Webster Financial To Buy JPMorgan's Health Savings Account Business

(RTTNews) - Webster Financial Corp. (WBS), the holding company for Webster Bank, N.A., agreed Tuesday to acquire the health savings account or HSA business from JPMorgan Chase Bank, N.A., a subsidiary of JPMorgan Chase & Co. (JPM) for an undisclosed cash amount. Terms of the deal were not disclosed.

"This acquisition will solidify HSA Bank's position as a leading provider of health savings accounts with nearly $4 billion in assets under administration in more than 1.4 million accounts and will accelerate HSA Bank's strategy to increase penetration of the carrier and large employer markets," Webster Chairman and CEO James Smith said in a statement.

The deal will see about 700,000 accounts, including an estimated $1.3 billion in deposits and $175 million in investments, migrating to HSA Bank, a division of Webster Bank, from JPMorgan Chase Bank.

HSAs increasingly are finding favor among employers and consumers, transforming the way consumers use and pay for health care. HSAs provide a tax-advantaged way for consumers to pay and save for current and future medical expenses.

Webster noted that HSAs attract long-duration transaction deposits which provide a stable source of funding for Webster's loan growth.

Webster said it will use about 60 percent of the deposits in the near term to pay down short-term borrowings with the remaining funds to be invested in securities.

Webster stated that it expects the deal to be modestly accretive to earnings per share and return on equity in the first year following closing. The closure of the deal is subject to regulatory approval and customary closing conditions.

The deal is also expected to improve Webster's loan-to-deposit ratio to about 80 percent from 87 percent pro forma at June 30, 2014. The company estimates the deal will have tangible book value dilution of about 3 percent.

However, JPMorgan Chase has advised Webster that the transaction is not expected to have a material impact on JPMorgan Chase's earnings.

In Friday's regular trading session, WBS is currently trading at $29.73, up $0.15 or 0.51% on a volume of 78,854 shares, and JPM is trading at $61.04, up $0.13 or 0.21% on a volume of 3.54 million shares.