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Citizens Financial (CFG) to Buy Clarfeld Financial Advisors

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Recently, Citizens Financial Group, Inc. (CFG - Free Report) and Tarrytown, NY-based Clarfeld Financial Advisors, LLC, inked a deal, under which the former will buy the latter for an undisclosed amount. The deal commensurate with Citizens’ strategic plan of trimming expenses, expanding its wealth management product offerings, and getting digitized with innovative technology.

 “The Clarfeld acquisition provides a unique opportunity to accelerate our strategy of building a highly competitive wealth management business that is well-positioned to offer a comprehensive range of wealth management and banking services to existing and future clients,” said John Bahnken, president and chief executive officer of Citizens Bank Wealth Management. “Clarfeld’s strong leadership, highly skilled team of wealth management professionals and broad range of advisory services complement our existing platform while adding important scale to our business”, he added.
 
Terms of the Deal

Post closure of the deal, Clarfeld turning into a unit of Citizens Bank Wealth Management will continue to work under its current brand name. Notably, Citizens Bank Private Wealth Management will be combined with Clarfeld.

Further, Clarfield’s Robert A. Clarfeld will be appointed as the CEO of Citizens’ high net worth and ultra-high net worth businesses.

Notably, the deal is likely to be completed later this year or in early 2019, subject to certain customary closing terms and conditions, along with regulatory approvals.

With $6.6 billion of assets under management (AUM) and $900 million of assets under administration (AUA) as of Sep 30, 2018, Clarfeld is a leading wealth-management firm. On the other side, Citizens Bank Wealth Management has AUM worth $7.9 billion and $26.5 billion of total AUM/AUA. Therefore, on closure of the deal, the combined entity will have around $14.4 billion of AUM and $34.1 billion of AUM/AUA.

Similar Deals

This August, Citizens concluded the buyout of Franklin American Mortgage Company. The all-cash deal was announced in early June 2018 and was valued at $511 million. Franklin, TN-based Franklin American Mortgage was a well-diversified and nationwide provider of mortgage servicing and origination, with a leading position among private, non-bank mortgage companies.

Bottom Line

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

Shares of Citizens have gained slightly in the past year against the 6.9% decline witnessed by the industry it belongs to.


 

Currently, Citizens carries a Zacks Rank #3 (Hold).

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