Santander Bank will further shrink its U.S. branch network this year by selling seven branches in eastern Pennsylvania, as it continues to focus on building out a national digital banking platform.
The U.S. subsidiary of Spanish banking giant Banco Santander has reached a deal to sell the branches to Community Bank, a subsidiary of Community Financial System, based in Syracuse, New York, the two companies said Wednesday in separate press releases.
Community Bank, which has been trying to grow its market share in eastern Pennsylvania, will pay about $48 million to acquire the branches, all of which are located in the Allentown market. The deal includes about $600 million in deposits and $33 million in loans.
The sale is expected to close in the fourth quarter, pending regulatory approval, the banks said.
Santander's branch-sale agreement is the latest effort by the bank to reposition its U.S. footprint as it pursues its digital banking strategy. The heart of that strategy is Openbank, Santander's online bank that launched in the U.S. last fall with a high-yield savings account designed to draw in deposits from across the country. So far, Openbank has generated more than $4 billion of deposits, which are being used to help Santander fund its sizable auto loan portfolio.
Aiming to be "a digital bank with branches," the bank has been tweaking its branch network.
In May, it informed the Office of the Comptroller of the Currency that it would close 18 U.S. branches, or about 4.5% of its network. All of the shutdowns, which will happen this summer, affect offices in the Northeast, where most of Santander's branches are located.
Meanwhile, it recently opened a branch in Miami that's billed as a flagship Openbank office. In addition to high-yield savings accounts, the bank plans to start offering checking accounts and certificates of deposit by the end of this year, Santander U.S. CEO Christiana Riley has said.
"As we grow our presence nationally, we are making refinements to our physical presence to reposition and optimize our footprint for the future," said Bhatia, the former head of Goldman Sachs' digital brand, Marcus. "The investments we are making in both digital and physical will help ensure Santander is best positioned to deliver for our customers for years to come."
At this time, Santander is not actively looking to sell other branches, a spokesperson for the bank told American Banker. It is "in the process of building a branch network aligned with our 'digital bank with branches' strategy," the spokesperson said.
The banking arm of Spanish giant Banco Santander plans to close about 4.5% of its branch network in the United States, according to regulatory filings.
Santander branches that will be sold to Community Bank include two locations in Easton and one location each in Allentown, Bethlehem, Emmaus, Coopersburg and Whitehall, Santander said. Post-sale, all of the offices will remain open and employees will be offered continued employment with Community Bank, the latter said in its press release.
Community Bank has been trying to make deeper inroads into the Lehigh Valley. The $16 billion-asset bank, which has 147 branches in New York, Pennsylvania, Vermont, Massachusetts and New Hampshire, has identified certain midsize markets — including Allentown, Buffalo, Rochester, Syracuse and Albany — where it's building new branches.
Three are planned for the Allentown market, the bank said in a May investor presentation.
After the branch sale is complete and the de novo branches are open, Community Bank will have 12 offices in the Allentown market, it said in its press release.
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