Recently, BofI Holding, IncBOFI entered into a deal with Nationwide Bank to acquire $3 billion of the bank's deposits. For this, BofI Holding has signed a deposit purchase and assumption agreement ("DAA") with Nationwide Bank, per which, the $3 billion of deposits will consist of $1 billion in checking, savings and money market accounts, and $2 billion in time deposit accounts. The transaction is likely to close by the fourth quarter of 2018, after obtaining all required regulatory approvals.
The deal will involve the transfer of around one lakh deposit customers from Nationwide Bank to BofI Federal Bank - the subsidiary company of BofI Holding.
BofI Holding will use its excess capital to fund the deposit premium which will be in proportion to the fair market value of deposits acquired. The deal is expected to be accretive to the company's earnings and tangible book value.
For Nationwide Bank, this deal is part of a series of steps to transfer all of its retail deposits to other financial institutions. The bank had earlier announced a plan to shift its focus and resources from retail banking to property, casualty, financial services and other emerging businesses.
Terrance Williams, chief marketing officer and president of emerging businesses for Nationwide, noted "BofI is a strong and stable institution with many similarities to Nationwide Bank. Both companies are direct, digital banks with a customer-centric approach to banking. Because of these similarities, as well as BofI's depth of product offerings and history of successful transitions, we feel confident that it's the right partner to provide banking services to our customers going forward."
Further, BofI Holding has prior experience of successfully undertaking similar transactions which will enable the company to make a smooth transition and expand its customer base. Further, this deposit acquisition is expected to strengthen the company's balance sheet position.
BofI Holding's shares have gained around 19.1% in the past six months compared with the industry 's growth of 6.7%.
The stock currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the same space are American River Bankshares AMRB , Bay Commercial Bank BCML and Cathay General Bancorp CATY . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
American River Bankshares' 2018 earnings estimates have been revised 1.1% upward over the last 30 days. Also, its shares have gained 12.6% in a year's time.
Bay Commercial's Zacks Consensus Estimate for current-year earnings moved 8.2% north in the last 30 days. The company's share price has risen almost 45% in the past year.
Cathay General's Zacks Consensus Estimate for 2018 earnings inched up 1.2% in 30 days' time. The stock has rallied 12.6% over the past year.
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