Bank7’s Century deal: the funding test behind EPS

Bank7’s October 15 release expects the Century closing on November 1, 2026. Company filing

Century’s June 30 deposits: $1.23bn; gross loans: $845m. Implied loan-to-deposit ratio: 68.7%. September announcement

Analysis: measure what the funding buys

The analytical opportunity is to ask what customers contribute after ownership changes. An acquired deposit balance is a starting inventory for that investigation. It cannot, by itself, establish how much recurring income the buyer will earn or how much additional lending would be prudent. A low loan-to-deposit ratio also leaves unanswered questions about securities, liquidity needs and the timing of asset cash flows.

A 2024 San Francisco Fed analysis distinguishes economic franchise value from assets recognized on bank balance sheets. Economic Letter

For this transaction, we would keep two separate scorecards: the acquired customers’ funding contribution and the combined company’s earnings per share. The first asks whether the customer relationships remain economically useful. The second asks how the entire acquisition affects shareholders after the share count and all relevant expenses are included. Both matter; neither substitutes for the other.

A sensitivity test, not a forecast

Consider a hypothetical $100 million deposit pool costing 0.50 percentage points less than replacement funding. Its annual gross funding advantage would be $500,000. Assume $200,000 of annual account-servicing costs: the contribution becomes $300,000 before taxes, credit effects, acquisition cost and other integration expenses.

Now raise the deposit rate by 0.25 percentage points while holding the replacement rate, balances and servicing costs unchanged. The contribution falls to $50,000. These are illustrative assumptions, not Century forecasts or reported costs. Their purpose is to show why a seemingly small change in pricing can matter more than a large headline balance.

Retention needs the same care. We would compare balances belonging to the same acquired customers across reporting dates. A stable total can conceal departures if new, more expensive accounts replace old ones. Conversely, a lower balance could improve economics if it reflects the deliberate exit of unusually costly accounts. A headcount of customers and a dollar balance answer different questions.

What would constitute convincing evidence?

A useful post-close disclosure would show opening acquired deposits, subsequent withdrawals and additions, account pricing, and the expense required to serve that book. Thirty-, ninety- and 180-day snapshots would make the transition easier to evaluate. These are proposed tests, not promised company disclosures.

The earnings scorecard should reconcile operating income with integration spending and acquisition-accounting effects, using the actual diluted share count. Comparison with a credible stand-alone baseline would help distinguish merger benefits from developments that might have occurred anyway. Such a comparison requires assumptions and should make them visible.

Our conclusion is conditional: the strongest evidence would be customers staying at sustainable prices while the buyer preserves service and lending discipline. If reported per-share earnings improve but that evidence remains thin, the funding case would still be unproven. The closing date starts the measurement period; it does not complete the economic test.