BOK Financial Corp. is in a quandary.
It would like to acquire other banks using its stock as payment. But 75% ownership by chairman George B. Kaiser makes the company's shares unattractive to many targets. Most companies don't want thinly traded stock; they want liquidity.
So Tulsa, Okla.-based BOK is seeking advice from investment banking firms to figure out how it can get more banks interested.
"It's the classic chicken-and-the-egg situation," said James A. White, chief financial officer for the $5.4 billion-asset company.
BOK has struggled to get its stock noticed. No analysts cover it because of its large single ownership and slim trading volume.
Although it has ambitious acquisition plans, BOK was unable to negotiate one deal in 1997. Its last two acquisitions, both in 1996, were cash transactions. Most recently it was snubbed by Overton Bancshares of Fort Worth, which agreed Tuesday to be sold to Cullen/Frost Bankers Inc. for $253.5 million in stock.
BOK wants investors to recognize its stock has value. Mr. White asserts that the company performs as well or better than 10 similar-size banking companies. BOK's stock has typically traded at about 15.5 times its trailing earnings, compared with peer banking companies that trade at more than 20 times earnings, Mr. White said.
"Our results have not fully registered in the market," he said.
Because Mr. Kaiser owns so much of the stock, the price can fluctuate based on his share purchases alone. Such was the case when Mr. Kaiser acquired 13,700 shares last week for an average price of $42.57 and a high of $46.
Mr. Kaiser's purchases boosted BOK's shares to close at $49 per share last Friday, up from $41 per share at the end of the previous week.
On Monday, BOK released a statement that read in part, "There are no unusual developments in the company's business to explain stock activity." However, the company noted Mr. Kaiser's stock purchases. Mr. Kaiser referred all questions to Mr. White.
The company also acknowledged in its statement that it had initiated discussions with investment banking firms to consider how it might increase interest among potential investors.
The shares of BOK that do trade are exchanged on the Nasdaq. Last year an average 3,500 shares of BOK's stock traded each day. Mr. White said the average among BOK's peer banks ranged between 50,000 and 100,000 shares traded daily.
Mr. White acknowledged that one of the reasons BOK does not trade more actively is Mr. Kaiser's ownership. The company hopes to market its stock more aggressively, get equity analysts interested in the company, and appeal to more firms to act as market makers, Mr. White said.
There are now three companies that make a market in BOK's stock: Herzog, Heine, Geduld of New York; Salomon Smith Barney; and Southwest Securities Inc. of Dallas.
But these things have been tried before, and analysts said it is still difficult to recommend BOK.
Because of its size, "most people would write that it's attractive as a takeover," said Diana Yates, an analyst with A.G. Edwards in St. Louis. Mr. Kaiser, however, has consistently said the bank is not for sale. That, combined with its low volume of shares traded, is going to make BOK less attractive to investors, and therefore analysts, Ms. Yates said.
