Webster Financial Corporation WBS announced a monumental deal, agreeing to purchase Ametros Financial Corporation for a staggering $350 million in cash. This acquisition marks a pivotal move for WBS, opening the doors to new opportunities and enhancing its presence in the medical insurance claim settlements arena.
The acquisition is set to be completed in the first quarter of 2024, contingent upon satisfying customary closing conditions and anti-trust review procedures. Post-acquisition, Ametros will function as a subsidiary of Webster Financial.
WBS’ strategic acquisition of Ametros is poised to fortify its foothold in the healthcare financial services sector and usher in a compelling new source of non-interest income.
Even more compelling is the addition of Ametros’ deposit balances to WBS, which are expected to experience a jaw-dropping five-year compound annual growth rate of approximately 25%. These deposits bring with them a low-cost and long-duration advantage, with an average cost of less than 10 basis points and an average duration exceeding 20 years.
Over the last three years, Ametros’ deposits under custody have more than doubled, with an average deposit balance per account of $33,000. As of December 2023, Ametros boasted approximately $804 million in deposits under custody, set to be assimilated into WBS’ deposit balance after the deal’s closure.
Webster Financial’s management foresees the acquisition to buoy the Zacks Consensus Estimate for 2025 earnings by over 2%. Additionally, it aims to generate an internal rate of return exceeding 25% and recoup its tangible book value dilution over a span of five years.
John Ciulla, the president and chief executive officer of Webster Financial, conveyed, “This acquisition aligns seamlessly with our strategic focus on cultivating a diverse and unique funding base.”
He further elaborated, “Ametros’ market position and value proposition for its clients and partners underscore a robust growth trajectory for this highly complementary business. Ametros builds on Webster’s history of developing non-traditional deposit verticals with a favorable financial profile, including HSA Bank and interLINK.”
WBS’ shares have soared by an impressive 35.1% over the past six months, outpacing the industry’s 15.3% growth rate.
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Webster Financial Corporation (WBS) : Free Stock Analysis Report
Inorganic Expansion Effort by Another Firm
In September 2023, Eastern Bankshares, Inc. EBC, the stock holding company for Eastern Bank, inked an all-stock merger deal with Cambridge Bancorp CATC, leveraging the potential of inorganic growth akin to Webster Financial’s move.
The completion of the deal is subject to regulatory approvals and is expected to materialize in the first quarter of 2024. Per the terms, Cambridge shareholders are set to receive 4.956 shares of Eastern common stock for each share of Cambridge common stock they own.
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