Banking & Finance, Real Estate, and Retail

Bank buying 52 branches

June 6, 2018
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Flagstar Bancorp meets NYSE listing requirement
Troy-based Flagstar Bank operates about 100 branches throughout Michigan. Photo via fb.com

A bank with a large West Michigan presence is acquiring 52 Midwest branches from one of the nation’s largest banks.

Troy-based Flagstar Bank said yesterday it has signed a definitive agreement to acquire the group of Wells Fargo branches, which are in Indiana, Michigan, Wisconsin and Ohio.

The branches have about $2.3 billion in deposits and $130 million in loans, along with certain related assets.

Flagstar will pay San Francisco-based Wells Fargo an “effective deposit premium” of about 7 percent based on balances as of Dec. 31, 2017.

Flagstar said the transaction will bring liquidity the company can use to re-pay short-term Federal Home Loan Bank advances.

Longer term, the larger branch network will expand Flagstar’s access to “core deposits and other business opportunities.”

Management expects the transaction will be moderately accretive to 2019 earnings per share.

Alessandro DiNello, president and CEO of Flagstar Bancorp, called the acquisitions a “terrific opportunity” to “increase our presence in the Midwest.”

“This transaction significantly expands our banking footprint, more than doubling our customer base,” DiNello said. “We’re also excited about the opportunity to meaningfully transform the bank’s balance sheet, while benefiting from funding that’s both more efficient and less sensitive to rising interest rates. This acquisition strengthens our funding platform and enhances franchise value.

“Wells Fargo’s primary goal throughout the negotiation of this transaction has been to make sure its customers and employees experience a seamless transition to Flagstar, and we will ensure that happens.”

Branch locations

The 52-branch purchase is for 33 locations in Indiana, including 26 branches in Fort Wayne, 14 branches in the Upper Peninsula of Michigan, four locations in Wisconsin and one in Ohio.

At closing, Flagstar expects to have 151 branches in the Midwest and eight in California.

Closing details

The branches to be acquired will operate as Wells Fargo branches until closing and will be re-branded as Flagstar branches after the transaction closes.

Flagstar intends to keep all branches and retain all employees at closing.

The transaction is subject to regulatory approval and customary closing conditions and is expected to close in the fourth quarter of 2018.

Flagstar was advised by the New York-based law firm Skadden, Arps, Slate, Meagher & Flom.

Flagstar

Flagstar Bancorp (NYSE: FBC) is a $17.7-billion savings and loan holding company.

Its subsidiary Flagstar Bank provides commercial, small business and consumer banking services through 99 branches in Michigan and eight branches in California through its Desert Community Bank division.

It also provides home loans through a wholesale network of brokers and correspondents in all 50 states, as well as 92 retail locations in 31 states.

Flagstar is a national originator and servicer of mortgage loans, handling payments and record keeping for $104 billion of home loans, representing more than 470,000 borrowers.

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