Excitement over Gold Banc Corp.'s five planned acquisitions has sent stock of the Leawood, Kan., company soaring about 30% in the past two weeks.
Since April 29, the $567 million-asset company has announced deals to purchase five Kansas banks. The latest agreement, announced May 20, calls for Gold to swap $25 million of stock for $109 million-asset First State Bancorp in Pittsburg, Kan.
In response, investors have pushed the aggressive acquirer's stock price to $21.375 by midday Friday, from $16.813 on May 18.
"They're showing their enthusiasm for these deals," said Anthony J. Polini, a bank analyst at Advest Group in New York.
Mr. Polini noted that Gold's earnings are projected to grow at a 32% annual clip-three times the industry's average.
Gold plans to grow to $1 billion of assets over the next 18 months by amassing a network of small community banks. When the five announced deals are completed, Gold would have assets of $791 million.
The company prefers to swap stock for banks with the No. 1 or 2 market position in county seat. The strategy is unique in a state where there is a gulf between large regional banks and tiny community banks.
"We're aggressively filling a niche for the next generation of bank holding companies," said Keith Bouchey, chief financial officer.
Michael W. Gullion, president and chief executive officer, said small banks are attracted to Gold because as subsidiaries they can offer products similar to their larger competitors'.
For example, Gold's banks can sell securities investments to customers through the company's full-service brokerage firm, Midwest Capital Management.
Aside from offering a uniform product line, Gold maintains a hands-off philosophy when it comes to bank subsidiaries. They keep their boards of directors and make loan decisions in-house, Mr. Gullion said.
The small banks, many of which are closely held, were also drawn to Gold to convert their investments to a publicly traded stock, Mr. Polini said.
"Local bankers want liquidity, and Gold can give that to them," he said.
Mr. Bouchey said that Gold is pleased with its stock price, but that investors should not interpret the recent jump as indicating the company is in play. In fact, he said he hopes the price increase encourages other small banks to sell to Gold.
"People are starting to take a harder look at us," he said.