New Jersey-based Bank of Princeton agreed to acquire all of the outstanding shares of Elkins Park, Pa.-based Noah Bank in an all-cash transaction valued at about $25.4 million, or $6.00 per share.
The transaction is expected to close in the second quarter of 2023 and be accretive to Bank of Princeton's EPS in the first year after close.
Following the completion of the deal, Bank of Princeton will have roughly $1.9 billion in total assets, $1.6 billion in loans and $1.6 billion in deposits. The bank will have 29 branches serving the southeastern Pennsylvania, New Jersey and New York City markets, according to a news release.
With the close of the transaction, Bank of Princeton will enter Bergen County, N.J., with two branches to be ranked No. 31 with a 0.14% share of approximately $70.24 billion in total market deposits; New York County, N.Y., with one branch to be ranked No. 154 with a 0% share of about $2.82 trillion in total market deposits; Queens County, N.Y., with one branch to be ranked No. 48 with a 0.05% share of roughly $84.04 billion in total market deposits; and Nassau County, N.Y., with one branch to be ranked No. 30 with a 0.01% share of approximately $126.46 billion in total market deposits, according to S&P Global Market Intelligence data. The bank will also expand in Montgomery County, Pa., by one branch to be ranked No. 26 with a 0.25% share of about $41.19 billion in total market deposits.
The purchase price equates to about 79.7% of tangible book value as of June 30. Bank of Princeton's tangible book value will have a dilution of about 3% with an estimated earnback period of one year, depending on final purchase accounting adjustments.
Under the terms of the merger agreement, the purchase price will be reduced if the sum of Noah Bank's shareholders' equity and allowance for loan losses is less than $37.1 million two days prior to the closing date of the transaction. As of June 30, the sum of Noah's shareholders' equity and allowance for loan losses was $37.6 million, according to the release.
At announcement, Market Intelligence calculates the deal value to be 79.65% of common equity, 80.63% of tangible common equity, 10.99% of deposits, 9.23% of assets and 5.17x earnings. The tangible book premium-to-core deposits ratio is negative 4.07%.
Market Intelligence valuations for bank and thrift targets in the mid-Atlantic region between Oct. 20, 2021, and Oct. 20, 2022, averaged 125.46% of book and 135.41% of tangible book and had a median of 20.91x last-12-months earnings, on an aggregate basis.
As previously announced, Bank of Princeton has secured all stockholder and regulatory approvals needed to reorganize into a bank holding company structure. Under the reorganization, which is expected to be completed in the first quarter of 2023, the bank will become a wholly owned subsidiary of a newly formed corporation known as Princeton Bancorp Inc.
In connection with the transaction, Janney Montgomery Scott was financial adviser to Bank of Princeton, and Stevens & Lee PC is its legal counsel. Piper Sandler & Co. was financial adviser to Noah Bank and rendered a fairness opinion, and Holland & Knight LLP is its legal counsel.
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