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The Rich Get Richer
Citizens, Webster announce late June acquisitions
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Business New Haven
7/12/1999
By: Michael C. Bingham
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The bank feeding frenzy continues apace.
On June 21, the Providence-based Citizens Financial Group announced it had reached an agreement to buy the Boston-based US Trust Corp. (UST) for $1.4 billion in cash, or $32 per share.
The deal, coupled with Citizens' recently announced acquisition of Boston's State Street Corp.'s commercial banking business, solidifies Citizens' position as the second-largest bank in New England, with assets of $28 billion. Only Fleet Financial Group is larger.
A $5.9 billion bank holding company, UST has 87 banking offices in eastern Massachusetts. Its sale will grow Citizens' Massachusetts assets from $8 billion to 14 billion. Itself a wholly-owned subsidiary of the Royal Bank of Scotland, PLC, Citizens now enjoys a strong presence in every New England state save Vermont and Maine.
Nine days later, the Waterbury-based Webster Financial Corp., parent company of Webster Bank, announced that it had itself reached an agreement to acquire New England Community Bancorp Inc. (NECB) of Windsor in a stock-for-stock exchange valued at approximately $220 million.
NECB is a multi-bank holding company with three subsidiary Connecticut banks, one New Hampshire bank and a mortgage company doing business in both states. The four commercial bank subsidiaries - New England Bank, the Equity Bank, the Community Bank and Olde Port Bank & Trust - have combined assets of about $800 million, 16 banking offices in Connecticut and two in the Granite State. Its mortgage subsidiary, the New England Community Mortgage Corp., posted about $160 million in loan originations in 1998.
With the acquisition, Webster will have approximately $10 billion in assets, making it the fifth-largest bank company in New England.
Said Webster Chairman and CEO James C. Smith, "Our partnership with New England Community Bancorp expands Webster's presence in Hartford, Litchfield and Tolland counties, and significantly strengthens our business banking presence."
The employment impact of the Webster-NECB deal is yet to be measured, although it is certain to result in some workforce reductions.
"When two banking companies merge in the same market to form a stronger bank, there will inevitably be duplication of duties resulting in some job eliminations," acknowledged John Brennan, Webster's chief financial officer.
He added however that downsized NECB employees would be given preference for open positions in the Webster organization. "Our history demonstrates a pattern of successfully placing most employees affected by our mergers."
Both the Citizens and Webster acquisitions will be subject to approval by state and federal regulators.
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