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M&T Bank's (MTB) Subsidiary to Sell CIT Business to Madison

M&T Bank Corporation’s MTB wholly-owned subsidiary, Wilmington Trust, N.A., has entered an agreement with Madison Dearborn Partners, LLC (“MDP”), which is a leading private equity firm based in Chicago. Per the deal, funds affiliated with MDP will acquire Wilmington Trust’s Collective Investment Trust (“CIT”) business. The completion of the deal, expected no later than mid-2023, is subject to customary closing conditions and regulatory approvals.

Once the transaction is complete, Wilmington Trust’s CIT business will become an independent company with a new brand name owned by funds affiliated with MDP.

Wilmington Trust’s CIT business, part of the company’s Institutional Client Services (“ICS”) division, provides third-party trustee and administrative services to asset managers and the employer-sponsored retirement market. The business has delivered consistent year-over-year revenue growth and currently manages $115 billion in CIT assets for more than 550 funds.

Jennifer Warren, the senior executive vice president and head of ICS, stated, “The CIT portfolio has shown tremendous growth since M&T Bank acquired Wilmington Trust in 2011. We believe this is the natural next step in the evolution of the business and will help ensure CIT services and offerings continue to develop in ways that current and future clients will require to meet their investing needs. Furthermore, this transaction will enable our remaining ICS businesses to deepen their focus on clients and further optimize their products and services as ICS continues to execute its vision to become the global leader in institutional trust services.”

Rob Barnett, the executive vice president at Wilmington Trust, said, “The CIT business is an industry leader, well-respected, and recognized for its successful track record of innovation. This transaction will help ensure continued growth for our business, people, and clients well into the future. MDP has extensive experience in financial services and will add significant value to our newly formed company.”

The managing director and co-head of MDP’s financial and transaction services team, Vahe Dombalagian, said, “We are thrilled to work with Wilmington Trust's leading CIT team and leverage our industry expertise to support the business's next chapter in the large and growing CIT market. As clients increasingly demand innovative and tailored retirement fund solutions, the Wilmington Trust CIT business will be well-positioned as an independent company to expand new and existing relationships with a focus on helping plan sponsors navigate complex retirement and regulatory challenges.”

Over the past year, shares of M&T Bank have lost 5.7% compared with the 21.2% decline of the industry.

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Currently, MTB carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Inorganic Growth Efforts by Other Firms

Raymond James Financial, Inc.’s RJF Canada business arm, Raymond James Ltd., along with its trust business, announced the acquisition of Vancouver-based Solus Trust Company Limited. Regulatory approvals for the deal are expected in early 2023.

The merger with Solus Trust will significantly accelerate growth and capacity of Raymond James’ trust business in Canada and its ability to deliver high-quality, independent trust and estate planning solutions.

RJF’s trust business in Canada was first launched as part of the company’s total wealth management offering in April 2020. It has a team of 17 professionals managing more than $400 million in assets on behalf of individuals and their families.

Washington Federal, Inc. WAFD announced its plan to enter the lucrative and “fast-growing” California market. The company signed an agreement to acquire Luther Burbank Corporation LBC and its wholly owned subsidiary, Luther Burbank Savings, for $654 million.

Washington Federal is expected to use the deal as “a platform for growth in attractive California markets.” The company intends to enhance multi-family loan origination capabilities and expand commercial banking activities to Northern and Southern California. At present, LBC operates in California, Washington and Oregon through 11 full-service branches and seven loan production offices.

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