Piper Jaffray Upgrades BOK Financial Following CoBiz Deal

Regional bank BOK Financial Corporation BOKF announced Monday an agreement to acquire CoBiz Financial Inc COBZ for $1 billion in cash and stock.

The Analyst

Reviewing the deal, Piper Jaffray analyst Brett Rabatin upgraded BOK Financial from Neutral to Overweight and increased his price target from $110.50 to $112.50.

The Thesis

Following the CoBiz deal, BOK Financial is better positioned for growth over the next two years and have an expanded geographical footprint, Rabatin said in a Tuesday note. The analyst views the deal as a good one, given his belief that CoBiz is one of the remaining best premium franchise in the West, vesting phased-in cost synergies.

"The deal also entails one of the most sought-after markets, 46% DDA and amongst the lowest deposit betas to date (12bp cost of deposits in 1Q18, or flattish Y/Y)," Rabatin said.'

Apart from improving the overall franchise and funding mix, the analyst believes the deal will help improve efficiency and operating leverage over the next several years.

Despite all positives, Piper Jaffray noted investors can now buy BOK Financial shares under 13 times its revised 2019 estimates, a multiple discount to similar sized national peers.

"We believe as investors become more comfortable with the transaction and see the benefits, the valuation will improve," the firm said.

The Price Action

After dropping 5.7 percent Monday, shares of BOK Financial were trading up 2 percent at $97.98 Tuesday.

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