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In Massachusetts, Independent Bank to acquire MNB Bancorp

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In Massachusetts, Independent Bank to acquire MNB Bancorp

Rockland, Mass.-based Independent Bank Corp., the holding company of Rockland Trust Co., agreed to acquire Milford, Mass.-based MNB Bancorp, the parent of Milford National Bank and Trust Co. in a deal comprised of 25% cash and 75% stock, set to close during the fourth quarter.

The deal exchanges each MNB share for either 3.55 shares of Independent Bank common stock or $275 in cash, subject to customary proration procedures. Independent Bank expects to issue around 528,375 common shares in the merger. Based upon Independent Bank's May 25 per-share closing price of $76.80, the deal is valued at about $54.2 million. Independent Bank hopes to fund the cash portion of the transaction from internal sources.

SNL calculates the deal value to be 41.3x earnings, 14.83% of assets, 18.00% of deposits and the tangible book premium-to-deposits ratio is 9.14%.

For comparison, SNL valuations for bank and thrift targets in the Northeast region between May 29, 2017, and May 29, 2018, averaged 151.74% of book, 152.63% of tangible book and had a median of 42.31x last-12-months earnings, on an aggregate basis.

Independent Bank, as a result of the deal, will expand in Worcester County, Mass., by four branches to be ranked No. 16 with a 2.08% share of approximately $16.17 billion in total market deposits.

As of March 31, Rockland Trust had $8.09 billion in assets, while Milford National had $365.4 million in assets.

Excluding one-time merger-related expenses of around $5.3 million after tax, Independent Bank expects the transaction to be approximately 10 cents accretive to its 2019 earnings per share. Furthermore, Independent Bank estimates the transaction to generate an internal rate of return of about 19%. The company also expects to incur tangible book value-per-share dilution of approximately 1.2%.

MNB directors and principal shareholders who currently own a total of about 67% of MNB's outstanding shares have agreed to vote their shares in favor of the merger.

Independent Bank's legal counsel was Day Pitney LLP, and it received a fairness opinion from Keefe Bruyette & Woods Inc. MNB Bancorp was advised by Sandler O'Neill & Partners LP and used Nutter McClennen & Fish LLP as its legal counsel.

The transaction is subject to regulatory approval.

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