Uniondale, N.Y.-based Flushing Financial Corp. agreed to acquire Islandia, N.Y.-based Empire Bancorp Inc. in a transaction valued at about $111.6 million.
Empire Bancorp unit Empire National Bank will merge into Flushing Financial unit Flushing Bank as part of the deal, with Flushing Bank as the surviving entity.
Each Empire common share will be exchanged for either 0.6548 Flushing common share or $14.04 in cash, based on the each Empire shareholder's election. The merger agreement provides for an aggregate split of total consideration of 50% Flushing common stock and 50% cash.
As of June 30, Flushing Financial had $6.95 billion in assets, while Empire Bancorp had $1.01 billion in assets, according to S&P Global Market Intelligence data.
S&P Global Market Intelligence valuations for bank and thrift targets in the Mid-Atlantic region between Oct. 24, 2018, and Oct. 24, 2019, averaged 172.79% of book and 181.19% of tangible book and had a median of 19.82x last-12-months earnings, on an aggregate basis
At closing, the combined company is expected to have approximately $8.0 billion in assets, $6.3 billion in loans, $5.8 billion in deposits, and 23 branches in Queens, Brooklyn, Manhattan and on Long Island, the press release said.
Flushing Financial will enter Suffolk County, N.Y., with three branches to be ranked no. 14 with a 1.67% share of approximately $55.02 billion in total market deposits and will expand in Nassau County, N.Y., by one branch to be ranked 9th with a 3.08% share of approximately $79.1 billion in total market deposits.
S&P Global Market Intelligence calculates the deal is 135.78% of common equity, 141.00% of tangible common equity and 31.33x earnings, on an aggregate basis. The deal value is 10.89% of assets and 12.26% of deposits, and the tangible book premium to core deposits ratio is 3.60%.
Based on financial information as of June 30, the transaction value represents 1.4x Empire's tangible book value and a 3.6% deposit premium. On a combined basis, the transaction is expected to be accretive to earnings by 19% in 2021, but will be dilutive to tangible book value by 7.0% at closing with a projected earnback period of 3.2 years using the cross-over method.
The deal is expected to close in the second quarter of 2020.
Deutsche Bank Securities Inc. served as financial adviser to Flushing, while Arnold & Porter served as its legal counsel. Sandler O'Neill & Partners LP served as financial adviser to Empire, while Fenimore Kay Harrison & Ford served as its legal counsel.