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Investors Bancorp to enter Philadelphia with Bank of Princeton deal

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Investors Bancorp to enter Philadelphia with Bank of Princeton deal

Short Hills, N.J.-based InvestorsBancorp Inc. ($21.19 billion) signed a $154 million deal to Princeton, N.J.-basedBank of Princeton ($1.04billion) for stock and cash.

Under the agreement, Bank of Princeton common stockholders willreceive either 2.633 Investors common shares or $30.75 in cash for each share. Thepayout will be prorated to ensure that 60% of the consideration is in stock and40% is in cash. The total deal value announced by the companies is inclusive ofoptions and warrants and based on Investors' May 3 closing price of $11.43.

On a per-share basis, SNL calculates the deal value to be 151.0%of book and tangible book, and 13.1x last-12-months earnings. The price is 18.93%of deposits and 14.99% of assets.

For comparison, SNL valuations for bank and thrift targets inthe Mid-Atlantic region between May 3, 2015, and May 3, 2016, averaged 135.11% ofbook, 148.27% of tangible book and had a median of 21.16x LTM earnings, on a per-sharebasis.

The deal would expand Investors into the Philadelphia market,President and CEO Kevin Cummings said in a May 3 press release. It would add 13branches primarily in the Greater Princeton, N.J., area and in Philadelphia.

SNL data shows that Investors Bancorp Inc. will expand in NewJersey, by 10 branches to be ranked seventh with a 4.19% share of approximately$302.51 billion in total market deposits and will enter Pennsylvania, with threebranches to be ranked No. 161 with a 0.02% share of approximately $356.32 billionin total market deposits.

The deal is expected to be accretive to analysts' consensus 2017EPS estimates by 6%, or 4 cents. It is expected to be 2%, or 19 cents, dilutiveto tangible book value, with an earnback period estimated at 3.5 years using thecrossover method. Investors said the estimated internal rate of return is more than15%.

Investors is assuming 35% in cost savings, a gross pretax markof $19 million and an after-tax restructuring cost of $6 million in its calculations.

The deal would see Bank of Princeton merged into . The transaction is expectedto close in the fourth quarter, and is subject to the approvals of regulators andBank of Princeton's stockholders. After the deal is completed, Investors will createan advisory board made of certain Bank of Princeton directors. "Key seniorexecutives" of the seller will remain with the combined company through themerger integration, the release stated.

RBC Capital Markets was Investors Bancorp's financial adviser,and Keefe Bruyette & Woods, A Stifel Co., provided a fairness opinion. LuseGorman PC was its legal counsel. For Bank of Princeton, Sandler O'Neill & PartnersLP, represented by Emmett Daly and John Beckelman, was financial adviser and Stevens& Lee was legal counsel.

To use SNL's branch analytics tools to compare market overlap,click here.To use SNL Maps to create custom maps, click here.