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Stifel Financial Plans to Acquire Business Bancshares & Unit

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On May 10, Stifel Financial Corp. (SF - Free Report) announced plans to acquire Business Bancshares and its wholly owned subsidiary, The Business Bank of St. Louis, with a view to fortify its presence in the St. Louis region and expand banking capabilities. The deal is expected to close in fourth-quarter 2018.

Shares of Stifel Financial lost 1.6% on next day’s trading session, reflecting investors’ concerns over undisclosed financial terms of the acquisition.

Founded in 2002, Business Bancshares is a provider of private and business banking products and services. On a consolidated basis with its subsidiaries, the company had about $620 million in assets, $516 million of loans, $536 million of total deposits and $70 million of tangible equity as of Mar 31, 2018, and its non-performing loan ratio was 0.04%.

Per the terms, The Business Bank of St. Louis will operate as a separate subsidiary bank and serve Stifel Financial’s Global Wealth Management and Institutional Group clients. Also, senior management and key client relationship managers of The Business Bank of St. Louis will be retained by Stifel Financial.  

Chairman and CEO of Stifel Financial, Ronald J. Kruszewski said, “This acquisition represents another step in the build-out of our banking services in our Global Wealth Management business.”

Larry Kirby, CEO and President of the acquired company said, “Stifel’s extensive capabilities in wealth management, trust, and investment banking will enhance the products and services that we can offer to our customers.”

The company’s inorganic growth activities reflect capital strength and efforts to bolster performance. Also, it has diversified revenue sources, which are likely to support its financials. Additionally, it will benefit from improving conditions in the domestic economy.

In the past year, shares of Stifel's have gained 26%, underperforming the industry’s rally of 32.2%.

Stifel currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the same space are E*TRADE Financial Corporation (ETFC - Free Report) , Interactive Brokers Group (IBKR - Free Report) and The Goldman Sachs Group (GS - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

E*TRADE’s Zacks Consensus Estimate for current-year earnings has been revised 9% upward over the last 30 days. In a year’s time, its share price has gained more than 84%.

Interactive Brokers’ Zacks Consensus Estimate for current-year earnings has been revised 4.7% upward over the last 30 days. Over the past year, its share price has shot up 128%.

Goldman Sachs has witnessed its Zacks Consensus Estimate for 2018 earnings being revised 6.6% upward, over the last 30 days. Also, its shares have gained 9.3%, in a year’s time.

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