NatWest Bancorp said the acquisition of the New Jersey bank would make it number two in the affluent Bergin County, where Citizens First has 31 branches, and give it market leadership in three other counties. The enlarged bank will have assets of dollars 26bn ( pounds 17.5bn).
Although NatWest Bancorp and Citizens First have only a handful of branches in similar locations, substantial savings are expected by eliminating head-office and systems functions where they overlap. Citizens First has 880 employees.
John Tugwell, chairman and chief executive of NatWest Bancorp, said the deal was an important strategic move that would offer substantial economies of scale and increased profits. But NatWest will not see any material improvement in earnings per share in the first full year after completing the purchase, probably late this year.
NatWest Bancorp has been seeking to expand after its strong recovery in the past two years. It doubled profits to pounds 184m last year, more than the contribution made by NatWest's UK branch business.
Martin Green, a banking analyst at Smith New Court, was encouraged to see NatWest 'doing something' with its US arm. He said there had been rumours that the US management was keen to push on with expansion plans but had been restrained because of problems in the main UK business.
NatWest is paying for Citizens First with a mixture of cash and shares. Up to 43 million NatWest shares, or 2.6 per cent of its ordinary share capital, will be available in an American depositary receipt issue.
Mr Green said that 2.6 per cent of new paper in the market was 'not exactly helpful in the current circumstances for bank shares'. NatWest shares fell 13p to 472p.
NatWest Bancorp is offering Citizens First shareholders a price nearly 2.5 times estimated book value at 31 December. Citizens First's chairman described the deal as 'a wonderful opportunity'.
In addition to shareholders' support, the deal requires the approval of US regulators.Reuse content