Bok financial denver -
MAY LOSE VALUE
BOK Financial Corp. on June 18 agreed to pay up to acquire CoBiz Financial Inc., joining a growing list of pricey M&A deals this year.
The deal to buy Denver-based CoBiz was priced at 288.7% of the target's tangible common equity, making it the fourth-most expensive deal in the last five years for a bank with at least $1 billion in assets. Of the three deals that were more expensive than BOK Financial's, two occurred this year. Given the deal landscape, analysts said they were not surprised by the price for CoBiz.
"I think it's a pretty full price and not something you would have seen three years ago, but obviously valuations are up," said John Rodis, an analyst with FIG Partners. "If you were going to approach CoBiz, you were going to have to pay close to 3x tangible."
One of the most expensive deals was Independent Bank Group Inc.'s acquisition of Denver-based Guaranty Bancorp, priced at 319.0% of tangible common equity. Analysts said that agreement likely pushed the price of CoBiz higher given the scarcity of banking assets based in Colorado. Other than Guaranty and CoBiz, there is only one publicly traded bank with more than $1 billion of assets in Colorado: National Bank Holdings Corp. Analysts said CoBiz presented a better opportunity for exposure to Colorado, and to Denver in particular, since more than half of National Bank's deposits are in Missouri and Kansas.
Markets sold off BOK Financial stock over the deal, matching the market reaction to other pricey deals this year such as Fifth Third Bancorp's purchase of MB Financial Inc.
"As we've seen on other transactions, when there's sizable dilution and long earnback, the market reacts unfavorably," said Gary Tenner, an analyst with D.A. Davidson. BOK Financial estimated that it would take 5.75 years to earn back the book value diluted in the deal. There is a chance the deal will outperform, as management did not include some potential revenue synergies, such as BOK Financial's higher fee income, said Brady Gailey, an analyst with Keefe Bruyette & Woods. But it is hard to model an outcome that makes the price look cheap, he said.
"To the extent that they can overlay their strong fee income businesses on top of CoBiz, then the earnback will be better. But even if it goes from six years to four years, a four-year earnback is still on the higher side of what the market deems appropriate," Gailey said.
BOK Financial executives pointed out that share repurchases — a use of capital that rarely triggers a sell-off — carry a much longer earnback of 7.50 years. But investors dinged BOK Financial's stock all the same, sending share prices down nearly 6%. D.A. Davidson's Tenner said investors might not worry about share repurchases since the dilution occurs over time while the bank is growing book value, so the impact is diffused.
The comparison to share repurchases is particularly meaningful for BOK Financial since it has significant cash on hand. The bank reported a common equity Tier 1 capital ratio of 12.06% in the first quarter, and management noted that the bank assumes a 9.5% CET1 ratio over the long term. That translates to more than $650 million of cash the bank could put to use. During the CoBiz deal call, management said the company would be open to additional M&A, including significantly larger banks.
But analysts said the company might struggle to find another bank to acquire. Executives said they would target a bank similar to CoBiz: a commercial-focused bank in existing or adjacent markets. The list of banks that fit the bill is short. KBW's Gailey said BOK Financial would like to acquire a bank that offers more exposure to Texas. But the most obvious commercial-focused banks in the state, such as Cullen/Frost Bankers Inc. or Texas Capital Bancshares Inc., are probably too large for BOK Financial considering the Oklahoma bank's credit culture and management style, Gailey said. Further, BOK Financial is still majority-owned by George Kaiser, so a significant acquisition would send his stake well below 50%. The bank might consider a smaller acquisition, but pricing could prove difficult, particularly after getting hammered over the CoBiz deal.
"They've shown a willingness to pay up, but a lot of [target banks] are already at the price they paid for CoBiz," Tenner said. "And then they'd have to put a premium on top of that."
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BOK Financial to buy CoBiz Financial for nearly $1 billion
BOK Financial in Tulsa, Okla., has agreed to buy CoBiz Financial in Denver.
The $33 billion-asset BOK Financial said in a press release Monday that it will pay $977 million in cash and stock for the $3.8 billion-asset CoBiz. The deal, which is expected to close in the fourth quarter, prices CoBiz at 290% of its tangible book value.
The deal is one of the biggest bank mergers announced this year and comes just weeks after Guaranty Bancorp in Denver agreed to sell itself to Independent Bank Group in McKinney, Texas, for $1 billion.
CoBiz is a commercially focused bank with operations in Colorado and Arizona. The company specializes in health care and public finance.
Steve Bangert, CoBiz’s chairman and CEO, will become Colorado vice chairman for BOK Financial's bank. He will also join BOK Financial’s board.
“CoBiz is a perfect fit as a merger partner,” Steven Bradshaw, BOK Financial’s president and CEO, said in the release. BOK Financial and CoBiz “have enjoyed a close relationship for almost two decades, and both franchises will benefit as a result of this partnership.”
BOK Financial said it expects to incur pretax merger and integration costs of about $61 million. It plans to cut about 40% of CoBiz’s annual noninterest expense.
The deal is expected to be 6% accretive to BOK Financial’s 2019 earnings and 9% accretive to next year. It should take about six years to earn back the deal's nearly 9% dilution to BOK Financial's tangible book value.
Goldman Sachs and Frederic Dorwart, Lawyers advised BOK Financial. BofA Merrill Lynch and Simpson Thacher & Bartlett advised CoBiz.
BOK Financial Corporation
American bank
 | |
 BOK Tower | |
| Type | Public company |
|---|---|
Traded as | Nasdaq: BOKF Russell 1000 Index component |
| Industry | Banking |
| Founded | 1910; 111 years ago (1910), as Exchange National Bank of Tulsa 1990; 31 years ago (1990), as BOK Financial Corporation |
| Headquarters | Tulsa, Oklahoma, US |
Areas served | Arizona, Arkansas, Colorado, Kansas, Missouri, New Mexico, Oklahoma, Texas |
Key people | George Kaiser, chairman Steven G. Bradshaw, CEO & President Steven E. Nell, CFO |
| Revenue |  US$1.888 Billion (Fiscal Year Ended 31 December 2020)[1] |
Operating income | US$563.864 Million (Fiscal Year Ended 31 December 2020)[1] |
Net income | US$432.418 Million (Fiscal Year Ended 31 December 2020)[1] |
| AUM | US$96.63 Billion (Quarter Ended June 30, 2021)[1] |
| Total assets | $47.15 billion (Quarter Ended June 30, 2021)[2] |
| Total equity | $5.35 billion (Quarter Ended June 30, 2021)[2] |
| Owner | George Kaiser (53%) |
Number of employees | 4,900 (2021) |
| Website | www.bokf.com |
| Footnotes / references [3] | |
BOK Financial Corporation is a bank holding company headquartered in the BOK Tower in Tulsa, Oklahoma. The company is more than 50% owned by George Kaiser, who acquired the bank in 1991 from the FDIC. It is the largest bank in Oklahoma, with 14% of the total deposits in the state. Known for its energy roots, as of June 30, 2021, 14% of its loan portfolio was to borrowers in the petroleum industry.
BOK — pronounced as letters, "B-O-K" — is derived from "Bank of Oklahoma." The company's banking subsidiary, BOKF, NA, operates under the brands Bank of Oklahoma, Bank of Texas and Bank of Albuquerque, and it operates as BOK Financial in Arizona, Arkansas, Colorado, Kansas, and Missouri.[4] It also operates TransFund, Cavanal Hill Investment Management and BOK Financial Securities.
History[edit]
BOK Financial traces its roots to the Exchange National Bank of Tulsa, which was formed in 1910 when four oil investors bought the assets of the failed Farmers National Bank.[5] One of the bank's major investors was Harry F. Sinclair, who became the president of the bank.[6]
In 1917, Exchange National Bank began construction of a headquarters building in Tulsa at Third Street and Boston Avenue. In 1928, the bank constructed a 28-story tower adjacent to the initial building. The combined structure, since renamed the 320 South Boston Building, remained the tallest building in Tulsa until 1967.[7]
In 1933, during the Great Depression, several Tulsa oil men, including William G. Skelly, Harry Sinclair, J.A. Chapman and H.G. Barnard, invested $6.5 million of their own wealth into the bank. As a result, it became a major player in the early 1930s oil boom. In 1933, it was reorganized as the National Bank of Tulsa (NBT).[6][8]
In 1945, the bank was one of the largest sellers of War bonds.[6]
In 1975, NBT changed its name to Bank of Oklahoma (BOK). The following year, BOK began moving its headquarters employees into the new BOK Tower. Also in 1975, the bank installed the first automated teller machine in Oklahoma.[6][9]
In 1979, the bank reached $1 billion in assets.[6]
In 1984, the bank merged with Fidelity of Oklahoma and reached $3 billion in assets.[6]
In 1986, the bank received $130 million from the Federal Deposit Insurance Corporation (FDIC) and reported a net loss of $139 million.[10]
On June 7, 1991, when the bank had just under $2 billion in assets, it was acquired by George Kaiser for $61 million in a sale facilitated by the FDIC. Under Kaiser's ownership, BOK began an aggressive expansion effort with the strategy to locate in growing markets near Oklahoma.[6][10]
In 1994, BOK Financial acquired an Oklahoma-based bank holding company with operations in Northwest Arkansas, which would become Bank of Arkansas.[6]
In 1997, BOK Financial’s regional expansion initiative officially began with acquisitions of Park Cities Bancshares and First Texcorp in Dallas, forming Bank of Texas. The bank would go on to complete several Texas acquisitions in the late 1990s and 2000s, bolstering its presence there.
In 1998, the bank formed the Bank of Albuquerque with the acquisition of 17 branches in New Mexico.[6]
In 2003, the bank formed Colorado State Bank and Trust and entered the Denver market.[6]
In 2005, the bank formed Bank of Arizona and entered the Phoenix market.[6]
In November 2008, the bank declined to receive a capital investment from the United States Department of the Treasury as part of the Troubled Asset Relief Program, making it the largest bank in the United States to do so.[6][11]
On August 19, 2012, the company acquired Milestone Group, a wealth management firm, in its first acquisition since 2007.[12]
In March 2014, the company announced the acquisition of MBM Advisors, Inc. of Houston, Texas.[13]
In November 2016, the company acquired MBT Bancshares, the parent company of Missouri Bank and Trust of Kansas City, informally known as "mobank."[14]
In October 2018, the company acquired CoBiz Financial and rebranded their Colorado and Arizona operations "BOK Financial."[15]
In October 2019, the company rebranded mobank and Bank of Arkansas under "BOK Financial," leaving the four brands known today: Bank of Oklahoma, Bank of Texas, Bank of Albuquerque, and BOK Financial in Arizona, Arkansas, Colorado, Kansas and Missouri.
A full merger and acquisition history can be located on the company's investor relations website.
[edit]
In 2005, the company acquired the naming rights for the BOK Center, for $11 million.[16]
References[edit]
- ^ abcd"BOKF Financial Corporation 2020 Annual Report Results"(PDF). December 31, 2020. Retrieved June 12, 2021.
- ^ ab"BOKF Financial Corporation Quarter Ended March Report Results"(PDF). March 31, 2021. Retrieved June 12, 2021.
- ^"BOK Financial Corporation 2017 Form 10-K Annual Report". U.S. Securities and Exchange Commission.
- ^"Bank of Arkansas to Rebrand to BOK Financial" (Press release). BOK Financial Corporation. October 28, 2019.
- ^"OKLAHOMA BANKS CLOSED: State Concern Forced to the Wall by Failure of National Bank". The New York Times. December 15, 1909.(subscription required)
- ^ abcdefghijklWINSLOW, LAURIE (November 14, 2010). "Bank of Oklahoma celebrates 100 years". Tulsa World.
- ^"Historic Tulsa: The Bank at 320 South Boston".
- ^GRAHAM, GINNIE (August 30, 2008). "Tulsa weathered other failures". Tulsa World.
- ^"The Panic of 1907 and the Savings and Loan Crisis", The Financial Crisis and Federal Reserve Policy, Palgrave Macmillan, 2013, doi:10.1057/9781137401229.0008, ISBN
- ^ abHARDIMAN, SAMUEL (June 7, 2016). "BOK Financial experiences 25 years of growth under George Kaiser". Tulsa World.
- ^"BOK FINANCIAL CORP. CHOOSES NOT TO PARTICIPATE IN TREASURY'S CAPITAL PURCHASE PROGRAM" (Press release). U.S. Securities and Exchange Commission. November 12, 2008.
- ^"BOK Financial Acquires The Milestone Group" (Press release). Business Wire. August 19, 2012.
- ^"BOK Financial Announces Acquisition of MBM Advisors" (Press release). Business Wire. March 4, 2014.
- ^"BOK Financial Receives Regulatory Approvals to Acquire MBT Bancshares" (Press release). GlobeNewswire. November 16, 2016.
- ^"BOK Financial Corporation to Acquire CoBiz Financial" (Press release). GlobeNewswire. June 18, 2018.
- ^Mecoy, Don (October 28, 2005). "BOK will pay $11 million to name Tulsa arena". The Oklahoman.
External links[edit]
CoBiz Financial Merges with BOK Financial in $1 Billion Transaction
The commercially focused banking operation will expand its footprint by three times
Denver-based CoBiz Financial Inc. and BOK Financial Corporation announced the signing of a definitive merger agreement, Tuesday, June 19, in a deal valued at approximately $1 billion. The two entities have comparable and complementary profiles, as both banks are focused on commercial customers and maintaining a strong credit culture.
BOK Financial is a $33 billion regional financial services company headquartered in Tulsa, OK. This transaction marks a significant expansion of BOK Financial's capabilities and positions it as a premier regional bank, expanding its footprint to Oklahoma, Texas, Arkansas, Missouri, Kansas and New Mexico.
"CoBiz is a perfect fit as a merger partner for BOK Financial," says Steven G. Bradshaw, president and CEO of BOK. "Steve Bangert and his team have built a well-respected, commercially focused bank that has consistently grown shareholder value, with a strong credit culture and differentiated approach to business banking. The two banks have enjoyed a close relationship for almost two decades and both franchises will benefit as a result of this partnership. We believe the combined organization will be the premier commercial bank in Colorado and Arizona.
Based on the closing price of BOK Financial's common shares on June 15, common shareholders of CoBiz will receive $977 million of total consideration, consisting of 0.17 shares of BOK Financial common stock and $5.70 in cash for each share of CoBiz common stock. The merger consideration is valued at $24.02 per share, based on the closing price of BOK.
"The merger drives an internal rate of return in excess of 20 percent, is materially accretive to earnings per share, enhances our return on equity and return on assets, and provides further geographic diversity for both banks' loan and deposit portfolio," Bradshaw says. "In addition, the issuance of more than 7 million shares as consideration for CoBiz shareholders should provide additional trading liquidity in BOK Financial common stock."
With approximately $3.8 billion in assets and strong history of revenue and earnings growth since 1994, CoBiz is a commercially focused bank, with a footprint that extends from Colorado to Arizona. CoBiz offers specialty lending lines of business including health care and public financial, and fee-generating businesses including wealth management and commercial insurance.
Bangert will join the BOK Financial Board of Directors after the close of the transaction.
"This merger will allow us to better serve our markets and provide customers with a more robust product offering, higher lending limits and a banking franchise that spans the lower midwest and southwest," says Bangert. BOK Financial enjoys an outstanding reputation as a supporter of the communities it serves and we're so pleased to join forces with a company that shares a similar approach to how we serve our customers, our employees and our communities.
BOK Financial expects the acquisition to be 6 percent accretive to earnings in 2019, and 9 percent accretive to earnings in 2020. The transaction is anticipated to deliver an internal rate of return of more than 20 percent.
Goldman Sachs served as financial advisor while Frederic Dorwart, Lawyers PLLC served as legal advisor to BOK Financial. BofA Merrill Lynch provided financial services and Simpson Thacher & Bartlett serves as legal advisor to CoBiz.
BOK Financial Corporation
American bank
| |
BOK Tower | |
| Type | Public company |
|---|---|
Traded as | Nasdaq: BOKF Russell 1000 Index component |
| Industry | Banking |
| Founded | 1910; 111 years ago (1910), as Exchange National Bank of Tulsa 1990; 31 years ago (1990), as BOK Financial Corporation |
| Headquarters | Tulsa, Oklahoma, US |
Areas served | Arizona, Arkansas, Colorado, Kansas, Missouri, New Mexico, Oklahoma, Texas |
Key people | George Kaiser, chairman Steven G. Bradshaw, CEO & President Steven E. Nell, CFO |
| Revenue | US$1.888 Billion (Fiscal Year Ended 31 December 2020)[1] |
Operating income | US$563.864 Million (Fiscal Year Ended 31 December 2020)[1] |
Net income | US$432.418 Million (Fiscal Year Ended 31 December 2020)[1] |
| AUM | US$96.63 Billion (Quarter Ended June 30, 2021)[1] |
| Total assets | $47.15 billion (Quarter Ended June 30, 2021)[2] |
| Total equity | $5.35 billion (Quarter Ended June 30, 2021)[2] |
| Owner | George Kaiser (53%) |
Number of employees | 4,900 (2021) |
| Website | www.bokf.com |
| Footnotes / references [3] | |
BOK Financial Corporation is a bank holding company headquartered in the BOK Tower in Tulsa, Oklahoma. The company is more than 50% owned by George Kaiser, who acquired the bank in 1991 from the FDIC. It is the largest bank in Oklahoma, with 14% of the total deposits in the state. Known for its energy roots, as of June 30, 2021, 14% of its loan portfolio was to borrowers in the petroleum industry.
BOK — pronounced as letters, "B-O-K" — is derived from "Bank of Oklahoma." The company's banking subsidiary, BOKF, NA, operates under the brands Bank of Oklahoma, Bank of Texas and Bank of Albuquerque, and it operates as BOK Financial in Arizona, Arkansas, Colorado, Kansas, and Missouri.[4] It also operates TransFund, Cavanal Hill Investment Management and BOK Financial Securities.
History[edit]
BOK Financial traces its roots to the Exchange National Bank of Tulsa, which was formed in 1910 when four oil investors bought the assets of the failed Farmers National Bank.[5] One of the bank's major investors was Harry F. Sinclair, who became the president of the bank.[6]
In 1917, Exchange National Bank began construction of a headquarters building in Tulsa at Third Street and Boston Avenue. In 1928, the bank constructed a 28-story tower adjacent to the initial building. The combined structure, since renamed the 320 South Boston Building, remained the tallest building in Tulsa until 1967.[7]
In 1933, during the Great Depression, several Tulsa oil men, including William G. Skelly, Harry Sinclair, J.A. Chapman and H.G. Barnard, invested $6.5 million of their own wealth into the bank. As a result, it became a major player in the early 1930s oil boom. In 1933, it was reorganized as the National Bank of Tulsa (NBT).[6][8]
In 1945, the bank was one of the largest sellers of War bonds.[6]
In 1975, NBT changed its name to Bank of Oklahoma (BOK). The following year, BOK began moving its headquarters employees into the new BOK Tower. Also in 1975, the bank installed the first automated teller machine in Oklahoma.[6][9]
In 1979, the bank reached $1 billion in assets.[6]
In 1984, the bank merged with Fidelity of Oklahoma and reached $3 billion in assets.[6]
In 1986, the bank received $130 million from the Federal Deposit Insurance Corporation (FDIC) and reported a net loss of $139 million.[10]
On June 7, 1991, when the bank had just under $2 billion in assets, it was acquired by George Kaiser for $61 million in a sale facilitated by the FDIC. Under Kaiser's ownership, BOK began an aggressive expansion effort with the strategy to locate in growing markets near Oklahoma.[6][10]
In 1994, BOK Financial acquired an Oklahoma-based bank holding company with operations in Northwest Arkansas, which would become Bank of Arkansas.[6]
In 1997, BOK Financial’s regional expansion initiative officially began with acquisitions of Park Cities Bancshares and First Texcorp in Dallas, forming Bank of Texas. The bank would go on to complete several Texas acquisitions in the late 1990s and 2000s, bolstering its presence there.
In 1998, the bank formed the Bank of Albuquerque with the acquisition of 17 branches in New Mexico.[6]
In 2003, the bank formed Colorado State Bank and Trust and entered the Denver market.[6]
In 2005, the bank formed Bank of Arizona and entered the Phoenix market.[6]
In November 2008, the bank declined to receive a capital investment from the United States Department of the Treasury as part of the Troubled Asset Relief Program, making it the largest bank in the United States to do so.[6][11]
On August 19, 2012, the company acquired Milestone Group, a wealth management firm, in its first acquisition since 2007.[12]
In March 2014, the company announced the acquisition of MBM Advisors, Inc. of Houston, Texas.[13]
In November 2016, the company acquired MBT Bancshares, the parent company of Missouri Bank and Trust of Kansas City, informally known as "mobank."[14]
In October 2018, the company acquired CoBiz Financial and rebranded their Colorado and Arizona operations "BOK Financial."[15]
In October 2019, the company rebranded mobank and Bank of Arkansas under "BOK Financial," leaving the four brands known today: Bank of Oklahoma, Bank of Texas, Bank of Albuquerque, and BOK Financial in Arizona, Arkansas, Colorado, Kansas and Missouri.
A full merger and acquisition history can be located on the company's investor relations website.
[edit]
In 2005, the company acquired the naming rights for the BOK Center, for $11 million.[16]
References[edit]
- ^ abcd"BOKF Financial Corporation 2020 Annual Report Results"(PDF). December 31, 2020. Retrieved June 12, 2021.
- ^ ab"BOKF Financial Corporation Quarter Ended March Report Results"(PDF). March 31, 2021. Retrieved June 12, 2021.
- ^"BOK Financial Corporation 2017 Form 10-K Annual Report". U.S. Securities and Exchange Commission.
- ^"Bank of Arkansas to Rebrand to BOK Financial" (Press release). BOK Financial Corporation. October 28, 2019.
- ^"OKLAHOMA BANKS CLOSED: State Concern Forced to the Wall by Failure of National Bank". The New York Times. December 15, 1909.(subscription required)
- ^ abcdefghijklWINSLOW, LAURIE (November 14, 2010). "Bank of Oklahoma celebrates 100 years". Tulsa World.
- ^"Historic Tulsa: The Bank at 320 South Boston".
- ^GRAHAM, GINNIE (August 30, 2008). "Tulsa weathered other failures". Tulsa World.
- ^"The Panic of 1907 and the Savings and Loan Crisis", The Financial Crisis and Federal Reserve Policy, Palgrave Macmillan, 2013, doi:10.1057/9781137401229.0008, ISBN
- ^ abHARDIMAN, SAMUEL (June 7, 2016). "BOK Financial experiences 25 years of growth under George Kaiser". Tulsa World.
- ^"BOK FINANCIAL CORP. CHOOSES NOT TO PARTICIPATE IN TREASURY'S CAPITAL PURCHASE PROGRAM" (Press release). U.S. Securities and Exchange Commission. November 12, 2008.
- ^"BOK Financial Acquires The Milestone Group" (Press release). Business Wire. August 19, 2012.
- ^"BOK Financial Announces Acquisition of MBM Advisors" (Press release). Business Wire. March 4, 2014.
- ^"BOK Financial Receives Regulatory Approvals to Acquire MBT Bancshares" (Press release). GlobeNewswire. November 16, 2016.
- ^"BOK Financial Corporation to Acquire CoBiz Financial" (Press release). GlobeNewswire. June 18, 2018.
- ^Mecoy, Don (October 28, 2005). "BOK will pay $11 million to name Tulsa arena". The Oklahoman.
External links[edit]
BOK Financial Corp. on June 18 agreed to pay up to acquire CoBiz Financial Inc., joining a growing list of pricey M&A deals this year.
The deal to buy Denver-based CoBiz was priced at 288.7% of the target's tangible common equity, making it the fourth-most expensive deal in the last five years for a bank with at least $1 billion in assets. Of the three deals that were more expensive than BOK Financial's, two occurred this year. Given the deal landscape, analysts said they were not surprised by the price for CoBiz.
"I think it's a pretty full price and not something you would have seen three years ago, but obviously valuations are up," said John Rodis, an analyst with FIG Partners. "If you were going to approach CoBiz, you were going to have to pay close to bok financial denver tangible."
One of the most expensive deals was Independent Bank Group Inc.'s acquisition of Denver-based Guaranty Bancorp, priced at 319.0% of tangible common equity. Analysts said that agreement likely pushed the price of CoBiz higher given the scarcity of banking assets based in Colorado. Other than Guaranty and CoBiz, there is only one publicly traded bank with more than $1 billion of assets in Colorado: National Bank Holdings Corp. Analysts said CoBiz presented a better opportunity for exposure to Colorado, and to Denver in particular, since more than half of National Bank's deposits are in Missouri and Kansas.
Markets sold off BOK Financial stock over the deal, matching the market reaction to other pricey deals this year such as Fifth Third Bancorp's purchase of MB Financial Inc.
"As we've seen on other transactions, when there's sizable dilution and long earnback, the market reacts unfavorably," said Gary Tenner, an analyst with D.A. Davidson. BOK Financial estimated that it would take 5.75 years to earn back the book value diluted in the deal. There is a chance the deal will outperform, as management did not include some potential revenue synergies, such as BOK Financial's higher fee income, said Brady Gailey, an analyst with Keefe Bruyette & Woods. But it is hard to model an outcome that makes the price look cheap, he said.
"To the extent that they can overlay their strong fee income businesses on top of CoBiz, then the earnback will be better. But even if it goes from six years to four years, a four-year earnback is still on the higher side of what the market deems appropriate," Gailey said.
BOK Financial executives pointed out that share repurchases — a use of capital that rarely triggers a sell-off — carry a much longer earnback of 7.50 years. But investors dinged BOK Financial's stock all the same, sending share prices down nearly 6%. D.A. Davidson's Tenner said investors might not worry about share repurchases since the dilution occurs over time while the bank is growing book value, so the impact is diffused.
The comparison to share repurchases is particularly meaningful for BOK Financial since it has significant cash on hand. The bank reported a common equity Tier 1 capital ratio of 12.06% in the first quarter, and management noted that the bank assumes a 9.5% CET1 ratio over the long term. That translates to more than $650 million of cash the bank could put to use. During the CoBiz deal call, management said the company bok financial denver be open to additional M&A, including significantly larger banks.
But analysts said the company might struggle to find another bank to acquire. Executives said they would target a bank similar to CoBiz: a commercial-focused bank in existing or adjacent markets. The list of banks that fit the bill is short. KBW's Gailey said BOK Financial would like to acquire a bank that offers more exposure to Texas. But the most obvious commercial-focused banks in the state, such as Cullen/Frost Bankers Inc. or Texas Capital Bancshares Inc., are probably too how tall is jose baston for BOK Financial considering the Oklahoma bank's credit culture and management style, Gailey said. Further, BOK Financial is still majority-owned by George Kaiser, so a significant acquisition would send his stake well below 50%. The bank might consider a smaller acquisition, but pricing could prove difficult, particularly after getting hammered over the CoBiz deal.
"They've shown a willingness to pay up, but a lot of [target banks] are already at the price they paid for CoBiz," Tenner said. "And then they'd have to put a premium on top of that."
Did you enjoy this analysis? Click here to set up real-time alerts for data-driven articles on the U.S. financial sector. Click here to analyze US bank & thrift M&A using metrics such as deal value, deal volume, price/tangible book, price/book and price/earnings. The template displays results in a customizable heat map. |
