Comerica Nears Sterling Merger - Analyst Blog
July 14 2011 - 9:45AM
Zacks
Comerica Inc. (CMA) continues to be on track to
close its pending acquisition of Sterling
Bancshares Inc. (SBIB). The buyout has
been approved by the Board of Governors of the Federal Reserve
System. The deal also got the nod from the Texas Department of
Banking.
Comerica now expects to close the deal on July 28, 2011. This
is, however, subject to terms and conditions in the merger
agreement and completion of the expiration of the obligatory 15-day
Department of Justice waiting period related to the Federal Reserve
Board's approval order.
Sterling Bancshares is a Houston-based bank holding company with
total assets of $5.0 billion as of March 31, 2011. It operates
banking centers in Houston, San Antonio, Dallas and Fort Worth,
Texas. The agreement to acquire Sterling was announced by Comerica
in January 2011.
Upon completion of the merger, Sterling’s shareholders will be
allotted 0.2365 of Comerica common stock for each share of Sterling
common stock. Further, fractional shares will be paid in cash.
Earlier in May 2011, Sterling Bancshares also announced that its
common shareholders have voted to approve the merger agreement.
Impact on Comerica
On a pro forma basis, Comerica will continue to have a solid
capital position, including a Tier 1 capital ratio of about 10.0%.
The transaction is expected to be at break-even to Comerica's
earnings in the first full fiscal year, excluding merger and
integration costs of approximately $80.0 million after tax, and be
accretive thereafter. Estimated synergies include expense savings
of $56.0 million to be fully realized on a run-rate basis by
year-end 2012.
Comerica grows from having 95 banking centers in Texas to 152
banking centers in the state including 65 in Houston, 63 in
Dallas/Fort Worth, 13 in San Antonio and 11 in Austin.
Additionally, the acquisition adds about $3.0 billion in loans and
$4.0 billion in deposits.
Our Take
Comerica’s strategic expansion efforts and focus on cost
containment augur well. The acquisition of Sterling Bancshares Inc.
would augment its growth in Texas. It can leverage Sterling’s solid
network in that region and benefit from its strong deposit base.
Capital deployment efforts also inspire investors’ confidence in
the stock.
Yet, its significant exposure to riskier areas, such as
commercial real estate markets, lack of meaningful loan growth and
regulatory headwinds are the downsides.
Comerica currently retains a Zacks #3 Rank, which translates
into a short-term ‘Hold’ rating. Considering the fundamentals, we
are maintaining a long-term “Neutral” recommendation on the
stock.
COMERICA INC (CMA): Free Stock Analysis Report
STERLING BCS-TX (SBIB): Free Stock Analysis Report
Zacks Investment Research
Sterling Bancshares, Inc. (MM) (NASDAQ:SBIB)
Historical Stock Chart
From Apr 2024 to May 2024
Sterling Bancshares, Inc. (MM) (NASDAQ:SBIB)
Historical Stock Chart
From May 2023 to May 2024