Pa.-based bank buys Flagstar’s New England business
STEVE ISSA is being re-united with his former Sovereign Bank boss Jay Sidhu, whose Customers Bank has bought Flagstar Bank's Massachusetts and Rhode Island operations, which will be managed by Issa, former market president for Sovereign.
WYOMISSING, Pa. – Customers Bank has announced the acquisition of all local New England commercial banking business Michigan-based Flagstar Bank for approximately $149 million.
Flagstar launched its commercial operation in Providence in April 2011.
“The best part of this transaction is that we have recruited a team of very experienced New England bankers that are led by veteran Fleet and Sovereign banker Steve Issa,” said Customers Bank Chairman and CEO Jay Sidhu.
“I worked with Steve for many years at Sovereign and am delighted to have him join our top management team as president of this newly-created Customers Bank – New England Division,” Sidhu said.
The Customers CEO resigned as CEO of Sovereign Bancorp Inc. in October 2006 after a protracted conflict with Sovereign investors. Sidhu also set in motion the process through which Banco Santander S.A. acquired Sovereign. At the time, he was replaced as president and CEO of Sovereign by Joseph Campanelli, who resigned in October as president and CEO of Flagstar.
“We plan to be very aggressive and competitive in serving the privately held businesses in Eastern Massachusetts and Rhode Island,” Sidhu added. “We will have an exceptional team and have a goal to prudently grow this business to over $1 billion in outstanding over the next few years.”
Flagstar announced similar intentions for growth in the New England market when it began commercial operation in Providence.
In January, Flagstar announced the sale of an estimated $779 million of its Northeast-based commercial loan portfolio to CIT Bank, in a move it said was intended to focus on its community banking operation in Michigan and its national commercial mortgage business.
In mid-January, senior analyst Christine Pratt of the Aite Group in Boston told Providence Business News about the Flagstar sale of loans to CIT, “My take on it is they opened a commercial loan office and now they sold their commercial loans for the region, so I think they’re moving out of the Rhode Island operation.”
At that time, Flagstar declined to comment on any plans for its New England business.
On Jan. 28, the Founders League, a Rhode Island organization formed to encourage entrepreneurship, announced in a press release that Flagstar Bank gave $5,000 to sponsor the league for 2013. The Founders League noted that Flagstar Managing Director of Commercial/Specialty Lending Steve Issa made the sponsorship possible.
The Customers Bank acquisition of Flagstar includes $150.9 million of outstanding loans and commitments of $187.6 million, according to the press release. No classified or problem loans are included in the purchase. The purchase price of $148.9 million represents 98.7 percent of loans outstanding. In addition, Customers assumes the leases for two of Flagstar’s banking offices in New England.
Customers Bank has about $4 billion in assets on a pro forma basis.
Flagstar released a statement in which CEO Michael Tierney said that the deal helps the bank “focus on our community banking operation in Michigan and our national mortgage business.”