Vanessa Mambrino, Consultant & Nick Robin, Business Analyst
Capital Performance Group LLC, Washington, DC, a firm providing advisory, planning, analytic, and project management support to the financial services industry. 

 

Bank 7 of Oklahoma City, Okla., has been steadily expanding in size and geographic presence for the past ten years.  This year’s top performer among subchapter-S-corporations with between $100 million and $1 billion in total assets has consistently taken advantage of opportunities to broaden its geographic reach, entering the Oklahoma City market via branch acquisition in 2005 and adding new branches in northwestern Oklahoma in the following years. 

In 2011, this growth contributed to what Craig Adkins, bank president, describes as “an extremely successful year.”  As mentioned in the print version of the article, Bank 7 executed its first FDIC-assisted acquisition in January 2011 through its parent company, Haines Financial Corp. (Bank 7 is the holding company’s sole bank subsidiary).  Bank 7 acquired First State Bank of Camargo, Okla., at a significant discount, paying no premium on deposits but receiving no loss-share agreement from the regulator.  When asked about the transaction, Adkins explained: “First State Bank was located in a small rural community.  It was simpler to purchase the assets at a discount, rather than negotiate a loss-share agreement. The acquisition has been very successful; we have retained nearly all of First State Bank’s customers.”

The bargain purchase gain from this transaction caused net income at Bank 7 to increase from just over $2 million in 2010 to $15.9 million in 2011, helping to give Bank 7 the highest ROAE among all four top-ranked institutions, at 84.49%.  To put this in perspective, the average top-performing large S-corp had an ROAE of 25.76%, while the average large S-corp had an ROAE of 7.29%.

In addition, Bank 7 expanded its commercial lending portfolio in 2011, experiencing 65.7% growth in CRE and C&I loans.  This growth was higher than the average among top performing large S-corps of 16.6% and the average among all companies of 9.0%.  Commercial loans increased from 56% of Bank 7’s loan portfolio to 61% during the year.  The bank has benefited from the “thriving” economy in its markets, where natural gas, wind, and oil companies have prospered over the past few years.  “Due to our demonstrated expertise and experience in the energy industry, Bank7 has developed a reputation for helping customers grow and succeed in energy-related fields”, says Brad Haines, chairman and CEO.  “Our commitment to customer success has been the driving factor in our performance.”

The bank continues to look for new opportunities to grow, whether organically or through sensible acquisitions.  “Our net operating earnings continue to expand,” says Adkins.  “We hope and expect to be on the list next year.”

 

 

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[This article was posted on June 22, 2012, on the website of ABA Banking Journal, www.ababj.com.]    

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