BOK Financial Corporation BOKF has inked an all-cash deal to acquire MBT Bancshares, the parent company of Missouri Bank and Trust of Kansas City (“mobank”). The transaction is approximately valued at $102.5 million and is expected to close in the second quarter of 2016.
Incepted in 1891, mobank is a Kansas City-based private bank, which operates four banking divisions across the region. Renowned for its organic growth history and differentiated approach toward customer service, mobank has reportedly been on BOK Financial’s radar off late as the latter seeks to grow inorganically in the region.
The latest acquisition will help BOK Financial to enhance its foothold in Kansas City. The company presently provides full-banking services in the region under the Bank of Kansas City brand with branches in markets like Overland Park, KS, and Lee’s Summit, MO.
According to FDIC market share data, MBT Bancshares is 17th largest bank in Kansas City. Post acquisition, BOK Financial will achieve the ninth-largest deposit market share, which is a little over 2% of the total market. Moreover, mobank’s business will add to BOK Financial’s commercial banking, mortgage banking as well as wealth management operations. As of Sep 30, 2015, mobank held assets worth $578 million, including $536 million in deposits and $421 million in loans.
We expect the latest acquisition to boost the company’s Kansas City loan portfolio. Interestingly, during the third quarter of 2015, loan balances soared 17.6% year over year to $683.8 million, thereby surpassing overall loan growth of 12.3%. Investment in a high-loan growth market, amid a rising interest rate scenario, will likely drive higher net interest income as well as help increase total revenue for the company.
More importantly, BOK Financial anticipates the acquisition to drive earnings per share by 3 cents in the first year and by 6 cents in the second year. Notably, such estimates exclude integration-related costs. Further, the company projects an internal rate of return of 13%.
The transaction has received consent from board of directors of both the parties, and is now awaiting regulatory approvals and other customary closing conditions.
BOK Financial currently holds a Zacks Rank #2 (Buy).
Other favorably-placed stocks in finance space are Flagstar Bancorp Inc. FBC, Mutualfirst Financial Inc. MFSF, and New York Community Bancorp Inc. NYCB. All these stocks sport a Zacks Rank #1 (Strong Buy).
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