Equitable Bank announced this week that it has entered into an agreement to acquire a majority interest in Saskatchewan-based Concentra Bank.
As part of the $200-million deal, Equitable will acquire 84% common share equity interest in Concentra, which is the 13th largest Schedule I bank in Canada with $11.3 billion in assets.
As part of the agreement, Equitable will be able to acquire 100% of Concentra for a combined premium of $35.7 million to book value of common equity—or a total purchase price of $470 million based on Concentra’s book value as of November 30, 2021.
“Acquiring Concentra strengthens Equitable’s position as Canada’s Challenger Bank by adding scale, talent, customer and partner relationships that will allow us to better serve our purpose of driving change in Canadian banking that enriches people’s lives,” said Equitable’s President and CEO Andrew Moor. “This is one of the most important and consequential transactions in our 50-plus history, and it accelerates our growth plan by several years.”
Moor added that the addition of Concentra furthers Equitable’s relationship with credit unions, with whom the bank shares a “strong philosophical bond,” and is expected to result in strong earnings accretion and “exciting growth opportunities” in the coming years.
Concentra currently offers residential loans, including alternative single-family, prime single-family, reverse mortgages, commercial mortgages and specialty finance solutions.
The majority of its business is focused in Ontario (about 55% of outstanding loans), with 19% in Alberta, 13% in B.C., 5% in Saskatchewan, 2% in Quebec and 6% throughout the rest of Canada.
What does the deal mean for brokers?
In a letter to broker partners, Equitable further explained some of the implications of the deal.
“Equitable’s focus has long been to provide smarter mortgage products with exceptional service to mortgage brokers. The acquisition of Concentra Bank will make Equitable Bank even better positioned,” reads the letter, signed by Equitable’s executive team.
“Equitable will be significantly larger, with a wider range of products to offer and a broader geographic footprint to better serve our mortgage broker partners,” it added. “We will also have greater technical resources to back up that commitment.”
Equitable Bank also reaffirmed its commitment to the broker space in the letter.
“We strongly believe that the best way to get a mortgage in Canada is through a mortgage broker and we have built our business by working closely with mortgage brokers across Canada to help you build your businesses,” the letter reads. “There will be no change to this strategy post-acquisition.”
As an aside, the fact that Concentra is headquartered in Saskatchewan will open up new opportunities for Equitable Bank in both the Prairies and the west coast, it added.
The acquisition is expected to close by the second half of 2022.