Published on 4 Apr 2022 on Zacks via Yahoo Finance
M&T Bank (MTB) Acquires People's United Financial for $8.3B
M&T Bank Corporation MTB recently announced that it has completed the acquisition of People's United Financial, Inc. for $8.3 billion.Systems conversion is expected to take place in third-quarter 2022. Until then, customers of People's United can continue using its current branches, websites, mobile applications, financial advisors and relationship managers.The merger was originally expected to close in the fourth quarter of 2021. However, in mid-February, the companies extended their merger agreement's closure due to the pending Federal Reserve nod, which it finally received on Mar 4, 2022.The acquisition of People’s United is a strategic fit for M&T Bank since it increases the latter’s footprints in 12 U.S. states, helping it reach out to more customers and expand into new regions. The combined company has created a $200-billion banking franchise, serving clients in the attractive banking markets of the Northeast and Mid-Atlantic regions, from Maine to Virginia and Washington, D.C. This will offer M&T Bank additional growth prospects and strengthen the company's financials in the near future.Post the acquisition, M&T Bank has more than 22,000 employees, 1,000 branches and around 2,200 automated teller machines. People's United's headquarters in Bridgeport, CT, is converted to M&T Bank's New England regional headquarters.According to a recent investor update provided by M&T Bank, the acquisition of People’s United is expected to accelerate MTB’s earnings per share. However, earnings accretion is expected to be lower than the previously announced 10-12%, considering the improvement in the standalone financials of MTB.Nonetheless, annual tangible capital generation is expected to be more than $650 million, higher than the $600 million expected during deal announcement. Cost savings of $330 million are still expected with full run rate in early 2023. Further, the all-stock deal is not expected to affect the capital level of M&T Bank.M&T Bank is growing organically as well. The company’s rising fee income, loans and deposits will likely drive its revenues. It also expects to resume its share repurchase plan in the second quarter of 2022. Such capital deployment activities and inorganic growth moves, backed by its sound liquidity position, bodes well for the company.Over the past year, shares of MTB have gained 7.5% against 2.3% decline of the industry it belongs to.
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