Norwich, N.Y.-based NBT Bancorp Inc. and Lakeville, Conn.-based Salisbury Bancorp Inc. entered into an agreement pursuant to which Salisbury Bancorp will merge with and into NBT Bancorp in an all-stock deal worth $204 million.
As per the agreement, upon closing of the transaction, each outstanding share of Salisbury Bancorp common stock will be converted into the right to receive 0.7450 share of NBT Bancorp common stock. This equates to a value of $35.00 per Salisbury Bancorp share and based on NBT Bancorp's volume-weighted average closing stock price of $46.98 for the 10-day trading period ending on Nov. 29, according to a news release.
At announcement, S&P Global Market Intelligence calculates the deal value to be 161.89% of common equity, 182.79% of tangible common equity, 15.06% of deposits, 13.20% of assets and 12.56x earnings. The tangible book premium-to-core deposits ratio is 7.20%.
Market Intelligence valuations for bank and thrift targets in the Northeast region between Dec. 5, 2021, and Dec. 5, 2022, averaged 132.24% of book and 132.25% of tangible book and had a median of 16.66x last-12-months earnings, on an aggregate basis, and averaged 136.84% of book and 136.87% of tangible book and had a median of 14.36x LTM earnings, on a per-share basis.
After the close of the transaction, NBT Bancorp expects the merger to be approximately 9.8% accretive to first full-year pro forma GAAP earnings per share and 4.9% per share accretive to cash earnings excluding the impact of purchase accounting adjustments, including fair value marks to securities and loans and the establishment of a core deposit intangible asset.
The merger is expected to close in the second quarter of 2023, subject to customary closing conditions, including approval by the shareholders of Salisbury Bancorp and required regulatory approvals.
Based on Market Intelligence data, with the completion of the deal, NBT Bancorp will expand in Massachusetts by three branches to be ranked No. 93 with a 0.05% share of approximately $579.55 billion in total market deposits and will expand in Connecticut by four branches to be ranked No. 32 with a 0.32% share of about $195.97 billion in total market deposits. NBT Bancorp will also expand in New York by seven branches to be ranked No. 49 with a 0.23% share of roughly $3.7 trillion in total market deposits.
The boards of both companies unanimously approved the combination that will provide a market extension for the institutions, the release said.
The transaction between the companies is intended to qualify as a reorganization for federal income tax purposes, and as a result, the receipt of NBT Bancorp common stock by shareholders of Salisbury Bancorp is expected to be tax-free.
As of Sept. 30, Salisbury Bancorp had assets of $1.51 billion, deposits of $1.33 billion and net loans of $1.18 billion. Its subsidiary, Salisbury Bank and Trust Co., has 14 banking offices in northwestern Connecticut, the Hudson Valley region of New York and southwestern Massachusetts, the release said.
Following the completion of the merger, Salisbury Bank and Trust's offices will become locations of NBT Bank NA, a subsidiary of NBT Bancorp.
NBT Bancorp has committed to maintaining charitable support in the markets served by Salisbury Bancorp at consistent levels following the merger. NBT Bancorp also pledged to contribute an additional $500,000 in incremental support to demonstrate the company's ongoing commitment to these markets.
At the close of the merger, one director from the Salisbury Bancorp board will be added to the board of NBT Bancorp. The Norwich, N.Y.-based company also intends to establish a regional operations center in Lakeville, Conn.
The merger agreement between the companies carries an $8 million termination fee, which is payable by Salisbury Bancorp to NBT Bancorp if the merger is not consummated under specific circumstances.
Piper Sandler & Co. was the financial adviser and Hogan Lovells US LLP was the legal counsel to NBT Bancorp. Janney Montgomery Scott LLC was the financial adviser and Updike Kelly & Spellacy PC was the legal counsel to Salisbury Bancorp on this transaction.
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