- Key insight: Bank7's bid for Century Financial Services is moving on a court-imposed clock, leaving the $68 million stalking-horse bid exposed to competing offers.
- Expert quote: "We're not adversarial people. We're not bottom-feeder people. We've had plenty of transactions in our history where we deal fairly and professionally with people." —Tom Travis, CEO Bank7
- Forward look: Assuming Bank7 prevails in the auction, the bank anticipates a "stub period" before it moves to negotiate with Century's remaining 29% of shareholders.
Bank7 expects a court-ordered auction for a majority stake in a New Mexico competitor to wrap up by Sept. 3.
A four-week bidding window for the shares of Sante Fe-based Century Financial Services should open in August, Bank7 CEO Tom Travis told analysts on a conference call this week, with "further clarity" coming within two weeks. The Oklahoma community bank is currently the approved "stalking horse bidder" for 71% of shares, with a $68 million offer, though it could be outbid in the auction.
Earlier this month, Bank7 announced that it had
If Bank7 prevails, the deal would push its total assets from $1.9 billion to $3.4 billion and mark its first expansion into New Mexico.
Travis said the company intends to eventually engage with the shareholders of the remaining 29% of the bank. He anticipates a "stub period" after acquiring the majority stake during which Bank7 would work to consolidate the remaining stock.
"We're confident that we could meet with that group of people or with them and strike a really good transaction," Travis said on the earnings call. "We're not adversarial people. We're not bottom feeder people. We've had plenty of transactions in our history where we deal fairly and professionally with people."
Travis noted that there have been objections and motions in the receivership case, and the court recently required an expedited time frame.
"This has been an ongoing thing for quite some time, and I think the court is recognizing that," Travis said.
Century Bank's ownership drama was sparked by Peters' problems with creditors. As of this spring, he was a defendant in at least six lawsuits filed by creditors seeking the repayment of unpaid loans, according to the Sante Fe New Mexican. A well-known figure in New Mexico who also has significant real estate holdings and an extensive art collection, Peters owns or owned art galleries in Sante Fe and New York, and was listed as president of the Heart Gallery of New Mexico Foundation, which called him a "renowned authority on 19th and early 20th century American art."
Nathan Race, an analyst at Piper Sandler, inquired on Thursday's call whether "magnitude" of the potential Century acquisition would halt Bank7's M&A activity through the first half of the next year.
Travis emphasized that Bank7 is in "growth mode," and is open to raising capital or issuing debt if the right strategic opportunity comes along. The bank would welcome a "relatively short to mid-term" follow-on transaction to keep expanding, Travis added.
Race previously told American Banker that the deal is a "very compelling opportunity" for Bank7. He added that Century brings with it low-cost, high-quality deposits, a fairly liquid balance sheet and "significant dry powder in terms of core deposit funding to support Bank7's proven commercial loan growth prospects."
The Oklahoma bank reported net income of $8.35 million in the second quarter, down 25% from a year ago amid "heavier expenses" including M&A activity.
