Webster Bank Announces $10 Billion Merger Plan, to Open Stamford HQ

The parent company of Webster Bank announced Monday it would merge with the parent company of Sterling National Bank in an all-stock deal worth about $10.3 billion.

The new company will locate its headquarters in Stamford — an agreement that marks the second blockbuster transaction this year for Connecticut’s banking sector.

Waterbury-based Webster Financial Corp.’s union with the Pearl River, N.Y.-based Sterling Bancorp would create a bank with about $63 billion in total assets, $52 billion in deposits and more than 200 branch locations in the northeast U.S. The merger is expected to close in the fourth quarter of 2021.

The combined company will keep the Webster name. It will “have a continued multi-campus presence in the greater New York City area and Waterbury,” in addition to the new Stamford headquarters, the companies said in their announcement. They did not specify the address of the Stamford headquarters, but since 2018 Webster has maintained offices at 200 Elm St., in the city’s downtown.

“We are bringing together two high-performing organizations with strong cultural and business model alignment to create a powerhouse northeast bank,” John Ciulla, Webster’s CEO, chairman and president, said in a statement. “This combination provides exceptional financial benefits and enables us to more aggressively invest in key businesses and activities to enhance value for our customers, our communities, our shareholders and our bankers.”

Ciulla, would serve as CEO and president of the combined company until 24 months after the deal’s closing, at which point he would become chairman, president and CEO.

Sterling CEO and President Jack Kopnisky would serve as executive chairman of the combined company for 24 months after the deal’s closing and would then continue in a consulting role for another 12 months.

The combined company's executive management team would include executives from both companies. Its board of directors would have 15 directors, consisting of eight from Webster and seven from Sterling.

“We are excited to combine the best of both companies to create an industry leader,” Kopnisky said in a statement. “Webster and Sterling have much in common: distinguished client service, diversity of revenue, funding sources and assets, and disciplined capital allocation. The increased capabilities and scale of our two organizations are attractive propositions for our clients, communities, shareholders and colleagues.”

Also Monday, Webster announced earnings of about $106 million for the first quarter of 2021, compared with a bottom line of some $36 million in the same period last year.

With more than 110 branches statewide at last report, Webster’s branch count is comparable to that of Bank of America for the largest footprint in Connecticut after Bridgeport-based People’s United Bank.

Webster ranked third for deposits in Connecticut branches, at $23.3 billion as of June 2020, according to data from the Federal Deposit Insurance Corp.

In the 2020 fiscal year, Webster employed about 300 Waterbury-based employees, ranking as the city’s third-largest corporate employer after Stop & Shop and Walmart, according to the city’s latest annual financial report.

Messages left Monday morning for Waterbury Mayor Neil O’Leary and Stamford Mayor David Martin were not immediately returned.

The Webster-Sterling deal follows the announcement in February that M&T Bank would acquire People’s United’s parent company for about $7.6 billion.

If completed, the combination of People’s United and M&T would form one of the dozen-largest banks in the country. Buffalo, N.Y.-based M&T vowed to keep People’s United’s Bridgeport headquarters as its New England regional office.

On Monday, M&T reported $447 million in profits in the first quarter, a 5 percent drop from the fourth quarter of 2020 but up two-thirds from the first quarter of last year when the pandemic hit.

Connecticut banks are coming off a year in which they generated the third-highest profits in their history, despite the struggles of borrowers, such as borrowers, hit hard by revenue losses during the pandemic.