Lender Investors Bancorp is reportedly ready to start reaching out to potential buyers as it considers a sale. According to The Wall Street Journal, Investors, which has about 150 branches in New Jersey and New York, has hired Keefe, Bruyette & Woods to advise on the potential sale.
However, the report pointed out that the bank is in the early stages of looking into a sale and there is no guarantee that it will actually happen. The lender had a market value of about $3.3 billion as of Tuesday (Nov. 6), and if a sale were to happen, it would be the second-largest recent bank deal. Earlier this year, Fifth Third Bank and MB Financial inked an agreement to merge in a $4.7 billion deal.
A sale is one way for the smaller bank to compete with bigger financial institutions (FIs). Investors paid customers a 1.39 percent rate on interest-bearing deposits as of the third quarter, which caused its profit margin from lending to fall. By comparison, Bank of America paid its customers 0.50 percent.
In addition, Investors must still comply with an agreement with regulators to improve its anti-money-laundering (AML) controls, which often delays deals. However, on a third-quarter earnings call, the bank’s CEO Kevin Cummings revealed that he was “cautiously optimistic” the order could be lifted soon.
Still, the bank’s stock had fallen 18 percent so far this year — until news broke about a potential sale, which sent its stock up 9.9 percent.
Another factor that could help boost Investors’s chances of attracting a buyer: It is popular with shareholder activists. The bank’s largest shareholder is Blue Harbour Group, a hedge fund that considers itself a “friendly” working alongside management, and has a 9.7 percent stake in the bank. Last year, Investors and Blue Harbour reached an agreement that would have the fund’s Managing Director Peter Carlin join its board.