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Citizens Financial (CFG) Completes Merger Deal With JMP Group

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Citizens Financial Group, Inc. (CFG - Free Report) has completed its previously announced merger agreement to acquire JMP Group LLC . Citizens Financial had announced the all-cash deal in September in a bid to augment its capital market capabilities.

JMP Group is a well-known capital market firm, providing investment banking services like strategic advisory, equity research, and sales and trading focused mainly on the healthcare, technology, financial services and real estate sectors.

Now, JMP will operate as Citizens Financial's wholly-owned subsidiary.

The transaction enhances Citizens Financial's industry expertise and expands its product offerings. It adds an institutional equities franchise — equity capital markets and research, and sales and trading capabilities — which will complement Citizens Financial's growing corporate banking and strategic advisory capabilities.

The buyout is also expected to foster growth and diversify Citizens Financial’s capital market platform and provide greater scale in key verticals like healthcare, technology, financials and real estate.

Such enhancement in capabilities and the commercial banking segment will thus bolster Citizens Financial's fee income and help diversify the company's capital market revenue stream. Apart from this, the company can now leverage JMP Group's mid-corporate client base by expanding its geographical footprint into the Southeast, Texas and California.

Our Take

Supported by a solid balance sheet and liquidity position, Citizens Financial has been on an acquisition spree. The latest acquisition marks the company's fourth purchase since this May.

In the past year, shares of Citizens Financial have jumped 51% compared with 41.8% growth of the industry it belongs to.


Zacks Investment ResearchImage Source: Zacks Investment Research


Currently, Citizens Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Several companies from the finance sector are undertaking consolidation efforts to counter the low interest rate environment along with the heightened costs of investments in technology. Also, mergers help in diversifying revenues and products.

Last month, with an aim to further diversify deposit gathering capabilities and revenue mix, Raymond James (RJF - Free Report) announced a cash-cum-stock deal to acquire TriState Capital Holdings, Inc. for $1.1 billion.

Supported by a digital lending platform and a solid risk management technology system, TriState Capital provides securities-based loans to high-net-worth borrowers across the United States. Following the deal closure, Raymond James' SBL balance is likely to be 33% of net loans (on a pro-forma basis).

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