North Andover, Mass.-based Northmark Bank agreed to merge with and into Cambridge, Mass.-based Cambridge Trust Co., a subsidiary of Cambridge Bancorp, in an all-stock transaction.
Under the terms of the deal, each Northmark Bank common share will be exchanged for 0.9950 of a Cambridge Bancorp common share. Based on Cambridge Bancorp's closing stock price of $79.94 as of May 20, the transaction is valued at $79.54 per share of Northmark Bank's common stock, or approximately $63 million in the aggregate.
At announcement, S&P Global Market Intelligence calculates the deal value to be 117.52% of common equity, 117.52% of tangible common equity, 14.24% of assets, 16.54% of deposits and 17.87x earnings. The tangible book premium to core deposits ratio is 3.21%.
S&P Global Market Intelligence valuations for bank and thrift targets in the Northeast region between May 23, 2021, and May 23, 2022, averaged 146.95% of book and 146.98% of tangible book and had a median of 15.44x last-12-months earnings, on an aggregate basis.
The deal is expected to close during the fourth quarter.
On a pro forma basis, the transaction is projected to be 5.8% accretive to Cambridge Bancorp's mean consensus analyst 2023 EPS, excluding transaction costs, and about 1.7% dilutive to tangible book value per share, with an anticipated earnback period of approximately 2.25 years, according to a news release.
As of March 31, Northmark Bank had about $442 million of total assets, $314 million of gross loans and $381 million of deposits. Based on financial metrics as of March 31, the combined company is expected to have $5.5 billion in assets, $3.7 billion in gross loans and $4.9 billion in deposits, along with Cambridge Bancorp's $4.7 billion of wealth management assets.
The merger will expand Cambridge Bancorp's presence in Massachusetts through the addition of Northmark Bank's three full-service banking offices in North Andover, Andover and Winchester.
With the deal, Cambridge Bancorp will enter Essex County, Mass., with two branches to be ranked No. 20 with a 0.88% share of approximately $32.4 billion in total market deposits, and will expand in Middlesex County, Mass., by one branch to be ranked eighth with a 3.01% share of approximately $83.44 billion in total market deposits, based on S&P Global Market Intelligence data.
Effective at the closing of the transaction, Northmark Bank founder, President and CEO Jane Walsh will be appointed to the boards of Cambridge Bancorp and Cambridge Trust, to serve until the next annual meeting of the company, at which time Walsh will be nominated for reelection.
Northmark Bank will be required to pay Cambridge Bancorp a termination fee of $2.2 million upon termination of the merger agreement under specified circumstances.
Piper Sandler & Co. was financial adviser and Hogan Lovells US LLP was legal counsel to Cambridge Bancorp. Griffin Financial Group was financial adviser and provided a fairness opinion to Northmark Bank, and Goodwin Procter LLP acted as legal counsel to the bank.
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