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Citizens Financial (CFG) Completes Deal to Acquire Investors

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Citizens Financial Group, Inc. (CFG - Free Report) completes the acquisition of Investors Bancorp, Inc. In July 2021, CFG announced that it would acquire Investors for $3.5 billion.

At the time of the deal announcement, it was decided that shareholders of Investors would receive 0.297 of a share of Citizens Financial common stock and $1.46 in cash for each Investors’ share they owned. Accordingly, the former shareholders of Investors own 14% of the combined company.

In February, CFG closed the acquisition of 80 East Coast branches and the national online deposit business from HSBC. The acquisition of Investors and the HSBC branches are expected to create a strong franchise in the greater New York City and Philadelphia Metro areas, and New Jersey by adding 234 branches.

The acquisitions will add $29 billion of deposits and $24 billion of loans, creating a strong foundation for revenue growth. Moreover, CFG will likely be able to strengthen its banking franchise and geographic reach.

Bruce Van Saun, the chairman and CEO of Citizens Financial, stated, “With the acquisitions of Investors and HSBC’s East Coast branches now complete, we look forward to bringing our new customers the full range of Citizens capabilities and building a formidable business in the important New York City metro region and New Jersey markets. We are pleased to welcome more than 1,600 Investors colleagues to the Citizens family. Together we will drive future growth and deliver long-term value for all our stakeholders.”

Notably, during 2022, Citizens Financial will provide Investors’ customers with comprehensive information relating to the anticipated conversion of their accounts, targeted to be completed in first-quarter 2023.

At the time of the announcement of the Investors’ deal, the merger was estimated to be immediately accretive to CFG’s earnings per share (EPS). The transaction was expected to add 6.4% to 2023 fully-diluted EPS.

Moreover, the deal was anticipated to improve return on tangible common equity by 120 basis points (bps) and efficiency ratio by 270 bps.

After provision for adding investments in brand marketing and technology capabilities, the CFG-Investors merger was expected to result in $130 million of fully phased in annual cost savings. Total pre-tax integration costs were estimated at $400 million.

Our Take

Backed by a robust liquidity position, Citizens Financial has been undertaking inorganic growth efforts to expand its product and service capabilities.

In December 2021, as part of its efforts to enhance growing corporate advisory capabilities, it 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. It also closed the acquisition of Willamette in September 2021, which is expected to amplify its corporate financial advisory competencies.

So far this year, shares of CFG have lost 11.9% compared with a 4.9% decline of the industry.

 

Zacks Investment Research
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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.

Inorganic Growth Moves by Other Finance Companies

First Horizon Corporation (FHN - Free Report) and TD Bank Group (TD - Free Report) signed a definitive agreement, wherein TD will acquire FHN in an all-cash deal valued at $13.4 billion or $25 for each FHN common share.

TD anticipates the FHN acquisition to close by Nov 1, 2022.

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