- Newtek Business Services Corp. last week received the Office of the Comptroller of Currency’s nod to acquire the National Bank of New York City.
- The $20 million all-cash deal, expected to close in January, received a green light from the Federal Reserve late last month.
- The transaction would give a banking charter to the third-largest lender in the Small Business Administration’s 7(a) program and give Newtek access to NBNYC’s $206 million in assets.
The approval comes 16 months after Newtek proposed the acquisition as part of a strategy to reposition itself as a bank holding company.
“We are thrilled to see the finish line in completing this corporate transformation,” Newtek CEO Barry Sloane said in a press release Thursday.
“It's actually a busy time, and we are going to be a different type of financial institution. … No time to party yet," he told American Banker.
The year-plus timeline for approval is not unusual after President Joe Biden called for “more robust scrutiny” of bank mergers in July 2021.
New York Community Bank and Flagstar got the go-ahead for their $2.6 billion merger in November, 19 months after it was proposed. The merger’s timeline was extended twice.
But not every proposed deal survives the wait. State Street and Brown Brothers Harriman last week scrapped a $3.5 billion transaction that would have put the latter’s investor services business under State Street’s umbrella.
Once the Newtek deal closes, NBNYC will be rebranded as Newtek Bank. The acquisition is likely to strengthen Newtek’s foothold on SBA lending.
Newtek said it expects to pay existing shareholders $0.70 per share on Dec. 30, before the company begins operating as a bank in January.
Unlike business development corporations, banks are not required to pay 90% of net income in dividends. That, American Banker reported, has led some investors to drop the stock.
“We are excited about our future and what we believe is our ability to be a disruptor with a differentiated business model in the bank holding company and bank ownership investment landscape,” Sloane said in Thursday’s release.