Citizens Financial Group announced an agreement to acquire the holding company for Investors Bank, Investors Bancorp, in a cash and stock deal worth nearly $3.5 billion.
According to the Wednesday press release, Investors shareholders will receive $.297 of a share of CFG common stock and $1.46 in cash for each share of Investors they own. Based on Tuesday’s closing price for CFG at $44.32, the deal puts Investors value at roughly $14.62 per share.
Following a completion of the deal, former Investors shareholders will collectively own approximately 14% of the merged company.
Citizens accredited the acquisition as a strategic move in the Northeast physical banking space, connecting New England to the Mid-Atlantic market. The deal adds 154 branches to Citizens ecosystem, including 130 in the New York City metropolitan area.
The agreement and plan of merger has been unanimously approved by the boards of directors of each company and the transaction is expected to close in first or second quarter 2022, subject to approval by the shareholders of Investors, receipt of required regulatory approvals and other customary closing conditions.
Upon closing of the transaction, Investors’ Chairman and Chief Executive Officer Kevin Cummings and Michele Siekerka, current members of Investors’ board of directors, are expected to join Citizens’ board of directors.
Wednesday’s deal arrived almost exactly two months after Citizens announced its acquisition of HSBC Bank with nearly $9 billion in deposits and $2.2 billion in loans. Citizens’ HSBC merger allotted another 80 branches to the Providence-based company and added 800,000 new customers overall.
“The acquisition of Investors, following on the heels of the acquisition of HSBC’s East Coast branches, further strengthens our formidable franchise in the northeast, together adding roughly one million customers and boosting our near and long-term growth potential,” said Bruce Van Saun, chairman and chief executive officer of Citizens.
In an era that is shifting to digital banking, billion dollar investments in physical locations seems like a bold move. A January study by Credit Karma and Qualtrics found a whopping 71% of Americans already used online or mobile banking prior to the pandemic. With the addition of former COVID-19 restrictions, that total was pushed to 87%.
In their third-quarter earnings reports, JPMorgan Chase and the country’s three other banking heavyweights — Bank of America, Citi and Wells Fargo — supplied metrics showing an uptick in digital adoption by their customers.
Not to mention three of the five largest banks in the U.S. closed branch locations at a rate of greater than 7% over the period between 2014 and 2018, Smart Asset reported.
But Citizens’ and Investors’ releases revealed the banks have bigger plans.
By adding more physical branches, the companies intend to provides branch bases and brand reach to expand commercial lending and fee opportunities in the region. According to Citizens, this adds “attractive middle market / small business customer base opportunities to drive household growth and share while accelerating lending and wealth growth in consumers.”
“Citizens shares Investors’ deep commitment to serving customers, supporting colleagues and giving back to local communities,” said Kevin Cummings, chairman and chief executive officer of Investors. “Our local-market expertise and personal touch will align well with Citizens’ approach and together we will drive long-term value for all our stakeholders.”