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Citizens Financial (CFG)-Investors Merger to Close by Mid-April

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Following the regulatory approvals from the board of governors of the Federal Reserve System and the Office of the Comptroller of the Currency, Citizens Financial Group, Inc. (CFG - Free Report) expects to close the acquisition of Investors Bancorp, Inc.  by mid-April of 2022. The acquisition was announced in July 2021.

Post-closing, information relating to the anticipated conversion of Investors’ customer accounts to Citizens Financial will be communicated throughout the year, with conversion targeted to be completed in first-quarter 2023.

The central bank is set to use the 2023 stress test to recalculate the stress capital buffer requirement for CFG to reflect the material impact of Investors Bancorp’s acquisition on the company’s capital requirements.

Citizens Financial generally requires a two-year stress test cycle and will receive a new stress capital buffer this year. However, since this year's test does not include the effects of the acquisition, recalculation for 2023 is additionally required.

Management noted, “We are pleased to have received regulatory approval to complete the acquisition of Investors, which closely follows the acquisition of HSBC’s East Coast branches. The addition of these two businesses strengthens our franchise across the Northeast, significantly adding to our growth potential”.

Last month, the company closed the acquisition of 80 East Coast branches and the national online deposit business from HSBC.The acquisitions of Investors and the HSBC branches will create a strong franchise in the greater New York City and Philadelphia Metro areas, and New Jersey by adding 234 branches. The acquisitions are expected to add $29 billion of deposits and $24 billion of loans, creating a strong foundation for revenue growth. The buyout efforts enable the company to strengthen its banking franchise and geographic reach.

Per the deal terms announced last July, Investors’ shareholders are entitled to receive 0.297 of a share of Citizens Financial common stock and $1.46 in cash for each Investors’ share they own. Thus, former Investors’ shareholders will own nearly 14% of the combined company. The implied total transaction value, based on the closing prices on Jul 27, 2021, is $3.5 billion.

CFG has also been making inorganic growth moves to expand its product and service capabilities, backed by a robust liquidity position. In December 2021, in its efforts to enhance growing corporate advisory capabilities, Citizens Financial announced a definitive agreement to acquire substantially all assets of DH Capital LLC. In November, CFG closed the buyout of JMP Group in an all-cash transaction. Citizens Financial also closed the acquisition of Willamette in September 2021, which is expected to amplify its corporate financial advisory competencies.

Over the past year, shares of the company have rallied 8.1% compared with 0.4% growth of the industry.

 

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Currently, Citizens Financial carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Other Banking Consolidations

QCR Holdings, Inc. (QCRH - Free Report) received all the necessary regulatory approvals for its previously announced acquisition of Guaranty Federal Bancshares, Inc. . The stock-and-cash merger, announced in November 2021, is anticipated to be completed on Apr 1, 2022, subject to the satisfaction of other customary closing conditions.

Shareholders of Guaranty Federal provided their consent to the deal.  Per the terms of the transaction, QCRH plans to merge Guaranty Bank, the banking subsidiary of Guaranty Federal, into Springfield First Community Bank, its Springfield-based charter. Following the merger, the combined company will operate under the name of Guaranty Bank in all markets across Springfield and southwest Missouri.


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