The bank for a changing world

Acquisition of Commercial Federal Corporation : A further step in BNP Paribas' retail banking expansion in the Western US

  • 14.06.2005
BNP Paribas takes a further step in its expansion strategy in the Western US
through BancWest Corporation ("BancWest"), its wholly owned subsidiary.
BancWest announced today that its subsidiary, Bank of the West, has
reached an agreement to acquire Commercial Federal Corporation
("Commercial Federal"), a NYSE listed company (CFB), headquartered in
Omaha, Nebraska.

BancWest currently operates through 541 branches in 17 Western states,
primarily California and Hawaii. It operates under the brands of First Hawaiian
Bank in Hawaii, and Bank of the West on the Western US Mainland.
Commercial Federal operates through 198 branches in 7 states.
This transaction underscores BNP Paribas' expansion strategy in US retail
banking and its disciplined acquisition policy. Following the transaction,
BancWest will have in excess of 4.2 million accounts and 739 branches,
enhancing its presence in high growth markets. BancWest will operate in 20
states with 100 million inhabitants, and benefit from some of the strongest
demographic growth trends in the US.

On Monday 13th of June 2005, the Board of Directors of Commercial Federal
approved an agreement for the sale of 100% of the company to Bank of the
West. The transaction was also approved by the boards of BNP Paribas,
BancWest and Bank of the West. Commercial Federal shareholders will
receive at closing US $34.5 per share, of which a cash payment of US $34.0
from BancWest and US $0.5 as a special one-time dividend. In total, this US
$1.36 billion (1.12 billion Euros) purchase price represents a 27% premium to
the average closing stock price of Commercial Federal over the past six
months, and is equivalent to 14.8 times 2006 consensus earnings and 1.8
times book value as at 31 March 2005. Subsequent to the transaction, all
Commercial Federal activities will continue under the Bank of the West brand.
In 2004, Commercial Federal reported total revenues of US $382 million, net
income of US $76 million, and a RoE of 10.1%. The bank had US $10.4 billion
of assets as of March 31st, 2005. Bank of the West will accelerate the growth
of the franchise, by enhancing product offering, increasing sales efficiency,
generating pre-tax revenue synergies estimated at US $ 12 million in 2007,
net of associated costs.
The merger will also generate significant pre-tax cost synergies estimated at
US $54 million, decreasing the cost-income ratio of Commercial Federal
towards Bank of the West standard, creating shareholder value from 2006
onwards. The transaction presents limited execution risk given BancWest's
proven integration track record and the similarity between both banks'
business models and operating systems.
In a statement following the agreement, Baudouin Prot, CEO of BNP Paribas
said: "I recently reiterated that the US is one of our major priorities for
expansion in retail banking. This transaction is a good example of our welldefined
and focused expansion strategy. It is in line with our policy of valuecreating
transactions in businesses and geographies with strong growth
potential where there is limited execution risk. This acquisition also represents
a great example of our efficient use of capital ".
In addition, Don McGrath, President and CEO of BancWest said: "Commercial
Federal is an excellent franchise that has built strong relationships with its
clients and is an excellent fit for Bank of the West. It operates in high-growth
retail markets that complement our existing footprint. We will add substantially
to our market share in Denver, and become one of the leading banks in
Omaha and Des Moines. We see great opportunities to leverage this
franchise. It offers significant potential for BancWest's further organic growth
in that region."
The transaction, recommended by the Board of Directors of Commercial
Federal, is currently subject to approval by Commercial Federal's
shareholders and by various regulatory agencies in the US. The transaction is
expected to close in the fourth quarter of 2005. BNP Paribas was advised by
Morgan Stanley, Lehman Brothers and Goldman Sachs.

About BNP Paribas and BancWest

BNP Paribas (www.bnpparibas.com) is a European leader in banking and
financial services, with a significant and growing presence in the United
States and leading positions in Asia. BNP Paribas is the leading bank in the
Euro zone in terms of net income in 2004. The group has one of the largest
international banking networks, present in over 85 countries with close to
100,000 employees, including 67,000 in Europe. BNP Paribas enjoys key
positions in its three core businesses: Corporate and Investment Banking,
Asset Management & Services and Retail Banking.
BancWest Corporation is a wholly-owned subsidiary of BNP Paribas with
assets of US $51.4 billion and headquarters offices in Honolulu, Hawaii and
San Francisco, California. Its subsidiaries Bank of the West and First
Hawaiian Bank, are respectively the 5th largest commercial bank in California
and the largest bank in Hawaii.
Press contact(s)
Press contacts:

Michèle SICARD (33) 1 40 14 70 61
michele.sicard [at] bnpparibas (dot) com

Carine LAURU (33) 1 42 98 15 91
carine.lauru [at] bnpparibas (dot) com

Céline CASTEX (33) 1 40 14 65 16
celine.castex [at] bnpparibas (dot) com

Christelle MALDAGUE (33) 1 42 98 56 48
christelle.maldague [at] bnpparibas (dot) com

Hélène REGNARD (33) 1 40 14 65 14
helene.regnard [at] bnpparibas (dot) com