Photo by James Sanna | Banker & Tradesman Staff

The parent company of California-based Silicon Valley Bank is looking at potential growth rather than cost savings in its decision to acquire Boston Private Bank.

The banks announced yesterday that SVB Financial Group would acquire Boston Private Financial Holdings in a deal valued at $900 million. The transaction is expected to close in mid-2021.

Boston Private’s technology investments in recent years and its strategy to expand its wealth management business were key reasons for pursuing the deal, SVB executives said in a conference call to discuss the acquisition.

SVB sees an opportunity to expand its position with current commercial clients by $400 billion, including about $250 billion in wealth and $150 billion in lending. Greg Becker, CEO of SVB Financial Group, said Boston Private’s technology, products and expertise would contribute to this growth.

“The combination of SVB and Boston Private will significantly accelerate and scale the growth of our private bank and wealth management strategy, expanding our assets under management exponentially, advancing our expertise, products and technology and providing the opportunity to deepen our client relationships and capture a larger portion of this $400 billion opportunity among our clients,” Becker said.

Boston Private is one of Massachusetts’ largest state-chartered banks, with more than $9 billion in total assets. SVB, which is based in Santa Clara, California, has about $95 billion in total assets.

Boston Private’s CEO Anthony DeChellis will co-lead the combined private bank and wealth management business with SVB’s Yvette Butler.

“Together, SVB and Boston Private will be well-positioned to grow and scale our business, leveraging SVB’s deep client relationships and broad reach across the innovation economy to capture a greater share of the wealth management market,” Anthony DeChellis, CEO of Boston Private, said in a statement Monday. “We look forward to working together to support our clients as they pursue the goals they have for their businesses, families and legacies.”

While cost savings was not a driver of the deal, Becker said Boston Private’s technology would save SVB from having to spend on building new platforms. Overall, SVB expects about a 20 percent cost savings from the acquisition.

Boston Private has 12 banking or wealth offices in Boston, Brookline, Cambridge, Hingham, Lexington, Newton and Wellesley, though it recently received permission from the Massachusetts Division of Banks to close the Brookline banking office. The bank also has branches in Northern and Southern California and wealth offices in Miami and Palm Beach Gardens, Florida.

SVB Financial Group, the bank’s parent company, offers commercial and private banking, asset management, private wealth management, brokerage and investment services and funds management services to companies in the technology, life science and healthcare, private equity and venture capital and premium wine industries, according to a statement announcing the deal. Boston Private provides integrated wealth management, trust and banking services to individuals, families, businesses and nonprofits.

Boston Private’s wealth business has more than $16 billion in assets under management, while SVB has about $1 billion.

Christopher McGratty with Keefe, Bruyette & Woods, wrote in an analyst’s note yesterday that SVB had spoken about building its wealth management business, adding that the acquisition suggested that “‘buying’ vs. ‘building’ was the more efficient avenue to achieve this growth and diversification.”

“Operationally, [Boston Private] has regularly faced net outflows, which to us reflects both the structural challenges facing the wealth management industry, but company-specific execution,” McGratty said. “The $16 billion of AUM that [Boston Private] brings to [SVB’s] just $1 billion of AUM allows for greater scale, and over time cross-sell potential to its growing and dynamic ecosystem.”

Becker in the conference call said SVB would also look at opportunities in some of Boston Private’s lending areas, including nonprofit, multifamily, professional services firms, commercial real estate and commercial and industrial lending. He added that SVB’s have shown interest in borrowing in some of these areas, including commercial real estate.

Boston Private’s residential mortgage business could benefit from the acquisition because  liquidity would no longer be a concern, Becker said.

The banks have not decided whether the Boston Private brand name will continue after the merger, according to a memo to Boston Private’s employees filed with the SEC. The bank did not say whether the deal would result in layoffs.

“Cost reduction is not the goal of this transaction and we will work together with SVB leadership to develop a strong team to best serve our clients,” Boston Private said in its employee memo. “We recognize that the uncertainty presented by an acquisition can be stressful. We will share additional information as soon as possible in an effort to provide clarity and alleviate anxiety.”