Webster Bank, whose Waterbury headquarters are shown above, is acquiring New Britain-based First City Bank in a $33 million transaction.
Waterbury-based Webster Bank is gearing up for its third acquisition in the past year. The holding company of the $17 billion bank, Webster Financial, announced Monday that it has reached an agreement to acquire New Britain-based First City Bank in a combination cash-and-stock transaction valued at about $33 million or $27 per common share of First City stock, payable by 60 percent in Webster stock and 40 percent in cash.
“Webster is pleased to announce its partnership with First City Bank, which strengthens our presence in the Hartford area as the leading Connecticut-based bank,” said Webster Chairman and Chief Executive Officer James C. Smith in a prepared statement. “We will make the transition seamless and look forward to providing our new customers with significantly expanded access to offices, ATMs and our online banking system, as well as a broad range of products and services.”
Webster Financial late last year acquired Swansea, Mass.-based FirstFed America Bancorp, the holding company for First Federal Savings Bank of America, and the Phoenix National Trust Co., a move that broadened Webster’s wealth management capabilities.
The acquisition of First City is a continuation of that growth plan.
“It’s part of our strategy to strengthen our Connecticut market,” said Art House, the head of Webster’s public relations team.
The First City deal is different from the acquisition of FirstFed. That acquisition expanded Webster’s footprint to FirstFed’s 19 Massachusetts branches and seven Rhode Island branches. But Webster already has branches in the four central Connecticut towns – New Britain, Plainville, Newington and Berlin – served by First City’s four branches.
“This is an intensification [in that market],” House said. “There is some overlap.”
‘Seamless’ Transition
Because of those common areas, House is not sure whether First City’s branches will remain open or whether its employees will have positions in the bank after the acquisition is completed in the fourth quarter of this year. There are about 45 people working in First City’s branches, House said.
But First City President John S. Manning is hopeful that those employees will find positions in the bank. Webster has several job openings available, he said.
“I think [Webster] will do what they can,” he said.
Manning announced the news of the acquisition to his employees on Monday morning and was planning to call a staff meeting that evening. He said in a Monday interview that it was too early to gauge their reaction. But with Connecticut and the rest of New England rife with mergers and acquisitions over the last couple of years, this is old hat to many bank employees, he said.
“Some of the people have been through it before,” Manning said.
Manning has been with the bank during its 15-year life span and was one of its organizers. He expects to stay with the bank during the transition, but isn’t sure if he will have a position with Webster after the acquisition is complete.
“We haven’t got down to the fine print yet,” he said. But even so, the acquisition will be positive for First City and its customers, he added.
Increasing regulatory requirements in the past several years have stalled the bank’s growth at about $200 million, Manning said. He and other executives have been searching for alternatives and decided the acquisition was best, he said. He has known Webster’s president for 25 years and thinks the cultures of the banks will merge well.
“I think it will be a good fit,” Manning said.
Although Webster is a $17 billion institution, it enjoys a reputation as a community bank, Manning said, which will make the integration of cultures easier. The acquisition also will give First City customers access to services they didn’t have before, he said.
“It will allow us to offer online banking and [other perks for the customers],” Manning said.
The two banks also have other similarities, he said.
“Webster is a very attractive merger partner for First City,” Manning said in a prepared statement. “Both banks share a strong commitment to our customers and to Connecticut. By merging with Webster, we will enhance our ability to provide a full range of financial services without sacrificing the personal attention and dedication that First City has always offered.”
First City customers will have access to Webster’s expanded services like free checking and free online bill pay, House said. They also will go from having four branches at which to do their banking business to having 145, he said.
“We think the customers in our market area will have [more advantages after the deal closes],” House said.
The acquisition of First City is expected to close in the fourth quarter and the transition of customers’ accounts and banking operations will begin then, House said.
“It should be seamless for the customers,” he said.
After the completion of the acquisition, First City shareholders will be entitled to receive either 0.57 shares of Webster common stock or $27 in cash for each share of First City Bank stock, according to a statement from Webster.
The bank expects the combination to be accretive to earnings in the first full year following the conversion and should generate an additional $2.3 million of cash earnings and $2.1 million of net income.
