Webster Financial Corporation (NYSE: WBS) ("Webster") and Sterling
Bancorp (NYSE: STL) ("Sterling") jointly announced today that their
boards of directors have approved by unanimous vote a definitive
agreement under which the two companies will combine in an
all-stock merger of equals transaction with a total market value of
approximately $10.3 billion.
Under the terms of the agreement, Sterling will merge into
Webster, and Sterling's shareholders will receive a fixed exchange
ratio of 0.463 of a Webster share for each share of Sterling stock
they own. Following the closing of the transaction, Webster
shareholders will own approximately 50.4% of the combined company,
and Sterling shareholders will own approximately 49.6%, on a fully
diluted basis.
The combined company will retain the Webster name, establish a
new corporate headquarters in Stamford, CT, and have a continued
multi-campus presence in the greater New York City area and
Waterbury, CT.
The pro forma company will be a powerhouse player in the
Northeast with highly differentiated businesses in commercial
banking, health savings and consumer and digital banking. Enhanced
scale will unlock growth and value across each of these business
lines.
- Commercial banking unlocks a
diversified, multi-billion dollar opportunity to grow regional and
national C&I, commercial real estate and Sponsor &
Specialty loans through expanding existing relationships and new
clients.
- HSA Bank, a division of Webster
Bank and a top national provider of health savings accounts
nationally, will benefit from increased capacity for growth and
investment.
- Consumer, small business and direct
banking will benefit from local density and increased investment in
digital capabilities.
"We are excited to combine the best of both companies to create
an industry leader," said Jack L. Kopnisky, President & CEO of
Sterling. "Webster and Sterling have much in common: distinguished
client service, diversity of revenue, funding sources and assets,
and disciplined capital allocation. The increased capabilities and
scale of our two organizations are attractive propositions for our
clients, communities, shareholders and colleagues."
"We are bringing together two high-performing organizations with
strong cultural and business model alignment to create a powerhouse
Northeast bank," said John R. Ciulla, Chairman, President & CEO
of Webster. "This combination provides exceptional financial
benefits and enables us to more aggressively invest in key
businesses and activities to enhance value for our customers, our
communities, our shareholders and our bankers."
Strategic Benefits of the Proposed Merger
- Powerhouse Northeast Bank: Combined $63 billion in assets, $52
billion in deposits, and $42 billion in loans provides scale to
deliver best-in-class financial performance and drive value for all
stakeholders.
- Highly Differentiated Businesses: Webster and Sterling have
complementary businesses and strong franchises in commercial,
health savings and consumer and digital banking. Relationship- and
expertise-based commercial banking and a local presence are
enhanced by national reach in both lending and deposit gathering,
resulting in sustainable high performance and competitive
advantages.
- Significant Loan Growth Potential: The combined company’s
Northeast footprint is the most densely populated in the nation.
Through diversification and scale, commercial banking will unlock
opportunities to grow relationships with existing clients and
enhance operating leverage, particularly in commercial lending.
Webster and Sterling’s niche national lending platforms contribute
further growth, risk-adjusted returns and diversification.
- Best-in-Class Deposit Franchise: Together, Webster and Sterling
are strongly positioned with a low-cost, long-duration deposit
base. The pro forma company will have 200+ financial centers in the
Northeast market. In addition, it will benefit from the ability to
more aggressively grow and invest in HSA Bank, a top health savings
platform nationally with 12% market share and strong growth
characteristics.
Financial Benefits of the Proposed Merger
- Exceptional Profitability: The combined company is projected to
generate a ROAA of 1.40% and ROATCE of 17% – among the strongest
return profiles nationally.
- Enhanced Revenue Growth Potential: Scale and diversification
unlock compelling revenue growth opportunities by expanding
selected commercial lending portfolios, aggressively growing HSA
Bank, and enhancing digital banking offerings.
- Strong GAAP EPS Accretion to Both Companies' Shareholders:
>20% to Webster, >10% to Sterling, after realizing $120
million of projected cost savings.
- Significant Excess Capital Generation: The combined company is
projected to generate $440 million per year, or ~$2.50 per share,
of excess capital after organic growth and dividends, available for
both capital investments and share repurchases.
Governance and Leadership
Reflecting the equal contribution both partners bring to the
combined company, the board and executive management team will draw
from both sides:
- Jack L. Kopnisky, President & CEO of Sterling, will serve
as Executive Chairman of the combined company for 24 months after
closing, and will continue in a consulting capacity for an
additional 12 months thereafter.
- John R. Ciulla, Chairman, President & CEO of Webster, will
serve as President & CEO of the combined company until 24
months after closing, at which time he will become Chairman,
President & CEO.
- The combined company's executive management team will be
comprised of executives from both companies, including Luis
Massiani as Chief Operating Officer and Glenn I. MacInnes as Chief
Financial Officer.
- The board of directors of the combined company will have 15
directors, consisting of eight directors from Webster and seven
directors from Sterling, including Jack L. Kopnisky and John R.
Ciulla.
- William L. Atwell, current lead independent director of
Webster, will serve as lead independent director for 24 months
after closing, after which the Lead Independent Director will be a
legacy Sterling director.
Timing and Approvals
The merger is expected to close in the fourth quarter of 2021,
subject to satisfaction of customary closing conditions, including
receipt of required regulatory approvals and approval by the
shareholders of each company.
Advisors
J.P. Morgan Securities, LLC acted as lead financial advisor to
Webster and rendered a fairness opinion to its board of directors.
Piper Sandler & Co. also rendered a fairness opinion to
Webster's board. Wachtell, Lipton, Rosen & Katz is serving as
legal counsel to Webster.
Citigroup Global Markets Inc. acted as lead financial advisor to
Sterling and rendered a fairness opinion to its board of directors.
Keefe, Bruyette & Woods, Inc. also rendered a fairness opinion
to Sterling's board. Squire Patton Boggs (US) LLP is serving as
legal counsel to Sterling.
Joint Conference Call and Webcast Details
Webster and Sterling will conduct a live conference call to
discuss the transaction at 8:30 am Eastern Time today. To listen to
the live call, please dial 877-407-8289 or 201-689-8341, for
international callers. The webcast, along with related slides, will
be available on the Webster website (www.wbst.com) and slides will
be available on the Sterling website (www.sterlingbancorp.com). A
replay of the conference call will be available for one week via
the websites listed above, beginning at approximately 11:00 a.m.
(Eastern) on April 19, 2021. To access the replay, dial
877-660-6853 or 201-612-7415, for international callers. The replay
conference ID number is 13718870.
As a result of today's merger announcement, both companies have
cancelled their previously scheduled 2021 first quarter earnings
conference calls.
About Webster Financial Corporation
Webster Financial Corporation is the holding company for Webster
Bank, National Association and its HSA Bank division. With $33.3
billion in assets, Webster provides business and consumer banking,
mortgage, financial planning, trust, and investment services
through 148 banking centers and 280 ATMs. Webster also provides
mobile and online banking. Webster Bank owns the asset-based
lending firm Webster Business Credit Corporation; the equipment
finance firm Webster Capital Finance Corporation; and HSA Bank, a
division of Webster Bank, which provides health savings account
trustee and administrative services. Webster Bank is a member of
the FDIC and an equal housing lender. For more information about
Webster, including past press releases and the latest annual
report, visit the Webster website at www.websterbank.com.
About Sterling Bancorp
Sterling Bancorp, whose principal subsidiary is Sterling
National Bank, specializes in the delivery of services and
solutions to business owners, their families and consumers within
the communities it serves through teams of dedicated and
experienced relationship managers. Sterling National Bank offers a
complete line of commercial, business, and consumer banking
products and services. For more information, visit the Sterling
Bancorp website at www.sterlingbancorp.com.
CAUTION REGARDING FORWARD-LOOKING
STATEMENTS
This communication may contain certain
forward-looking statements, including, but not limited to, certain
plans, expectations, goals, projections, and statements about the
benefits of the proposed transaction, the plans, objectives,
expectations and intentions of Webster and Sterling, the expected
timing of completion of the transaction, and other statements that
are not historical facts. Such statements are subject to numerous
assumptions, risks, and uncertainties. Statements that do not
describe historical or current facts, including statements about
beliefs and expectations, are forward-looking statements.
Forward-looking statements may be identified by words such as
expect, anticipate, believe, intend, estimate, plan, target, goal,
or similar expressions, or future or conditional verbs such as
will, may, might, should, would, could, or similar variations. The
forward-looking statements are intended to be subject to the safe
harbor provided by Section 27A of the Securities Act of 1933,
Section 21E of the Securities Exchange Act of 1934, and the
Private Securities Litigation Reform Act of 1995.
While there is no assurance that any list of risks
and uncertainties or risk factors is complete, below are certain
factors which could cause actual results to differ materially from
those contained or implied in the forward-looking statements:
changes in general economic, political, or industry conditions; the
magnitude and duration of the COVID-19 pandemic and its impact on
the global economy and financial market conditions and our
business, results of operations, and financial condition;
uncertainty in U.S. fiscal and monetary policy, including the
interest rate policies of the Federal Reserve Board; volatility and
disruptions in global capital and credit markets; movements in
interest rates; reform of LIBOR; competitive pressures on product
pricing and services; success, impact, and timing of our business
strategies, including market acceptance of any new products or
services; the nature, extent, timing, and results of governmental
actions, examinations, reviews, reforms, regulations, and
interpretations, including those related to the Dodd-Frank Wall
Street Reform and Consumer Protection Act and the Basel III
regulatory capital reforms, as well as those involving the OCC,
Federal Reserve, FDIC, and CFPB; the occurrence of any event,
change or other circumstances that could give rise to the right of
one or both of the parties to terminate the merger agreement
between Webster and Sterling; the outcome of any legal proceedings
that may be instituted against Webster or Sterling; delays in
completing the transaction; the failure to obtain necessary
regulatory approvals (and the risk that such approvals may result
in the imposition of conditions that could adversely affect the
combined company or the expected benefits of the transaction); the
failure to obtain stockholder approvals or to satisfy any of the
other conditions to the transaction on a timely basis or at all;
the possibility that the anticipated benefits of the transaction
are not realized when expected or at all, including as a result of
the impact of, or problems arising from, the integration of the two
companies or as a result of the strength of the economy and
competitive factors in the areas where Webster and Sterling do
business; the possibility that the transaction may be more
expensive to complete than anticipated, including as a result of
unexpected factors or events; diversion of management’s attention
from ongoing business operations and opportunities; potential
adverse reactions or changes to business or employee relationships,
including those resulting from the announcement or completion of
the transaction; the ability to complete the transaction and
integration of Webster and Sterling successfully; the dilution
caused by Webster’s issuance of additional shares of its capital
stock in connection with the transaction; and other factors that
may affect the future results of Webster and Sterling. Additional
factors that could cause results to differ materially from those
described above can be found in Webster’s Annual Report on Form
10-K for the year ended December 31, 2020, which is on file
with the Securities and Exchange Commission (the “SEC”) and
available on Webster’s investor relations website,
https://webster.gcs-web.com/, under the heading “Financials” and in
other documents Webster files with the SEC, and in Sterling’s
Annual Report on Form 10-K for the year ended December 31,
2020, which is on file with the SEC and available on Sterling’s
investor relations website,
https://sterlingbank.gcs-web.com/investor-relations, under the
heading “Financials” and in other documents Sterling files with the
SEC.
All forward-looking statements speak only as of the
date they are made and are based on information available at that
time. Neither Webster nor Sterling assumes any obligation to update
forward-looking statements to reflect circumstances or events that
occur after the date the forward-looking statements were made or to
reflect the occurrence of unanticipated events except as required
by federal securities laws. As forward-looking statements involve
significant risks and uncertainties, caution should be exercised
against placing undue reliance on such statements.
IMPORTANT ADDITIONAL INFORMATION
In connection with the proposed transaction,
Webster will file with the SEC a Registration Statement on Form S-4
that will include a Joint Proxy Statement of Webster and Sterling
and a Prospectus of Webster, as well as other relevant documents
concerning the proposed transaction. The proposed transaction
involving Webster and Sterling will be submitted to Sterling’s
stockholders and Webster’s stockholders for their consideration.
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. INVESTORS AND
STOCKHOLDERS OF WEBSTER AND STOCKHOLDERS OF STERLING ARE URGED TO
READ THE REGISTRATION STATEMENT AND THE JOINT PROXY
STATEMENT/PROSPECTUS REGARDING THE TRANSACTION WHEN IT BECOMES
AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS
WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders will be able
to obtain a free copy of the definitive joint proxy
statement/prospectus, as well as other filings containing
information about Webster and Sterling, without charge, at the
SEC’s website (http://www.sec.gov). Copies of the joint proxy
statement/prospectus and the filings with the SEC that will be
incorporated by reference in the joint proxy statement/prospectus
can also be obtained, without charge, by directing a request to
Kristen Manginelli, Director of Investor Relations, Webster
Financial Corporation, 145 Bank Street, Waterbury, Connecticut
06702, (203) 578-2202 or to Emlen Harmon, Managing Director,
Investor Relations, Sterling Bancorp, Two Blue Hill Plaza, Second
Floor, Pearl River, New York 10965, (845) 369-8040.
PARTICIPANTS IN THE SOLICITATION
Webster, Sterling, and certain of their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from the stockholders of Webster and
Sterling in connection with the proposed transaction under the
rules of the SEC. Information regarding Webster’s directors and
executive officers is available in its definitive proxy statement
relating to its 2021 Annual Meeting of Stockholders, which was
filed with the SEC on March 19, 2021, and other documents filed by
Webster with the SEC. Information regarding Sterling’s directors
and executive officers is available in its definitive proxy
statement relating to its 2021 Annual Meeting of Stockholders,
which was filed with the SEC on April 14, 2021, and other documents
filed by Sterling with the SEC. Other information regarding the
participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise,
will be contained in the joint proxy statement/prospectus and other
relevant materials filed with the SEC. Free copies of this document
may be obtained as described in the preceding paragraph.
STERLING BANCORP CONTACT:Emlen Harmon, Managing
Director – Investor Relations212.309.7646
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