Citibank to Leave Texas Market

Citibank to Leave Texas Market

Posted in the Citigroup Forum

Debrah

Wylie, TX

#1 Jul 10, 2008
Citibank will be selling ALL their branches in Tx, 100+ in coming months.
Lone Wolf Texas

Odessa, TX

#2 Jul 11, 2008
Did you see the American Banker article Thursday, July 10th? Rumors will continue until sold. Unlikely they sell it all to 1 buyer. It will probably be broken up. Sooner the better.
OFallon MO

Warren, NJ

#3 Jul 11, 2008
Lone Wolf Texas wrote:
Did you see the American Banker article Thursday, July 10th? Rumors will continue until sold. Unlikely they sell it all to 1 buyer. It will probably be broken up. Sooner the better.
Can you post the American Banker article that you are referring to?
Thanks

Since: Jan 08

Dyersburg, TN

#4 Jul 13, 2008
Lone Wolf Texas wrote:
Did you see the American Banker article Thursday, July 10th? Rumors will continue until sold. Unlikely they sell it all to 1 buyer. It will probably be broken up. Sooner the better.
I beleive this is the American Banker article Lone Wolf Texas is referring too.
"Citigroup Looking for Exit from Texas
AUSTIN — Four years after entering Texas with its purchase of First American Bank in Bryan, Citigroup Inc. is looking for an exit strategy.
The $2.2 trillion-asset New York company last month sold eight Texas branches to Happy State Bank and Trust Co. in Amarillo, and several industry sources said the nation's largest banking company is actively seeking a buyer for the rest of its Texas franchise.
A Citigroup spokesman said the company does not comment on market speculation, but industry insiders said that selling its 126 branches and $4.4 billion of deposits in Texas would probably go over well with Citigroup investors, who have been pressing the company to sell peripheral assets and focus on its core businesses.
Morgan Stanley analyst Betsy Grasek said that Texas has been an especially awkward fit for Citigroup since it bought the $3.5 billion-asset First American, because many of the Texas branches are in rural areas and Citigroup operates mainly in urban markets.
"It's not a shock," Ms. Grasek said of the bank's presumed desire to leave the state. "They are trying to get rid of a lot of stuff …. If they can sell it at a small premium or even no premium, it could be helpful in the execution of shrinking the balance sheet."
Roughly 40% of Citigroup's Texas branches are in major metropolitan markets — Houston, Dallas, and San Antonio — the rest are in smaller cities and rural communities.
The Texas deposits make up about 2% of Citigroup's total, and the branches are 9% of its network overall.
At June 30, 2007, Citigroup held the 16th-largest market share in Texas, with just under 1% of the state's $450 billion of deposits, according to Federal Deposit Insurance Corp. data.
Dan Bass, the managing director of the Houston office of Carson Medlin Co., said Citi's Texas business might be small to the parent but is large enough to entice a regional bank looking to enter the state or to bulk up in it.
"Citi is so large, it isn't a big deal for them, but it is a big deal for Texas," Mr. Bass said.
But even in a market as attractive as Texas, Citi could have a hard time selling all the branches at once.
In the current economy, many banks are opting to hold on to their capital rather than spend it on acquisitions.
Mr. Bass estimated that Citigroup would seek a 6% to 8% premium on the deposits, which, on the low end, would price a deal at about $260 million.
"That price tag is pretty significant," Mr. Bass said. "There are only a handful of buyers who could afford it. You could break it apart and sell it as pieces, but that makes it a lot more complex."
Still, Citigroup has been known to sell off portions of its branch network in recent years.
Aside from the branches it recently sold to the $880 million-asset Happy State Bank, it sold its retail banking and brokerage operation in Puerto Rico to Popular Inc. last year and in 2006 sold its 21 upstate New York branches to M&T Bank Corp. of Buffalo.
After the March deal with Happy State Bank, Darryl Hendricks, Citigroup's central-division manager for Texas and Illinois, said in a memo to employees that the company remained "committed to maintaining and expanding in Texas, where we have a great and growing franchise."

Since: Jan 08

Dyersburg, TN

#5 Jul 13, 2008
Citigroup Looking for Exit from Texas
By Marissa Fajt
July 10, 2008
AUSTIN — Four years after entering Texas with its purchase of First American Bank in Bryan, Citigroup Inc. is looking for an exit strategy.

The $2.2 trillion-asset New York company last month sold eight Texas branches to Happy State Bank and Trust Co. in Amarillo, and several industry sources said the nation's largest banking company is actively seeking a buyer for the rest of its Texas franchise.

A Citigroup spokesman said the company does not comment on market speculation, but industry insiders said that selling its 126 branches and $4.4 billion of deposits in Texas would probably go over well with Citigroup investors, who have been pressing the company to sell peripheral assets and focus on its core businesses.

Morgan Stanley analyst Betsy Grasek said that Texas has been an especially awkward fit for Citigroup since it bought the $3.5 billion-asset First American, because many of the Texas branches are in rural areas and Citigroup operates mainly in urban markets.

"It's not a shock," Ms. Grasek said of the bank's presumed desire to leave the state. "They are trying to get rid of a lot of stuff …. If they can sell it at a small premium or even no premium, it could be helpful in the execution of shrinking the balance sheet."

Roughly 40% of Citigroup's Texas branches are in major metropolitan markets — Houston, Dallas, and San Antonio — the rest are in smaller cities and rural communities.

The Texas deposits make up about 2% of Citigroup's total, and the branches are 9% of its network overall.

At June 30, 2007, Citigroup held the 16th-largest market share in Texas, with just under 1% of the state's $450 billion of deposits, according to Federal Deposit Insurance Corp. data.

Dan Bass, the managing director of the Houston office of Carson Medlin Co., said Citi's Texas business might be small to the parent but is large enough to entice a regional bank looking to enter the state or to bulk up in it.

"Citi is so large, it isn't a big deal for them, but it is a big deal for Texas," Mr. Bass said.

But even in a market as attractive as Texas, Citi could have a hard time selling all the branches at once.

In the current economy, many banks are opting to hold on to their capital rather than spend it on acquisitions.

Mr. Bass estimated that Citigroup would seek a 6% to 8% premium on the deposits, which, on the low end, would price a deal at about $260 million.

"That price tag is pretty significant," Mr. Bass said. "There are only a handful of buyers who could afford it. You could break it apart and sell it as pieces, but that makes it a lot more complex."

Still, Citigroup has been known to sell off portions of its branch network in recent years.

Aside from the branches it recently sold to the $880 million-asset Happy State Bank, it sold its retail banking and brokerage operation in Puerto Rico to Popular Inc. last year and in 2006 sold its 21 upstate New York branches to M&T Bank Corp. of Buffalo.

After the March deal with Happy State Bank, Darryl Hendricks, Citigroup's central-division manager for Texas and Illinois, said in a memo to employees that the company remained "committed to maintaining and expanding in Texas, where we have a great and growing franchise."

But J. Pat Hickman, Happy State Bank's chairman and chief executive officer, said that Citi had started shopping portions of its Texas branch network in markets such as Amarillo, Odessa, Midland, and Wichita Falls in early 2007. The company pulled back when it did not get offers it felt were sufficient, he said.

Happy State's offer for the Amarillo-area branches was rejected at the time, he noted, but Citigroup approached him again last November.

The branches Happy State bought were in Amarillo, Pampa, and Hereford.

Originally published in American Banker.
Guy

New York, NY

#6 Jul 18, 2008
Debrah wrote:
Citibank will be selling ALL their branches in Tx, 100+ in coming months.
Debrah-

Where did you hear this other than the article. Do you have an inside source?
Debrah

Wylie, TX

#7 Jul 18, 2008
Guy wrote:
<quoted text>
Debrah-
Where did you hear this other than the article. Do you have an inside source?
No, just read it online. Nothing confirmed and I dont know anyone at Citi. I work at another large regional bank and heard the rumor from a Citi employee looking to be hired on with us.
Rick James

Killeen, TX

#8 Sep 23, 2008
What a difference one week can make!
Sooo? Now that Citi appears to be interested in WaMu will they hold the Texas Banks?
Now that Morgan Stanley and Goldman Sachs are in the banking bidness are they new players if the Texas banks do, in fact, get sold off?
Has the pending announcement been tabled in lieu of these dramatic new developments?
Tune in for the next exciting episode...
Highlander

Wylie, TX

#9 Sep 23, 2008
Agreed, looks like the Texas fire sale may be off the table. Only makes sense.
Lone Wolf

Odessa, TX

#10 Sep 25, 2008
AP
JPMorgan to buy WaMu deposits, branches
Thursday September 25, 9:36 pm ET
JPMorgan to buy WaMu deposits, branches; WaMu shares plunge in after-hours trade

WASHINGTON (AP)-- JPMorgan Chase & Co. Inc. acquired the assets of Washington Mutual Inc.'s banking operations Thursday after federal regulators seized the ailing thrift, the country's largest.
The deal marks the second time in six months that JPMorgan Chase has taken over a financial institution crippled by bad mortgage bets.

The deal will cost JPMorgan Chase $1.9 billion. The Federal Deposit Insurance Corp., which insures bank deposits, said it would not have to dip into the insurance fund as a result of the seizure.

The Seattle-based thrift has roughly $310 billion in assets and was searching for a lifeline after piling up billions of dollars in losses due to failed mortgages.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

WASHINGTON (AP)-- JPMorgan Chase & Co. Inc. acquired the assets of Washington Mutual Inc.'s banking operations Thursday after federal regulators seized the ailing thrift, the company's largest. The deal marks the second time in six months that JPMorgan Chase has taken over a financial institution crippled by bad mortgage bets.

The deal will cost JPMorgan Chase $1.9 billion. The Federal Deposit Insurance Corp., which insures bank deposits, said it would not have to dip into the insurance fund as a result of the seizure.

The Seattle-based thrift has roughly $310 billion in assets and was searching for a lifeline after piling up billions of dollars in losses due to failed mortgages.
Highlander

Frisco, TX

#11 Sep 28, 2008
word on the street is that this is off, Citibank will not leave Texas.
Presto

New York, NY

#12 Sep 29, 2008
From Biz Journal:
"In Dallas Fort Worth, Wachovia is the No. 11 bank in deposit market share terms, and Citibank is No. 13. That’s according to June 30, 2007 data, the latest information available. Combined, Citi-Wachovia would have at least 98 Dallas-Fort Worth branches and $3.2 billion in D-FW deposits, representing 1.8% of the region’s bank branch deposits.

The Wachovia purchase is a turnabout for Citi on the retail banking side. The Dallas Business Journal reported Sept. 5 that Citigroup had been attempting to sell its Texas retail bank branch network."
Darrell

Tulsa, OK

#13 Sep 26, 2009
Looks like this article had lots of truth to it, abecause last Friday, Citi announced that it was going to abandon and sell all its branches in the TX market....read it on MSN.com and CBS market watch had a great article about it too!!!
Former Employee_NY

Fairfield, CT

#14 Sep 26, 2009
I remember the acquisition of FAB in Texas. There were some branches where men on horseback rode to the drive-up window of the bank. The Texas market was very quiet in terms of ATM activity. One ATM in a off-site location only had an average of 80 transactions a month. I am not surprised that they want to get out.
Steve

Brenham, TX

#15 Jun 16, 2014
I am so glad they are gone! They have screwed their customers once again though. Last night they sold. today I can not access my previous activity online and they refuse to allow me online access to export electronically. They say they can not send me the electronic file. Absolute idiots! Glad they are gone and I hope they lost their butts!

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