Laurel, Md.-based Revere Bank ($1.17 billion) and Rockville, Md.-basedMonument Bank haveagreed to merge, with Revere Bank as the surviving institution.
According to a May 3 news release, Revere will exchangeshares to acquire 100% of the outstanding shares of Monument. The exchangeratio will be fixed at 1.0682 of Revere's shares for each share of Monument,subject to adjustment based on the performance of a component of the latter'sloan portfolio. Assuming a valuation ofRevere common stock of $21.26, the aggregate consideration of the transactionis approximately $65.1 million, including the value of outstanding options toacquire Monument common stock. Options to acquire Monument common stock wouldbe converted into options to acquire shares of Revere common stock. The numberof options and the exercise price will be adjusted by the exchange ratio.
The dealvalue is 161.3% of book, 161.5% of tangible book and 20.3xearnings, on an aggregate basis. It is 16.07% of deposits, 12.67% of assets andhas a tangible book premium-to-core deposits ratio of 7.32%. For comparison,SNL's valuations for bank and thrift targets in the mid-Atlantic between May 3,2015, and May 3, 2016, averaged 125.56% of book, 133.74% of tangible book andhad a median of 22.83x last-12-month earnings, on an aggregate basis.
The deal is set to close in the fourth quarter, and is stillsubject to regulatory and shareholder approval.
Monument Bank President and CEO H.L. Ward will join Revere'sboard and executive management team. Three Monument directors will also beinvited to join the board, while the rest will be invited to join Revere'sMontgomery regional advisory board. In addition, Revere plans to maintainMonument's Silver Spring regional advisory board.
As of March 31, Monument had approximately $514 million inassets, $405 million in gross loans and $405 million in deposits, according tothe release. At closing, the combined institution is expected to have over $1.7billion in assets with 10 branches making it the third-largest bankheadquartered and operating in Maryland."We are also excited about expanding our market presence, especially inMontgomery County where we will now have five branches on a combinedbasis," Revere co-President and co-CEO Andrew Flott said in the release."Like our recentBlueRidge Bankacquisition,this merger will increase our lending capabilities and drive significant costefficiencies."
Excluding one-time deal related expenses, the transaction isexpected to be significantly accretive to EPS during the first 12 months afterclose and accretive to tangible book value in less than four years, Flott and co-Presidentand co-CEO Kenneth Cook told shareholders in a July 30 letter.
Revere Bank will expand in Montgomery County by fourbranches to be ranked No. 11 with a 1.74% share of approximately $35.03 billionin total market deposits.
Houlihan Lokey Capital Inc. served as financial adviser toRevere Bank, while Windels Marx Lane & Mittendorf LLP acted as legalcounsel and Ambassador Financial Group Inc. provided the fairness opinion.Sandler O'Neill & Partners LP served as financial adviser and rendered afairness opinion to Monument Bank while Luse Gorman PC served as legal counsel.