SVB Financial (SIVB) Completes Buyout of Boston Private
SVB Financial SIVB closed the previously announced $900-million deal to acquire Boston Private Financial Holdings, Inc., which pioneers in providing streamlined wealth management, trust, and banking services to households, individuals, businesses and non-profits.
The acquisition, which was announced in January 2021, and received regulatory approvals in May and June, has accentuated SVB Financial’s commitment to its wealth management business, as it will be better competent to impart the guidance and solutions to increase opportunities for its clients in the long term. Further, the adoption of Boston Private’s digital platforms will accelerate SVB Financial’s technology development.
The combined private banking and wealth management business will be headed by the CEO of SVB Private Banking & Wealth Management, Anthony DeChellis, and the president of SVB Private Banking & Wealth Management, Yvette Butler. Moreover, Boston Private Bank merged with and into Silicon Valley Bank, with Silicon Valley Bank continuing as the surviving firm.
The president of SVB Financial Group, Greg Becker, said, "With the close of our acquisition of Boston Private, we are well positioned to deliver the understanding, guidance and solutions to help our clients achieve their wealth goals."
SVB Financial aims to be the arch financial partner for the cutting-edge economy, providing services through its four core businesses — commercial banking, investment banking, private banking and wealth management, and fund management — to cater to the needs of companies, entrepreneurs and their investors.
As previously disclosed, SVB Financial expects the deal to be immediately accretive to earnings (excluding restructuring charges) in low-single digits and help diversify its revenues. The company anticipates restructuring costs of $200 million, including $65 million related to technology systems integration.
Additionally, the transaction will lead to cost savings of 20% of Boston Private’s non-interest expenses in 2020. Of the total cost savings, 25% will be realized this year, 75% in 2022 and 100% thereafter.
Conclusion
SVB Financial continues with its efforts to be one of the foremost providers of financing solutions to innovative companies. Hence, the current deal is likely to strengthen its position in the innovation economy.
In December 2020, the company acquired the debt investment business of WestRiver Group. With the acquisition, SVB Financial’s funds management division, SVB Capital, will be able to establish the SVB Capital Credit Platform. This enabled Silicon Valley Bank's (the banking arm of SVB Financial) clients to access new debt options and also offer “institutional investors additional investment opportunities in the innovation economy.”
Given the strong balance sheet and liquidity position, SVB Financial is expected to continue making efforts to expand, be it through acquisitions and/or expansion of operations globally.
In the last six months, shares of SVB Financial gained 36.1% compared with the industry’s growth of 22.3%.
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SVB Financial currently carries a Zacks Rank #3 (Hold).
A few better-ranked finance stocks are Cathay General Bancorp CATY, East West Bancorp, Inc. EWBC and Northrim BanCorp Inc. NRIM. The companies carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the last 30 days, Cathay General witnessed an upward earnings estimate revision of 3.6% for the current year. Its share price has increased 11% in the past six months.
East West’s earnings estimates for 2021 have moved marginally north in 30 days’ time. Its shares have appreciated 28.3% over the past six months.
Over the last 30 days, Northrim BanCorp witnessed upward earnings estimate revision of 21%. Its share price has increased 17% in the past six months.
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SVB Financial Group (SIVB) : Free Stock Analysis Report
Cathay General Bancorp (CATY) : Free Stock Analysis Report
East West Bancorp, Inc. (EWBC) : Free Stock Analysis Report
Northrim BanCorp Inc (NRIM) : Free Stock Analysis Report
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