BOK Financial Corporation (BOKF) recently completed the acquisition of Denver-based The Milestone Group Inc., a wealth management firm. Financial terms of the deal were not disclosed.
The acquisition by BOK Financial demonstrates its aim of diversifying its revenue opportunities by increasing its fee-based business. Previously, the company also purchased United Banks of Colorado in 2007 and Colorado State Bank and Trust in 2003.
Frederic Dorwart, Lawyers acted as the legal counsel to BOK Financial, while Sherman and Howard L.L.C. was delegated as legal advisors to The Milestone Group. Moreover, FBR Capital Markets, a subsidiary of FBR & Co. (FBRC), provided financial advice to the Milestone Group.
The Milestone Group, which provides wealth management services to about 250 high net worth clients, was founded in 1996 and is established mainly in Colorado and Nebraska. Moreover, the firm has about $1.3 billion in equity and fixed income investments.
Having strengthened its foothold over the years through its local bank brand, Colorado State Bank and Trust, BOK Financial has a robust presence in Denver. Therefore, with the acquisition of Milestone Group, the company will expand further in Denver with the help of the acquired firm’s wealth management brand and proficiency. Furthermore, assets under management and administration for BOK Financial will sum up to about $50 billion.
The deal widens The Milestone Group’s scope and will help its expansion efforts with the commitment of providing investment decisions to its clients. Moreover, there will be no change in the company’s founders, advisors and relationship teams.
Overall, the clients of Milestone Group will have access to the additional services and products provided by Colorado State Bank and Trust, while BOK Financial will take advantage of Milestone Group's investment management potencies.
Recently, the long-term Issuer Default Ratings (IDR) of BOK Financial and its lead bank subsidiary, BOKF, NA, have been upwardly revised to 'A' from 'A-' by Fitch Ratings. The outlook assigned is Stable.
A diverse earnings base, solid capital position and healthy liquid profile are the positives behind the ratings upgrade of BOK Financial. According to Fitch, BOK Financial’s solid fundamentals are a consequence of its ownership as well as structure of governance.
Our Viewpoint
The rating upgrades and acquisitions of such asset management companies are welcome as they play a major role in preserving investor confidence in the stock.
We also believe that BOK Financial’s diverse revenue stream, sturdy capital position and expense control initiatives bode well for investors. Capital deployment efforts also bode well and boost investors’ confidence. Nevertheless, a protracted economic recovery and its exposure to the energy sector and risky assets remain our concerns.
BOK Financial currently retains its Zacks #2 Rank, which translates into a short-term Buy rating. However, considering the fundamentals, we maintain our long-term ‘Neutral’ recommendation on the stock.
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