New Jersey bank M&A has snapped back to life following a COVID-19-induced slowdown in 2020.
Over a one-month span, three of the state's largest 10 community banks under $10 billion in assets announced a deal, bringing 2021's M&A tally to four, compared to two in all of 2020 and eight in 2019.
Most recently, Elmwood Park-based Spencer Savings Bank SLA, the state's seventh-largest community bank by assets, announced July 16 that it would acquire Edgewater-based Mariner's Bank. If completed, this will be Spencer's largest acquisition since 2014 when the company acquired the assets and liabilities of Ewing, N.J.-based NJM Bank FSB. Spencer has been in a long-running dispute with activist investor Larry Seidman, who has been pressing for a board seat.
Four days earlier, Oak Ridge-based Lakeland Bancorp Inc., the holding company of New Jersey's second-largest community bank, announced a $243.7 million deal agreement for Cranbury-based 1st Constitution Bancorp, the holding company of the state's 15th-largest community bank by assets. Once completed, the combined company will have roughly $9.6 billion in assets, which should make it the largest community bank in the state under $10 billion in assets.
Analysts expressed skepticism over the deal's projected cost savings and earnback period, and since the announcement through July 23, Lakeland's stock price has underperformed the SNL U.S. Bank and Thrift index.
On June 17, Columbia Financial Inc., the holding company of New Jersey's largest bank by assets, announced that it would acquire Freehold MHC. Once completed, Columbia will have just shy of $9.4 billion in assets.
As for performance through the first quarter, New Jersey's community banks and thrifts lagged the national and regional medians in all six of the major banking metrics examined. The state's 6.22% median return on average equity and 2.91% median net interest margin were both lower than the Mid-Atlantic and national medians. In addition, the state's community banks posted a higher median efficiency ratio and nonperforming assets ratio. Loan and deposit growth year over year were also lower than the regional and national medians.
During the first quarter, 22 bank and thrift branches were closed in New Jersey and only one opened, as banking continues to transition to digital channels. Over the yearlong period ended March 31, 21 branches were opened in the Garden State and 131 closed.
Click here for a refreshable spreadsheet containing first-quarter 2021 financial information for New Jersey-based community banks.