Advancing with the merger deal,
Webster Financial Corporation ( WBS Quick Quote WBS - Free Report) and Sterling Bancorp have received regulatory approval from the board of governors of the Federal Reserve System for the all-stock merger between the two companies. The transaction, announced in April 2021, is expected to close on or around Feb 1, 2022, subject to satisfaction or waiver of the remaining customary closing conditions.
Per the previous announcement in August 2021, both banks also received respective stockholders’ approval for the merger. Webster Bank, National Association and Sterling National Bank, the respective subsidiary banks of Webster Financial and Sterling were also granted approvals from the Office of the Comptroller of the Currency to merge as part of the merger between Webster Financial and Sterling.
According to the terms of the deal announced in April 2021, shareholders of Sterling will get 0.46 of share of Webster Financial common stock for each share of Sterling. Thus, following the closure, Sterling shareholders will own 49.6% of Webster Financial.
After the deal’s conclusion, Sterling will be merged into Webster Financial, and the combined company will retain the Webster Financial name. The combined entity is likely to have $65.5 billion in assets, $42 billion in loans and $54 billion in deposits (based on balances as of Sep 30, 2021) and will operate more than 200 financial centers in the Northeast region.
Going by the previous disclosure, post completion of the deal, the combined firm is expected to generate a return on average assets and a return on average tangible common equity of 1.40% and 17%, respectively. Further, it will lead to cost savings of almost $120 million and generate $440 million of excess capital per year.
Following the executive order by President Joe Biden that proposes a more rigid scrutiny of bank mergers, an extending timeline for the regulatory approvals can be seen of late.
The merger is expected to strengthen Webster Financial’s commercial banking, health savings, and consumer and digital banking business. Shares of Webster Financial have fallen 5% compared with the 4.5% decline recorded by shares of Sterling, over the past six months.
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Currently, both Webster Financial and Sterling carry 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
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