Easthampton, Mass.-based Hometown Financial Group Inc. is buying Cohasset, Mass.-based Pilgrim Bancshares Inc. for about $53.9 million.
Pilgrim Bancshares shareholders will receive $23 per share in cash, representing an estimated 151% of Pilgrim Bancshares' tangible book value as of March 31. Hometown Financial will maintain Pilgrim Bank as a separate banking unit and does not expect to close any Pilgrim Bank branches.
On a per-share basis, SNL calculates that the deal value is 153.7% of book and tangible book, and 37.7x earnings. It is 20.50% of assets, 28.37% of deposits and has a tangible book premium-to-core deposits ratio of 15.48%.
The deal has a one-day premium of 11.65%, based on Pilgrim Bancshares' closing price of $20.6 as of July 24, and a one-month premium of 13.69%, based on Pilgrim Bancshares' closing price of $20.23 as of June 22.
For comparison, SNL valuations for bank and thrift targets in the Northeast region between July 25, 2017, and July 25, 2018, averaged 171.89% of book, 172.67% of tangible book and had a median of 31.04x last-12-months earnings, on a per-share basis.
The acquisition will expand Hometown Financial's footprint into eastern Massachusetts. Hometown Financial will have about $2.4 billion in consolidated assets and 26 full-service branches after the deal closes. The transaction is expected to be accretive to Hometown Financial's earnings in the first year of combined operations.
Hometown Financial will enter Norfolk County, Mass., with two branches to be ranked No. 30 with a 0.55% share of approximately $29.01 billion in total market deposits, and will enter Plymouth County, Mass., with one branch to be ranked No. 23 with a 0.26% share of approximately $13.64 billion in total market deposits.
The deal should close early in the first quarter of 2019.
Keefe Bruyette & Woods acted as Pilgrim Bancshares' financial adviser and rendered a fairness opinion to its board. Nutter McClennen & Fish LLP served as Hometown Financial's legal counsel, and Luse Gorman served in that role for Pilgrim Bancshares.
SNL is an offering of S&P Global Market Intelligence.