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In This List

New Jersey's largest community banks keep buying

Street Talk Episode 68 - As many investors zig away from bank stocks, 2 vets in the space zag toward them

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Street Talk Episode 65 - Deferral practices trap US bank portfolios in purgatory

New Jersey's largest community banks keep buying

New Jersey's largest community banks remain active on the M&A front as financial results continue to underwhelm.

Fairfield-based Kearny Financial Corp., the parent company of the state's fourth-largest community bank, announced on Dec. 18 that it would buy Millington-based MSB Financial Corp. for $95.7 million, marking New Jersey's eighth M&A deal of 2019.

On Dec. 3, Fair Lawn-based Columbia Financial Inc. (MHC), the holding company of Columbia Bank (MHC), New Jersey's third-largest community bank, announced it would acquire Roselle-based RSB Bancorp MHC in its second M&A deal of 2019. Columbia's previous deal for Midland Park-based Stewardship Financial Corp. closed on Nov. 1, adding close to $1 billion in assets, according to June 30 data.

Englewood Cliffs-based ConnectOne Bancorp Inc., the holding company for ConnectOne Bank, New Jersey's sixth-largest community bank by assets, announced on Aug. 16 that it would buy Fort Lee-based Bancorp of New Jersey Inc. Once the deal closes, ConnectOne Bank will have more than $7 billion in assets.

Toms River-based OceanFirst Financial Corp., holding company of OceanFirst Bank NA, the state's No. 2 community bank by assets, announced two M&A transactions on Aug. 9 that will push the bank's assets to just below $10 billion.

Last year, only four deals were announced with New Jersey-based bank or thrift targets.

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The median return on average equity for New Jersey's banks and thrifts with less than $10 billion in assets was 6.37% in the third quarter, down 61 basis points year over year and well below the median 7.51% ROAE for Mid-Atlantic community banks and 9.86% for all U.S. community banks. Likewise, New Jersey community banks had a median net interest margin of 3.19%, lower than the Mid-Atlantic's 3.41% NIM and 3.85% for the U.S. as a whole.

The state's 0.70% median nonperforming asset ratio was 4 basis points higher than the regional median and 8 basis points higher than the national median.

On a positive note, loans grew at a slightly faster pace in the state, rising by a median 4.5% year over year, compared to 4.4% nationwide.

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Iselin-based Provident Bank, New Jersey's largest community bank by assets, remained very close to $10 billion in assets in the third quarter. But the company does not anticipate breaching the threshold in the fourth quarter, Provident Financial Services Inc. CFO Thomas Lyons said during a third-quarter earnings call. Once a bank breaches $10 billion in assets at year-end, it becomes subject to the Dodd-Frank Act's Durbin amendment, which limits the amount of debit card interchange revenue the company can earn with each transaction.

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New Jersey, like most of the rest of the U.S., is seeing more branch closures than openings as banking increasingly goes digital. During the third quarter, banks closed 48 branches in the state while only opening eight. During the 12 months through Sept. 30, New Jersey saw 129 branch closures and 34 openings.

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Click here for an Excel spreadsheet containing results for all New Jersey community banks in the third quarter.