UP Wells Fargo Banks Among Those To Become Flagstar Banks

Fourteen Wells Fargo banks in the Upper Peninsula will be rebranded as Flagstar Banks.

Troy, MI-based Flagstar Bank is acquiring 52 Wells Fargo Bank branch locations, its almost 500 employees and its customers in Indiana (33 branches), the Upper Peninsula of Michigan (14 branches), Wisconsin (4 branches) and Ohio (1 branch).

Wells Fargo bank branches located in the areas of Fort Wayne, Indiana, South Bend, Indiana, the Upper Peninsula of Michigan and Northern Wisconsin will become Flagstar Bank branch locations.

The benefits lauded by Flagstar include strengthening the banking franchise through transformational transaction, diversifying and expanding its banking footprint, adding nearly 200,000 new customer relationships, and moves funding from wholesale borrowings to core deposits, reducing rate sensitivity of funding base.

Important key items to note:

• Flagstar Bank will grow through the acquisition of Wells Fargo branches in four states—Indiana, Michigan, Wisconsin and Ohio
• 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.
• Flagstar Bank is recognized as a community-oriented mid-size bank and national mortgage lender.
• Flagstar Bank is the third largest savings bank in the country and is the fifth largest bank mortgage originator. Nearly a half million (470,000) home buyers already use the company to service their mortgages.
• Flagstar Bank continues to grow. This is the fourth acquisition by the company in 15 months. This acquisition will add $2.3 billion in deposits and more than double Flagstar Bank’s customer base.
• Wells Fargo credit cards and residential mortgage loans will not transfer to Flagstar Bank.
• The official transition of local branches from Wells Fargo to Flagstar Bank is anticipated to be completed in the fourth quarter of 2018, pending regulatory approval and customary closing conditions.
• At closing, Flagstar expects to have 151 branches in the Midwest and eight in California.
• All affected Wells Fargo bank customers receive a communication from Flagstar’s CEO, letting them know about the transaction.
• Flagstar Bank intends to keep all Wells Fargo bank branches open and will welcome the almost 500 Wells Fargo employees at the acquired locations into the nationwide Flagstar Bank team of 3,600+ employees.

Here is the full press release from Flagstar:

Flagstar Bancorp, Inc. (“Company,” NYSE: FBC) today announced that Flagstar Bank, FSB, has signed a definitive agreement to acquire 52 Wells Fargo Bank branches in Indiana, Michigan, Wisconsin and Ohio, with approximately $2.3 billion in deposits and $130 million in loans, along with certain related assets. Flagstar will pay an effective deposit premium of approximately 7 percent based on balances as of December 31, 2017. Management expects the transaction will be moderately accretive to 2019 earnings per share.

“We’re excited to welcome the Wells Fargo employees and customers to Flagstar Bank,” said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp, Inc. “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. We are confident customers will like Flagstar’s big bank line-up of quality products and services delivered with the high-touch personal service of a community bank. Flagstar has a long tradition of supporting its communities and fully expects to continue its commitment to good corporate citizenship and community reinvestment in our expanded market area.

“Being able to increase our presence in the Midwest market–a geography we know well and find very attractive–is a terrific opportunity for us. This transaction significantly expands our banking footprint, more than doubling our customer base. 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.”

The 52-branch purchase is for 33 locations in Indiana, including 26 branches in Fort Wayne (#1 market share), 14 branches in the Upper Peninsula of Michigan (#1 market share), four locations in Wisconsin and one in Ohio.

At closing, Flagstar expects to have 151 branches in the Midwest and eight in California. The transaction brings liquidity that the Company can use to repay short-term Federal Home Loan Bank advances. Longer term, a larger branch network will expand access to core deposits and other business opportunities.

The branches to be acquired will operate as Wells Fargo branches until closing, and will be re-branded as Flagstar branches immediately upon closing of the transaction. Flagstar intends to keep all branches and retain all employees at closing.

This 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 law firm of Skadden, Arps, Slate, Meagher & Flom LLP.