Medford Bank, a $1.4 billion backing company based in Medford, is being acquired by Citizens Financial Group in a cash merger transaction for $273 million.
Citizens Financial Group and Medford Bancorp have announced a definitive agreement under which Citizens will acquire Medford Bank in a cash merger transaction for $273 million, or $35 per share.
The deal, announced last Thursday, marks the 18th acquisition for Citizens overall. Only 11 months ago, the bank paid $2.1 billion to buy the retail, small-business and middle-market corporate lending divisions of Mellon Bank.
Medford Bank is a $1.4 billion banking company based in Medford. The acquisition will increase Citizens’ market share in Middlesex County from 10 to 14 percent.
Medford’s total deposits as of March 31 were $1.1 billion. The bank operates 19 branches and 24 ATMs throughout Eastern Massachusetts.
Lawrence K. Fish, Citizens’ chairman, president and chief executive officer, said, “This transaction will deepen our strategic presence in Middlesex County, enhance convenience for Citizens and Medford Bank customers, and bring added value to the community.
“Medford Bank has a highly respected franchise. We look forward to bringing even greater value to Medford Bank’s customers, employees and communities with this transaction.”
Published reports have indicated that Medford Bancorp had attracted offers from a number of banks, including BankNorth Group, Sovereign Bancorp, Commerce Bancorp and Webster Financial Group.
Arthur H. Meehan, chairman, president and CEO of Medford Bank, said, “Citizens is a unique institution, combining the products and offerings of a large institution, with the services and management of an outstanding community bank. This is a ‘win-win’ for our customers and shareholders.”
Meehan will become a director of Citizens Bank of Massachusetts.
Thomas J. Hollister, president and CEO of the expanded Citizens Bank of Massachusetts, said, “I look forward to welcoming Medford Bank’s customers and employees to the Citizens family, and to deepening our community commitments in Middlesex County through this transaction.”
Melodie Jackson, senior vice president and director of public affairs at Citizens, echoed similar sentiments by saying, “The acquisition gives us an opportunity to deepen our presence in an important community, as well as a chance to become involved in the community itself.”
According to a published report, Citizens has about 200 job openings in Massachusetts, while Medford Bancorp has approximately 325 employees. Citizens said it also could add more workers to its Medford operations center in the near future, the report stated.
Jackson, who said Citizens Bank of Massachusetts has a total of about 2,900 employees, noted, “At this point, we anticipate minimal job loss” as a result of the merger.
‘Great Asset Value’
The transaction, subject to customary conditions – including shareholder and regulatory approval – is expected to be completed in the fourth quarter of 2002. Due diligence has been completed.
Jackson said that no specific date has been set for the physical changeover at Medford branches.
“We’re really going to take our time to get to know the Medford operation, so we can do it right,” she said.
CIBC World Markets Corp. served as financial advisor to Medford Bank. Choate, Hall & Stewart provided legal counsel for Medford Bank.
In telephone interview, Michael R. McClintock, managing director and head of the U.S. Financial Institutions Group at CIBC, said Citizens paid 19 times trailing earnings, or about 2.5 times Medford Bank’s book value. Asked if that were a high price to pay, McClintock noted, “Those are always tough questions. I think, at the end of the day, what interested Citizens is that Medford [Bank] has about 45 percent market share in Malden and Medford, which are both terrific towns. It’s an incredibly well-run bank with great asset value.
“[CIBC was] very pleased to be involved with the deal. I think my relationship with Medford [Bank] goes back 11 years.”
The professional respect between Fish and Meehan also had a lot to do with the deal, McClintock added.
“Larry Fish is a wonderful guy, and he has a great relationship with Art,” he said.
Citizens Financial Group is a $53 billion commercial bank holding company based in Providence, R.I. It is one of the 20 largest commercial banks in the country, with more than 710 Citizens Bank branches, more than 1,495 ATMs and more than 13,000 employees in seven New England and Mid-Atlantic states. It operates as Citizens Bank in Massachusetts, Connecticut, Delaware, New Hampshire, New Jersey, Pennsylvania and Rhode Island. Citizens is wholly owned by the Royal Bank of Scotland Group.
Medford Bancorp is the parent company of Medford Savings Bank, a Massachusetts-chartered savings bank with over $1.4 billion in assets. The bank offers a wide variety of services to both business and retail customers throughout Eastern Massachusetts from 19 retail-banking locations in Middlesex County.
