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OceanFirst (OCFC) Signs $186M Merger Deal With Partners Bancorp
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In a bid to expand its presence, OceanFirst Financial Corp. (OCFC - Free Report) has entered an agreement with Partners Bancorp, wherein the latter will merge into the former. Closing of the deal is expected in the first half of 2022, subject to the receipt of required regulatory approvals, the receipt of approval from Partners Bancorp shareholders and fulfillment of other customary closing conditions.
Notably, Partners Bancorp is a multi-bank holding company, the parent company of The Bank of Delmarva (and its division, Liberty Bell Bank) and Virginia Partners Bank (and its division Maryland Partners Bank).
As of Sep 30, 2021, Partners Bancorp had $1.64 billion in assets, $1.11 billion in loans, $1.44 billion in deposits, and $139.5 million in stockholders’ equity.
Terms of the Deal and Financial Impact
Per the deal, which is valued at $186 million, Partners Bancorp shareholders have the option to elect to receive $10.00 in cash or 0.4512 shares of OceanFirst’s common stock in exchange for each of their shares.
The agreement provides that only up to 40% of Partners Bancorp’s shares can be exchanged for cash and the remaining shares have to be exchanged for OceanFirst’s common stock, subject to proration.
Now, assuming that 80% of Partners Bancorp’s common stock is converted into OceanFirst shares and the remaining 20% is converted into cash, the aggregate consideration to be paid in exchange for Partners Bancorp’s common stock will consist of approximately 6.5 million shares of OceanFirst and $37 million in cash.
The merger is expected to result in earnings per share accretion of approximately 10% in 2023 (the first full year of fully phased-in synergies).
One-time pre-tax transaction and integration expenses of $20 million are anticipated.
Cost savings are expected to be 40% of Partners Bancorp's cost base. Of this, 50% is expected to be achieved in 2022 and 100% thereafter.
Based on the results as of Sep 30, 2021, and the impact of purchase accounting, the combined firm is projected to have pro forma assets of $13.5 billion, loans of $9.3 billion and $11.2 billion in deposits.
Management Comments
The chairman and CEO of OceanFirst, Christopher D. Maher, stated, “The banks that comprise Partners Bancorp are each strong organizations operating community commercial banking models and have demonstrated strong growth in their markets. Joining the OceanFirst family will allow these highly professional commercial bankers to continue to build new relationships while leveraging the technology and operating efficiency offered by our Company.”
Maher added, “We believe the foundation and core values of OceanFirst are consistent with the teams at the Partners Bancorp banks and together we can achieve enhanced value for our stockholders while delivering an extraordinary experience for our customers.”
Lloyd B. Harrison, III, the CEO of Partners Bancorp, said, “This partnership creates a powerful and innovative financial services provider better able to serve its clients and communities of today and tomorrow. The team at OceanFirst has built and maintains a high quality banking franchise, and there is no better team with which to unite to deliver community-style banking and to capitalize on the opportunities presented by an evolving industry.”
Over the past year, shares of OceanFirst have gained 36.8% compared with 45.8% growth recorded by the industry.
Several companies from the finance sector are undertaking consolidation efforts to counter the low interest rate environment along with the heightened costs of investments in technology. Also, mergers help in diversifying revenues and products.
Last month, with an aim to further diversify its deposit gathering capabilities and revenue mix, Raymond James (RJF - Free Report) announced a cash-cum-stock deal to acquire TriState Capital Holdings, Inc. for roughly $1.1 billion.
Franklin Resources, Inc. (BEN - Free Report) announced the acquisition of O’Shaughnessy Asset Management, LLC, a preeminent quantitative asset management firm, thereby, bulking up its offerings in the separately managed account space.
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OceanFirst (OCFC) Signs $186M Merger Deal With Partners Bancorp
In a bid to expand its presence, OceanFirst Financial Corp. (OCFC - Free Report) has entered an agreement with Partners Bancorp, wherein the latter will merge into the former. Closing of the deal is expected in the first half of 2022, subject to the receipt of required regulatory approvals, the receipt of approval from Partners Bancorp shareholders and fulfillment of other customary closing conditions.
Notably, Partners Bancorp is a multi-bank holding company, the parent company of The Bank of Delmarva (and its division, Liberty Bell Bank) and Virginia Partners Bank (and its division Maryland Partners Bank).
As of Sep 30, 2021, Partners Bancorp had $1.64 billion in assets, $1.11 billion in loans, $1.44 billion in deposits, and $139.5 million in stockholders’ equity.
Terms of the Deal and Financial Impact
Per the deal, which is valued at $186 million, Partners Bancorp shareholders have the option to elect to receive $10.00 in cash or 0.4512 shares of OceanFirst’s common stock in exchange for each of their shares.
The agreement provides that only up to 40% of Partners Bancorp’s shares can be exchanged for cash and the remaining shares have to be exchanged for OceanFirst’s common stock, subject to proration.
Now, assuming that 80% of Partners Bancorp’s common stock is converted into OceanFirst shares and the remaining 20% is converted into cash, the aggregate consideration to be paid in exchange for Partners Bancorp’s common stock will consist of approximately 6.5 million shares of OceanFirst and $37 million in cash.
The merger is expected to result in earnings per share accretion of approximately 10% in 2023 (the first full year of fully phased-in synergies).
One-time pre-tax transaction and integration expenses of $20 million are anticipated.
Cost savings are expected to be 40% of Partners Bancorp's cost base. Of this, 50% is expected to be achieved in 2022 and 100% thereafter.
Based on the results as of Sep 30, 2021, and the impact of purchase accounting, the combined firm is projected to have pro forma assets of $13.5 billion, loans of $9.3 billion and $11.2 billion in deposits.
Management Comments
The chairman and CEO of OceanFirst, Christopher D. Maher, stated, “The banks that comprise Partners Bancorp are each strong organizations operating community commercial banking models and have demonstrated strong growth in their markets. Joining the OceanFirst family will allow these highly professional commercial bankers to continue to build new relationships while leveraging the technology and operating efficiency offered by our Company.”
Maher added, “We believe the foundation and core values of OceanFirst are consistent with the teams at the Partners Bancorp banks and together we can achieve enhanced value for our stockholders while delivering an extraordinary experience for our customers.”
Lloyd B. Harrison, III, the CEO of Partners Bancorp, said, “This partnership creates a powerful and innovative financial services provider better able to serve its clients and communities of today and tomorrow. The team at OceanFirst has built and maintains a high quality banking franchise, and there is no better team with which to unite to deliver community-style banking and to capitalize on the opportunities presented by an evolving industry.”
Over the past year, shares of OceanFirst have gained 36.8% compared with 45.8% growth recorded by the industry.
Currently, OceanFirst carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Competitive Landscape
Several companies from the finance sector are undertaking consolidation efforts to counter the low interest rate environment along with the heightened costs of investments in technology. Also, mergers help in diversifying revenues and products.
Last month, with an aim to further diversify its deposit gathering capabilities and revenue mix, Raymond James (RJF - Free Report) announced a cash-cum-stock deal to acquire TriState Capital Holdings, Inc. for roughly $1.1 billion.
Franklin Resources, Inc. (BEN - Free Report) announced the acquisition of O’Shaughnessy Asset Management, LLC, a preeminent quantitative asset management firm, thereby, bulking up its offerings in the separately managed account space.