People’s United acquiring Farmington Bank
People’s United Financial, parent company of People’s United Bank, is acquiring Farmington Bank and its parent company First Connecticut Bancorp, in a stock transaction valued at $544 million.
The Bridgeport-based company announced Tuesday it has entered into an agreement with Farmington Bank to absorb the Hartford County entities. The transaction is expected to close by the end of this year, strengthening People’s United’s foundation within Connecticut.
“We’re excited about the opportunity,” said People’s United CEO Jack Barnes. “We are very active in the Hartford County market in Connecticut and actually have great familiarity with the market and have always viewed Farmington Bank as a well-run institution with a lot of good customers that we compete for, so acquiring the bank brings those customers and relationships into People’s United Bank.”
Farmington Bank has $3.1 billion in assets across 28 branches in central Connecticut and western Massachusetts, ranking 12th for deposit market share in Connecticut as of June 2017 with nearly $2.2 billion.
Farmington Bank was established in 1851 and entered 2018 with a workforce of about 350 people. CEO John Patrick Jr. has led the bank and parent company for the past decade. He was previously head of TD Bank’s Connecticut operations.
In its home market of Hartford County, Farmington Bank ranked fourth, one rung ahead of People’s United. Combined, the banks would leapfrog TD Bank in Hartford County to trail only Bank of America and Webster Bank.
People’s United has assets of $44 billion and Barnes has articulated the goal of reaching the $50 billion plateau. Once this transaction closes, the Bridgeport-based company will rise to just over $47 billion in assets, according to a spokesperson.
While People’s United is still shy of that milestone, Barnes and his executive team are hopeful the company can grow organically and reach $50 billion in a reasonable time. “In the meantime, we continue to have discussions with other banks and so on, not dissimilar to Farmington Bank,” he said. “If the timing and circumstances work out that both of us are interested in the same time, it is quite possible that we might have additional merger and acquisition activity.”
Roughly 50 percent of the absorbed branches are expected to close following the acquisition. The remaining branches will be subject to conversion and rebranding once People’s United obtains regulatory approval, Barnes said.
This transaction is People’s United’s first deal on its home turf of Connecticut since 2015, when it spent $10 million for the Bridgeport-based insurance brokerage Kesten-Brown.
The company has been busy with expansion outside of Connecticut. Last year, it spent $484 million for Suffolk Bancorp on Long Island, and $220 million for Philadelphia-based Leaf Commercial Capital.
“We like the community where Farmington Bank is located,” Barnes said. “We’ve competed for those customers, and we think they have a very attractive customer base, and so the addition of those customers will strengthen People’s United.”
The acquisition of Hartford County companies and their assets helps reaffirm People’s United’s commitment and foundation in Connecticut, but it also has taken a step away from recent strategy within the state.
A considerable amount of People’s United’s success over the last decade has been through its branches within Stop & Shop locations, but the company has a mix of in-store and traditional branches in Fairfield County.
With more Stop & Shop branches than standalone banks in Hartford County, the acquisition of Farmington and its stock of banks in the area also factored into the transaction.
“The combination of our combined banks both the in-store and traditional branches will actually look a lot more similar to the Fairfield County presence,” he said. “We like the hub-and-spoke idea that a good mix of both has proven successful for us over time. This strengthens our mix in Hartford County.”