Citizens (CFG) completes takeover of 80 East Coast HSBC branches

Citizens Financial Group, Inc. CFG completed the acquisition of 80 East Coast branches and the national online deposit business of HSBC Bank USA, NA on February 18. The acquisition, which was announced in May, expands Citizens Financial’s physical footprint in many strategic markets, including New York, and adds more than 800,000 customer accounts.

These 80 branches include 66 locations in the New York metro area, five locations in Southeast Florida, and nine locations in the Mid-Atlantic/Washington DC region. The newly acquired branches were renamed “Citizens”.

The acquisition is part of the company’s efforts to strengthen its banking franchise in targeted markets. In fact, in July 2021, the company also announced a definitive agreement to acquire Investors Bancorp ISBC in order to strengthen its banking franchise and develop its consumer clientele. This transaction will mark Citizens Financial’s entry into the New Jersey market and position it in seventh place in terms of deposits. Upon closing, the acquisition will add $21.7 billion in loans, $20 billion in deposits and a network of 154 branches in New Jersey, New York and the Philadelphia metro area.

Management noted, “Combined with our impending acquisition of Investors Bancorp, these new branches will fill a significant gap in our business footprint while placing us in the top 10 depositories in the key New York City subway market.

The acquisition of Investors Bancorp, together with HSBC branches, creates a strong franchise in the New York and Philadelphia metropolitan areas, as well as in New Jersey by adding 234 branches. Apart from that, this move is expected to add $29 billion in deposits and $24 billion in loans, creating a solid foundation for revenue growth. Additionally, the combined transactions are expected to be 5% accretive to earnings per share in 2022.

The acquisition of HSBC’s national online deposit business also advances Citizens Financial’s national expansion strategy. This presents an exciting opportunity for CFG’s growing national consumer digital bank, Citizens Access, which is integral to its growth.

Therefore, the takeover strengthens Citizens’ Financial’s geographic footprint, adds liquidity to the balance sheet and enables the bank to expand its national digital banking platform.

Management said: “We are delighted to welcome over 500 talented HSBC colleagues to the Citizens family and look forward to recruiting more in areas such as wealth management, mortgages and services. corporate banking as we continue to develop our platform and position the bank for further. growth.”

While such moves are strategic for long-term growth, the costs of additional hiring and integrating these buyouts could increase the expense base, thereby limiting earnings growth.

Over the past six months, CFG shares have risen 22.1%, compared to 10.7% growth in the industry.

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CFG currently carries a Zacks Rank #3 (Hold). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Inorganic growth efforts by other companies

Several companies in the financial sector are undertaking takeover efforts to improve skills in adjacent businesses, strengthen franchise and increase scale in new geographies or within their existing footprint to increase technology flaring, compliance costs and low interest rates.

Last week, Webster Financial Corporation WBS has signed a definitive agreement to acquire Bend Financial, Inc., a provider of cloud-based health savings account (“HSA”) solutions.

The buyout will help HSA Bank, a division of Webster Bank, leverage Bend Financial’s customer experience that uses cloud-native technology and user-centric design. This will provide a modern and streamlined approach to managing and engaging HSAs.

At the beginning of February, Truist Financial CorporationTFC’s subsidiary, Truist Insurance Holdings, Inc., has signed an agreement to acquire Kensington Vanguard National Land Services.

Over the years, Truist Financial has strengthened its real estate services through strategic acquisitions. The transaction should help Truist Insurance expand its title insurance business. Trist Insurance’s existing title operation is BridgeTrust Title, which will likely be integrated into Kensington Vanguard.

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