Two multibillion-dollar mergers took crucial steps toward fruition Monday, as Columbia Banking System revealed the beneficiaries of a branch divestment plan, and a key regulator gave final approval for a tie-up between New York Community Bank (NYCB) and Michigan-based Flagstar Bank.
The Federal Reserve approved NYCB’s $2.6 billion acquisition of Flagstar, according to a press release Monday.
The sign-off represents the last regulatory hurdle for a deal that is set to create an $88.4 billion-asset bank with 395 branches across nine states and a mortgage division composed of 81 retail lending offices in 26 states.
"We are extremely gratified to receive all necessary regulatory approvals required to close on our acquisition [that] combines two like-minded organizations,” NYCB CEO Thomas Cangemi said in Monday’s release.
The deal is now expected to close Dec. 1, NYCB said Monday. The Office of the Comptroller of the Currency (OCC) approved the tie-up Oct. 28, and mandated a 15-day waiting period that made Nov. 11 the earliest possible close date. The banks, at the same time, extended until Dec. 31 the deadline by which the transaction must close.
“Our larger balance sheet will help us invest more in technologies that enhance the customer experience and create a more personalized approach to banking,” Flagstar CEO Alessandro DiNello said in a statement Monday. “We could not have teamed up with a more complementary partner and I look forward to the powerful results we will achieve.”
Cangemi, too, touted the potential of an expanded branch network, a “diversified funding base and loan portfolio” and the infusion of fresh talent from Flagstar.
NYCB and Flagstar, however, are not the only merging banks to make progress Monday toward their respective combinations.
Tacoma, Washington-based Columbia announced Monday that it has agreed to sell seven branches in Washington and Oregon to Mountlake Terrace, Washington-based 1st Security Bank of Washington and offload three California locations to Dixon, California-based First Northern Bank.
The Justice Department in September identified the 10 branches it is ordering Columbia to divest as part of its $5.2 billion merger with Portland, Oregon-based Umpqua Bank. The Fed approved that deal late last month.
The seven-branch sale will give 1st Security an entry to the Oregon market, the bank said Monday. The bank will take on roughly $510 million in deposits and $76 million in loans, along with branch real estate and fixed assets.
"We are pleased to find a partner for these branches with a reputation for service and community support and will work to provide a seamless transition for our customers and employees," Columbia CEO Clint Stein said in a statement Monday.
1st Security said it intends to keep all branches operational after the transaction and to retain all Columbia employees.
“As experienced acquirors, we are committed to providing our new customers and employees with the best possible transition from Columbia and look forward to offering our personalized banking services to these communities for years to come,” 1st Security CEO Joe Adams said Monday.
The 1st Security and First Northern deals are both expected to close during the first quarter of 2023.
In the latter move, First Northern will take on roughly $128 million in deposits and $4 million in loans.
"These markets are a natural fit for First Northern and allow us to extend our footprint north along the I-5 corridor,” First Northern CEO Louise Walker said Monday. “We … look forward to welcoming the Columbia branch employees with open arms and providing our new customers and communities with First Northern Bank's exceptional brand of personalized service."
Through Umpqua, Columbia will serve the same communities after the merger that it earlier had through the branches it is offloading to First Northern.
"We are confident in First Northern's commitment to their communities and we know they will work tirelessly to make the transition seamless for these customers," Stein said Monday.
