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Huntington to Sell 32 Wisconsin Bank Branches to Associated

Huntington Bancshares HBAN has agreed to divest the Wisconsin branch banking operations of its subsidiary — The Huntington National Bank — to Associated Banc-Corp ASB. Though the deal is subject to regulatory approvals, the company expects to close it in the first half of 2019. Notably, these branches became part of Huntington in 2016 through the FirstMerit buyout.

The company will continue to operate its national consumer and commercial businesses in Wisconsin, including its SBA business.

Per the terms of transaction, Huntington will sell about $850 million of deposits, $134 million worth loans and 32 branch locations. Both the companies do not expect the deal to have a material impact on their results.

For Associated, the deal is expected to bolster its franchise along with expanding services into 13 additional communities. President and CEO of the company, Philip B. Flynn, said "Ultimately, the scale and efficiencies we gain will position us to make investments to further enhance the customer experience and deliver increased value to our customers, colleagues, communities and shareholders."

Divestures by Other Banks

In September 2018, Bank of America BAC announced that it will divest its businesses that manage alternative investment feeder funds to a financial-technology firm, iCapital Network. The financial terms of the deal, expected to close in first half 2019, have not been disclosed.

As part of the agreement, BofA will continue to source, distribute and monitor feeder funds and also provide constant “guidance on the role of investments within a diversified investment strategy” to iCapital.

Further, with a view to cut costs, Wells Fargo WFC inked a deal with Flagstar Bancorp to divest all of its branches in Indiana, Michigan and Ohio. While the financial details were not disclosed, the deal is expected to close in the last quarter of 2018.

The 52 branches in consideration, including four branches of Wisconsin, comprise about $2.3 billion in deposits. Also, 490 employees across the branches will continue working with Flagstar.

Our Take

Huntington’s strong liquidity position enables it to undertake strategic growth measures, which are likely to keep supporting its top line and help it gain market share. Further, the company is expected to benefit from easing regulatory requirements and a rising interest rate environment.

However, Huntington’s bottom line growth remains affected due to consistently increasing costs.

This Zacks Rank #3 (Hold) stock has lost around 12.5% over the past year compared with 7.8% decline recorded by the industry.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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