Bank of Montreal to sell 138 branches to First Citizens to optimize US presence

[BMO logo sign. The Bank of Montreal (NYSE:BMO) is a Canadian multinational investment bank and financial services company. Toronto, Canada - April 29, 2024.]
Lumos Ajans

Bank of Montreal (NYSE:BMO [https://seekingalpha.com/symbol/BMO]) agreed to sell 138 BMO branches to First Citizens Bank & Trust (NASDAQ:FCNCA [https://seekingalpha.com/symbol/FCNCA]) (OTCPK:FCNCB [https://seekingalpha.com/symbol/FCNCB]) in a drive to optimize its U.S. branch network and reinvest in markets with strong long-term growth potential, the company said on Thursday.

BMO is selling branches in areas [https://seekingalpha.com/pr/20268279-bmo-announces-branch-optimization-to-accelerate-future-growth] including North Dakota, South Dakota, Wyoming, Nebraska, Kansas, Missouri, Oklahoma, and Idaho, but plans to open 150 new branches over the next five years, mostly concentrated in California.

First Citizens Bank will assume ~$5.7B i [https://seekingalpha.com/pr/20268261-first-citizens-bank-continues-national-expansion-agrees-to-acquire-select-branches-from-bmo]n deposit liabilities and acquire ~$1.1B in loans. As a result of the transaction, BMO (NYSE:BMO [https://seekingalpha.com/symbol/BMO]) will record a charge related to goodwill of ~US$75M (C$104M), before and after-tax, in Q4 2025. On closing, the bank expects to record a tax expense of US$85M (C$117M). The impact to BMO's CET1 ratio isn't expected to be material.

The deal is expected to close in mid-2026. Financial terms of the transaction weren't disclosed.

For First Citizens (NASDAQ:FCNCA [https://seekingalpha.com/symbol/FCNCA]), the acquisition pushes its business into new markets. "This deposit franchise is solid, and we look forward to serving individuals and business clients in these areas," First Citizens Bank Chairman and CEO Frank B. Holding, Jr. said. "Additionally, the net deposit position is expected to enable us to further enhance our liquidity position and provide additional flexibility to support our strategic initiatives."

Bank of Montreal (BMO [https://seekingalpha.com/symbol/BMO]) stock edged up 0.1% in early Thursday trading. First Citizens Bancshares (NASDAQ:FCNCA [https://seekingalpha.com/symbol/FCNCA]) class A shares slipped 0.5%.

MORE ON BANK OF MONTREAL

* Bank of Montreal: Apparently, It's Reasonably Priced While Trading Above Support Levels (Rating Upgrade) [https://seekingalpha.com/article/4824595-bank-of-montreal-apparently-its-reasonably-priced-while-trading-above-support-levels]
* Bank Of Montreal (BMO:CA) Presents At 2025 Scotiabank Financials Summit Transcript [https://seekingalpha.com/article/4820774-bank-of-montreal-bmo-ca-presents-at-2025-scotiabank-financials-summit-transcript]
* Bank Of Montreal (BMO:CA) Presents At Barclays 23rd Annual Global Financial Services Conference Transcript [https://seekingalpha.com/article/4820903-bank-of-montreal-bmo-ca-presents-at-barclays-23rd-annual-global-financial-services-conference]
* Bank of Montreal explores sale of certain U.S. branches - report [https://seekingalpha.com/news/4498061-bank-of-montreal-explores-sale-of-certain-us-branches---report]
* BMO Financial Group announces retirement of Tayfun Tuzun; appoints Rahul Nalgirkar as CFO [https://seekingalpha.com/news/4495878-bmo-financial-group-announces-retirement-of-tayfun-tuzun-appoints-rahul-nalgirkar-as-cfo]