Wells Fargo to Sell 52 Branches to Flagstar -- Update

By Colin Kellaher 

Wells Fargo & Co. on Tuesday said it agreed to sell 52 retail bank branches in the Midwest to Flagstar Bancorp Inc. as part of Wells's plan to trim its branch network.

The sale includes all Wells Fargo branches in Indiana, Michigan and Ohio, along with four branches in Wisconsin. Wells Fargo said the roughly 490 branch employees will receive job offers from Troy, Mich.-based Flagstar.

Wells Fargo previously said it plans to reduce its retail bank network to about 5,000 branches by the end of 2020, through consolidations and divestitures. The San Francisco bank, which is struggling to move past a spate of investigations across its businesses, had 5,861 branches at the end of 2017.

The transaction, which includes about $2.3 billion in deposits and $130 million in loans, is expected to close in the fourth quarter.

Flagstar said it will pay an effective deposit premium of about 7% based on balances as of Dec. 31, 2017, and said it expects the transaction to be moderately accretive to 2019 per-share earnings.

Flagstar, which reported total assets of about $17.74 billion as of March 31, said the deal provides liquidity that it can use to repay short-term Federal Home Loan Bank advances. Flagstar said it is moving funds to core deposits from wholesale borrowings, reducing the interest-rate sensitivity of its funding base.

Flagstar said it will have 151 branches in the Midwest and eight in California after the deal closes. Wells Fargo said it will still have a presence in affected markets through businesses including commercial lending, wealth management, retail brokerage and home lending.

Write to Colin Kellaher at [e-mail]

(END) Dow Jones Newswires

June 05, 2018 09:17 ET (13:17 GMT)

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