akbank was also awarded "Best Digital Bank" in the consumer banking category in Western Europe by Global Finance in 2015.

According to Forrester's "2015 European Mobile Banking Functionality Benchmark Study," Akbank Mobile Banking ranks first among Turkish banks and fourth in Europe.

Profitability
Akbank's successful, sustainable profitability model also proves itself with numbers. While Akbank managed to keep its normalized ROE sustainably above 14% between 2011 and 2015, the average ROE for peers declined to 12%. When evaluated together with more prudent risk policies, Akbank's success is an indication of higher performance, not only numerically but also of quality.

Akbank had a significant transition in customer profitability in the past few years. (CAGR of customer profit is 24% in the last four years.) Thus, while 44% of total profit was derived from customer profit in 2012, this has reached 82% levels in 2015.

Subsidiaries' Contribution
Akbank's subsidiaries are managed with the same governance model and principles in a fully aligned manner to Akbank. Contribution to income from subsidiaries continuously increases every year. While subsidiaries contributed just 3% to net income in 2012, the ratio reached 9% in 2015.

Unlike other banks' subsidiaries, Akbank subsidiaries' have a stable contribution to the bottom-line.

As a pioneer in the sector, Akbank formed a common Wealth Management Platform with Ak Brokerage and Ak Portfolio Management for investment services and started to cooperate together to further increase volumes, customer numbers and commissions.

Brand Value
Strong brand value is an outcome for the above mentioned accomplishments. Akbank is the most valuable brand in Turkey with a brand value of USD $2.5 billion.

Medium-Long Term Projects - "nextgen Akbank"
Akbank will continue to execute on the strategies mentioned above and ongoing since 2012. In addition to that, the new project "nextgen Akbank" will prepare Akbank for the future with a vision of new operational and branch models and increasing contributions from digital banking.

OTCM: What is your strategy for growth in 2016 and going forward?

Mr. Göksan: Akbank will continue to be an important part of the Turkish economy with its qualified human resources and strong financials in 2016 and will focus on all segments while providing profitable growth. Technology, digitization and mobile banking will be at the heart of our strategy with our solid infrastructure. Additionally, we will continue to hold the leading position in Turkey in terms of efficiency in 2016, as before.

Our assumption for sector loan growth is 13-15% and asset growth of 12-14%. We target higher growth than the sector. While our asset growth target is 14-16%, we are targeting 15-17% loan growth. We aim to fund our lending growth mainly through deposits. Our higher-than-the-sector growth target is related to our solid capital base and better balance sheet positioning in terms of liquidity and LDR. Additionally, our ROE and ROA targets for 2016 are around 14% and 1.5%, respectively, and in the range of 14-16% and 1.5-1.7%, respectively, for 2017 and beyond.

Our strategy in corporate and investment banking is:
  • to be the flow bank of customers in cash management and trade finance,
  • to be the local house of MNCs that operate in Turkey,
  • to provide hedging advisory, increasing derivative commissions.
In Commercial and SME banking, we are pursuing:
  • more customer acquisition, with higher demand deposits
  • higher fee income growth, and
  • further penetration in digital banking.
On the Retail and Private banking front, we are pursuing:
  • fee income through our Wealth Management platform
  • an enhanced segmented service model, and
  • further digitization in all products and services.
OTCM: Akbank upgraded its stock to the OTCQX market in March 2015. What caused you to make that move and what has been your experience on OTCQX to date?

Mr. Göksan: With a free float of 51% - one of the highest in the Turkish banking system - and a clear and defined investor targeting plan, we were happy to have our shares traded on an international platform which will pave the way for a more diversified and broad investor base. At Akbank, we make an in-depth analysis when reaching out to investors around the world and we use conferences, roadshows, webcasts and audiocasts as tools. We felt that OTCQX would provide a great opportunity to expand our investor base and present ourselves to a wider community.

In line with our full commitment to transparency, we held an audiocast on 4th of February for OTC Markets Group following our annual investor and analyst day on 7th of January, regarding our 2016 and beyond expectations. We believe that it is our responsibility to our stakeholders to establish a consistent dialogue with continued transparency and good governance and OTCQX enhances this. We provide other important information through OTC Markets Group’s platforms. Besides that, you may also find our presentations, webcasts and other information through our Akbank Investor Relations application from your iOS device.

OTCM: What else do you think U.S. investors should know about Akbank?

Mr. Göksan: Ranked among the leading financial institutions both in Turkey and Europe with a solid capital base, effective risk management and high asset quality, Akbank has maintained healthy profitable growth since 2012. Akbank will continue to deliver customer-driven, profitable growth, expanding its balance sheet for years to come, by acquiring new customers and ensuring long-term relations with its entire customer base.

We will continue to prepare our Bank for the future. Today, more than 92% of our deposit transactions take place outside of our bank branches. Mobile Banking is now the pillar of our growth strategy and we are working hard on this. Our cost-to-income ratio of 39% and cost-to-assets ratio of 1.7% in 2015 are not only the best in Turkey but also one of the best in the emerging markets. Akbank has gained this success by its comprehension of simplicity in banking, high efficiency and focus on technological developments. While digital banking used to be complementary for banking activities, it is now a major sales channel and business model. These channels are not only used to increase efficiency, but also to increase revenue and sales.

Akbank continues to be applauded by the most distinguished members of the world’s financial community as one of Turkey’s leading institutions. Akbank was named "Most Valuable Brand in Turkey" by Brand Finance. Additionally, Akbank was named "Most Valuable Banking Brand in Turkey" for the fifth consecutive year by Brand Finance’s widely referenced report, "Brand Finance Banking 500" in 2016.

We are certainly aware of the short-term challenges for Turkey, but we believe the potential of our country with its young population, successful entrepreneurship and geopolitical advantages and our main shareholder as a long-term investor in Turkey, is ample. Thus, while we operate the Bank carefully in the short-term, we are also preparing our bank for the future.

In the last four years, we have completed our transformation to become a strongly customer-driven business with increased revenue generation capabilities. Digital migration is at the heart of this strategy under the "Sustainable Leadership" motto, Now, we are moving it into a new innovative transformation.

Based on our future expectations, we have recently initiated a new project that we call "nextgen Akbank." This is a long-term project that will shape the "New Akbank" in the next three to five years.

The customer is our target while Akbankers, Channels and Processes are the keystones of "nextgen Akbank." We are aiming to create an agile, digital, simple and success-oriented bank that is dedicated to delivering the best customer experience and satisfaction.


Click to close.

OTC Markets Market Data
OTC Markets Real-Time+ market data is now supported by Redline Trading Solutions, Inc., a leading provider of high performance market data and order execution systems for automated trading. As a result, Redline customers now have access to real-time Level 1 and Level 2 quotes and reference data on 10,000 OTCQX®, OTCQB® and Pink® securities to inform their trading applications. Learn More
Light Up The Market
[photo]

Josh Disbrow, CEO of Aytu BioScience (OTCQX: AYTU)
[photo]

Rupen Shah and Stephen Nightingale of Britvic plc (OTCQX: BTVCY)
[photo]

Michael DeGiglio, CEO of Village Farms (OTCQX: VFFIF)

OTCQX companies Light up the Market to celebrate joining our Best Market!


Elio Motors (OTCQX: ELIO)
IEG Holdings Corporation (OTCQX: IEGH)
Mauna Kea Technologies (Euronext Paris: MKEA; OTCQX: MKEAY)
Omni-Lite Industries Canada Inc. (OTCQX: OLNCF)
Monthly Trade Summary

February 2016

Market
Designations
Number of
Securities*
  Monthly $
Volume
  Monthly $ Vol
per Security
  YTD $
Volume
OTCQX® 454   $3,067,033,247   $6,755,580   $6,612,932,400
OTCQB® 1,015   $443,688,441   $437,131   $1,048,157,352
Pink® 8,339   $11,692,218,861   $1,402,113   $24,390,517,999
Totals 9,808   $15,202,940,549   $1,550,055   $32,051,607,751
*Data as of February 29, 2016
Events, Webinars & Sponsorships
News
IR Magazine Awards - Europe - London, U.K. (June 22, 2016)

OTCQX Annual Issuers Forum - Vancouver, Canada (June 9, 2016)

Marcum Microcap Conference - New York, NY (June 1-2, 2016)

B. Riley & Co.’s Annual Investor Conference - Hollywood, CA (May 25-26, 2016)

Hovde Group 2016 Fast-Forward Bank Conference - Scottsdale, AZ (April 10-12, 2016)

80th Annual STANY Conference and Dinner - New York, NY (April 7, 2016)

Capital Raising 2.0 - New York, NY (April 6, 2016)

Sidoti Emerging Growth Convention - New York, NY (March 31, 2016)

Webinar: Learn how to Maximize your Press Release Results with PR Newswire and OTC Markets (March 30, 2016)

Contact us if you are interested in meeting us at one of these events.





View webcasts from the 27th Annual ROTH Conference held March 13-16 in Dana Point, CA:

OTC Market Group Company Presentation

IPO Readiness Panel

Uplisting to a U.S. National Exchange Panel
OTC Markets CEO Cromwell Coulson: "Online Securities Offerings are Completely Disruptive" - Crowdfund Insider (March 9, 2016)

How OTC Markets Is Transforming Its Image And Attracting Entrepreneurs Like Paul Elio - Forbes.com (March 7, 2016)

The 2016 Trading Technology 40: R. Cromwell Coulson - Institutional Investor magazine (March 7, 2016)

Exchanges Up Competition for Small Growth Listings - Growth Capitalist (March 4, 2016)

Main Street Growth Act Seeks to Create Venture Exchange for Smaller Companies - Crowdfund Insider (March 3, 2016)

OTC Markets Group Announces Fourth Quarter and Fiscal Year 2015 Financial Results - press release (March 2, 2016)

How Elio Became a Billion-Dollar Startup in Two Days - Inc. online (February 29, 2016)

Disrupting Transportation and Finance? - Motley Fool (April 26, 2016)

Elio Motors' mini-IPO could be the start of a new trend on Wall Street - New York Business Journal (February 26, 2016)
OTCQX AND OTCQB GRADUATIONS
Congratulations to the latest company to graduate from our markets to a U.S. exchange listing.

The OTCQB Venture Market

IZEA Inc. (NASDAQ: IZEA)
OTCQX AND OTCQB NEW ADDITIONS
OTCQB
4 companies qualified for the OTCQX Best Market in February.

CHC Group Ltd. (OTCQX: HELIF)
Elio Motors Inc. (OTCQX: ELIO)

Mauna Kea Technologies (OTCQX: MKEAY)
Omni-Lite Industries Canada Inc. (OTCQX: OLNCF)
A complete list of OTCQX companies is available on www.otcmarkets.com.


OTCQB
21 companies were verified for the OTCQB Venture Market in February.

Abattis Bioceuticals Corp. (OTCQB: ATTBF)
Ascent Solar Technologies, Inc. (OTCQB: ASTI)
Axion Power International, Inc. (OTCQB: AXPW)
BioHiTech Global, Inc. (OTCQB: BHTG)
CubeScape, Inc. (OTCQB: CSCP)
Eguana Technologies Inc (OTCQB: EGTYF)
Force Protection Video Equipment Corp. (OTCQB: FPVD)
Formation Metals, Inc. (OTCQB: FMETF)
H-Source Holdings Ltd. (OTCQB: HSCHF)
Iweb Inc. (OTCQB: IWBB)
Jarex Solutions Corp. (OTCQB: JRSC)

  Karnet Capital Corp. (OTCQB: KRTT)
Litera Group, Inc. (OTCQB: LRGP)
Medite Cancer Diagnostics, Inc. (OTCQB: MDIT)
Premier Exhibitions, Inc. (OTCQB: PRXI)
Rare Element Resources Ltd. (OTCQB: REEMF)
Solar Alliance Energy Inc. (OTCQB: SAENF)
Tasman Metals Ltd (OTCQB: TASIF)
Timberline Resources Corp. (OTCQB: TLRS)
UVIC INC (OTCQB: UVVC)
VNUE, Inc. (OTCQB: VNUE)
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