Citizens Financial Group and Investors Bancorp announced that they have entered into a definitive agreement and plan of merger under which Citizens will acquire all of the outstanding shares of Investors for a combination of stock and cash.

The acquisition of Investors enhances Citizens’ banking franchise, adding an attractive middle market/small business and consumer customer base while building its physical presence in the northeast with the addition of 154 branches located in the greater New York City and Philadelphia metropolitan areas and across New Jersey. The acquisition complements Citizens' recently announced acquisition of HSBC East Coast branches and national online deposits which is expected to close in first quarter 2022. The combined Citizens franchise will operate across some of the most attractive retail and commercial banking markets in the United States characterized by large and dense population centers, areas of high-income households and centers of robust business activity.

“The acquisition of Investors, following on the heels of the acquisition of HSBC’s East Coast branches, further strengthens our formidable franchise in the northeast, together adding roughly one million customers and boosting our near and long-term growth potential,” said Bruce Van Saun, Chairman and Chief Executive Officer of Citizens. “We are confident in our ability to successfully integrate these acquisitions, and to over time deliver the same attractive offerings to customers and strong financial performance in the New York City metro region and New Jersey as we do in other major metro areas we serve.”

“Joining Citizens, with its broad capabilities, scale and commitment to excellence in customer service opens exciting opportunities for our combined company,” said Kevin Cummings, Chairman and CEO of Investors. “Citizens shares Investors' deep commitment to serving customers, supporting colleagues and giving back to local communities. Our local-market expertise and personal touch will align well with Citizens’ approach and together we will drive long-term value for all our stakeholders.”

Highlights of the proposed transaction to acquire Investors:

Creates long-term shareholder value

• Immediately accretive to EPS; given substantial synergies, expected to add approximately 6.4% to 2023 fully-diluted EPS. Combined with HSBC, transactions add 8.8% to 2023 fully-diluted EPS
• Expected to deliver a strong internal rate of return of over 20% and an estimated return on invested capital of approximately 13%
• Accelerates achievement of long-term financial goals; expected to improve return on tangible common equity by approximately 120 basis points and efficiency ratio by approximately 270 basis points
• Expected to be CET1 neutral at closing
• Modest tangible book value per share dilution of approximately 2.6% expected at close with an approximately 2.5-year earn-back

Identified cost savings and other synergies

• Identified approximately $130 million of fully-phased in annual cost savings, after provision for adding investments in brand marketing and technology capabilities; this is approximately 30% of Investors' estimated 2021 cost base
• Total estimated pre-tax integration costs of approximately $400 million
• Meaningful revenue upside expected but not included in transaction estimates

Advances Citizens’ strategy with solid presence in important markets

• Expands upon our recently announced HSBC acquisition, building Citizens’ brand presence in the important greater New York City and Philadelphia metropolitan and New Jersey markets and combined, adding about one million customers
• Citizens combined with Investors and HSBC reaches top-10 NYC Metro deposit ranking
• Fills branch gap, connecting New England to the Mid-Atlantic market and adding to our leadership position in the Philadelphia MSA; adds 154 branches, including approximately 130 in the New York City MSA
• Provides branch base and brand reach to expand commercial lending and fee opportunities in the region; adds attractive middle market/ small business customer base
• Opportunity to drive household growth and share while accelerating lending and wealth growth in consumer

Under the terms of the agreement and plan of merger, Investors shareholders will receive 0.297 of a share of CFG common stock and $1.46 in cash for each share of Investors they own. Following completion of the transaction, former Investors shareholders will collectively own approximately 14% of the combined company. The implied total transaction value based on closing prices on July 27, 2021 is approximately $3.5 billion.

Key members of Investors' management team are expected to join Citizens, ensuring business and client continuity. Upon closing of the transaction, Kevin Cummings, Investors’ Chairman and Chief Executive Officer, and Michele N. Siekerka, who are current members of the board of directors of Investors, are expected to join Citizens’ board of directors.

The agreement and plan of merger has been unanimously approved by the boards of directors of each company and the transaction is expected to close in first or second quarter 2022, subject to approval by the shareholders of Investors, receipt of required regulatory approvals and other customary closing conditions.

Morgan Stanley & Co. LLC acted as financial advisor to Citizens in connection with the transaction and Sullivan & Cromwell, LLP served as legal advisor. Keefe, Bruyette & Woods, A Stifel Company, served as lead financial advisor; Piper Sandler & Co. and Lazard also served as financial advisors, and Luse Gorman, PC served as legal advisor to Investors.