Business as usual seen in M&T Bank’s acquisition of People’s United
Merger is ‘like a puzzle piece that just slid into place,’ says People’s New Hampshire president
M&T Bank’s $7.6 billion pending acquisition of People’s United Financial, including its 25 branches in New Hampshire, will create an institution with more branches than any other bank in the Northeast, save for Bank of America.
Yet there probably won’t be any changes in the near future, except perhaps the name and the new entity will be traded on the New York Stock Exchange under the ticker symbol MTB. Holders of People’s shares will get 0.118% of a share of MTB stock for each of their shares in the all-stock transaction. That was about a 13&% premium over the Feb. 19 close before the Feb. 22 merger announcement.
People’s shareholders will own 28% of the new entity.
“We don’t anticipate any changes to speak of to the folks that talk to customers,” said Darren King, M&T’s chief financial officer, during an investor call Monday. “Our number one priority is protecting those relationships.”
“They don’t want to disrupt things,” Dianne Mercier, president of People’s United Bank operations in the Granite State, told NH Business Review on Thursday.
It also helps that there is virtually no overlap, especially in New Hampshire. M&T has no operations here. The Buffalo-based bank’s current territory stretches down though New York state all the way to Washington D.C., whereas People’s – based in Bridgeport, Conn. – has a market that runs from Long Island to northern New England. The two banks only overlap in the New York City area, and even that will be lessened since People’s decision to close its Shop & Stop branches in New York and Connecticut last moth. When you put them together, you have a region that accounts for 20% of the US population.
“It’s like a puzzle piece that just slid into place,” said Mercier.
New Hampshire branches are mostly located in the southern part of the state and the Seacoast, with the sole exception of a branch in Wolfeboro that once belonged to Community Bank and Trust.
People’s acquired most of the others though acquisitions, notably Ocean Bank in 2008 to change the name. Mercier, who had worked at Ocean, expects that change to happen a lot sooner in this case, shortly after the deal’s anticipated close in the fourth quarter of this year.
“I fully and proudly expect to bear the M&T name,” said Mercier.
The combination of People’s 419 and M&T’s 716 branches will present a rather dense footprint crossing a dozen states. Its 1,135 branches is behind Bank of America but ahead of than JPMorgan Chase. People’s $63 billion in assets (ranked fifth in the state, with a market share of about 4%) would now be part of a $200 billion entity. Its Bridgeport headquarters will become M&T’s new England headquarters, and five members of its board of directors would join the M&T board.
Despite this lack of overlap, the bank officials told investors to expect an immediate return – single digits in the first year and double digits by 2023 thanks to $330 million in “cost synergies,” mainly through combining backroom operations and expanding products that represent each other’s strengths. People’s has the lead in business banking. Some 38% of its portfolio is commercial loans and it was a leader in issuing Paycheck Protection Program loans. People’s is also big in equipment finance and warehouse mortgages
M&T is strong in treasury management, capital markets, multifamily housing loans, has its own credit card and MyWay Banking, an offering for under-served communities.
Mercier said she was looking forward to M&T’s “slick digital” offerings as well, a key reason driving mergers bank mergers these days.
“We think this is more of a growth story than it is a expense save issue,” summed up M&T CEO René Jones in Monday’s investor call.
The merger was well received by investors, especially on People’s side. PBCT shares rose nearly 15 percent after the announcement and has been trading for $18 and $19 a share since.