Dive Brief:
- Waterbury, Connecticut-based Webster Bank will pay $5.1 billion in stock to buy Pearl River, New York-based Sterling Bancorp in what the companies are calling a merger of equals, according to a Monday press release.
- The deal, set to close in the fourth quarter, would create a bank with about $63 billion in assets, $52 billion in deposits, $42 billion in loans and more than 200 branches, the companies said.
- The combined entity, which would bear Webster’s name, will move its headquarters to Stamford, Connecticut, but maintain offices in Waterbury and the New York City area.
Dive Insight:
New England has proved fertile ground for mergers and acquisitions thus far this year. When M&T Bank sought access to the coveted Boston market, it targeted Bridgeport, Connecticut-based People’s United Financial, announcing a deal in February to buy the bank for $7.6 billion.
Eastern Bank agreed this month to pay $642 million to acquire Medford, Massachusetts-based Century Bank in a bid to bolster its Boston-area presence. The tie-up marks Eastern’s first bank acquisition since going public in October.
And SVB Financial Group, the parent company of Silicon Valley Bank, agreed in January to buy Boston Private Financial Holdings for roughly $900 million to boost its wealth-management business.
Webster plans to cut about 11% of the combined entity’s annual noninterest expenses, American Banker reported Monday. The company expects to incur $245 million in merger-related expenses, but the deal is projected to save $120 million while the company generates an extra $440 million per year.
The CEOs of Webster and Sterling will serve alternating two-year terms in leading roles. John Ciulla, Webster’s chief executive, will remain president and CEO after the deal is complete. Jack Kopnisky, Sterling’s chief executive, will serve as executive chairman for two years, then succeed Ciulla as president and CEO, while Ciulla will become executive chairman.
It's not the first time a CEO has had to wait to retake a top role after a merger. Former SunTrust CEO Bill Rogers will succeed Kelly King as chief executive in September after serving roughly two years as president and chief operating officer at Truist, the bank that spawned from SunTrust's combination with BB&T.
"We are bringing together two high-performing organizations with strong cultural and business model alignment to create a powerhouse Northeast bank," Ciulla said in Monday’s press release. "This combination ... enables us to more aggressively invest in key businesses and activities to enhance value for our customers, our communities, our shareholders and our bankers.”
Ciulla appears to be referring to HSA Bank, a Webster division that already accounts for 12% of health savings accounts nationwide, according to the company.
Webster shareholders will own 50.4% of the combined entity after the deal is complete. The bank’s board after the merger will comprise eight directors from Webster and seven from Sterling.
