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Regions' (RF) Sabal Buyout Enhances Capital Market Abilities

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Regions Financial Corporation's (RF - Free Report) subsidiary, Regions Bank, has closed the previously announced acquisition of Sabal Capital Partners, LLC. This October, Regions agreed to acquire the diversified financial services firm, leveraging tech-driven origination and servicing platform for off-balance-sheet lending in the small-balance commercial real estate market. 

With the deal completion, Sabal will be integrated into Regions' Real Estate Capital Markets platform. Regions has also taken over Sabal's flagship offices in Irvine and Pasadena, CA, as well as New York City to expand the Real Estate Capital Markets platform's production offices to 20.

Regions has acquired only the lending and servicing segments of Sabal's business. In contrast, the investment management business and the investment funds handled by Stone Point Capital LLC remain with the seller.

Management noted, "By welcoming Sabal into the Regions family, we are further enhancing our agency multifamily and non-agency lending capabilities and accelerating our growth in off-balance-sheet small balance commercial real estate lending. With Sabal's strong reputation, leading-edge technology platform, and exceptional team, this acquisition serves as an opportunity for Regions to meet additional needs for our clients while reaching new clients through the additional services delivered by Sabal Capital Partners."

Sabal is one of the culminating originators of small-balance agency commercial real estate loans, and has a strong presence in the non-agency commercial mortgage-backed securities loan origination. Sabal has originated financing worth nearly $6 billion across the United States since its inception and retains its current servicing portfolio worth $5 billion.

It aids clients via its proprietary avant-garde SNAP platform, a tool developed to improve the lending and communications processes with clients, and its investor base. Sabal capitalizes on tools, such as real-time commercial property financing scenarios, seamless online loan applications, and technology enabling clients, to scan loan progress through the deal's closure.

The acquisition boosts Regions' strategy of acquiring businesses that facilitate it to enhance its current client relationships, while also drawing business from new ones, attracted by services, competencies, and technologies offered by companies such as Sabal.

The acquisition of Sabal expands Regions' commercial real estate solutions across the full gamut of agency offerings. This is likely to drive origination and servicing feesfurther enhancing non-interest revenues and diversifying overall revenues.

Shares of Regions have gained 40% in the past year, outperforming 35.2% growth of the industry.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

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

Inorganic Growth Efforts by Other Firms

Several companies from the finance sector are undertaking consolidation efforts to counter the low-interest-rate environment along with heightened costs of investments in technology.

Recently, Ally Financial Inc. (ALLY - Free Report) acquired the digital-first credit card company Fair Square Financial. This October, ALLY agreed to buy Fair Square for $750 million in an all-cash deal.

The transaction will advance Ally Financial's evolution as the leading digital consumer bank, providing frictionless, innovative products to its growing customer base. In addition to advancing the company's digital offerings, the deal is expected to enhance its ability to grow and deepen customer relationships, and provide access to the $1-trillion credit card market.

Valley National Bancorp (VLY - Free Report) completes the previously announced merger deal with The Westchester Bank Holding Corporation. This June, VLY entered an agreement to acquire Westchester with an aim to expand its presence.

The acquisition is expected to provide Valley National with a physical footprint and additional commercial lending expertise in the Westchester County market. With Westchester's branches, Valley National will now have 233 total branches, 131 in New Jersey, 45 in New York, 41 in Florida, and 16 in Alabama.

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

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