As shareholders of Brooklyn Federal Bancorp Inc. prepare to vote Thursday on the $11 million merge with Investors Bancorp Inc., the head of New Jersey's third largest bank is hopeful the deal will get done.
"We're cautiously optimistic that the vote will be approved," said Kevin Cummings, president and CEO of Investors Bank, which is owned by Investors Bancorp. "It's a good transaction for us, because it expands our presence in New York, particularly Brooklyn."
The banks have said they expect the deal to be complete in January, pending shareholder approval.
Two independent proxy advisory firms that advise shareholders, Institutional Shareholder Services and Glass, Lewis & Co., have recommended their clients — many of them institutional investors — vote for the merger, according to the banks.
In November, Investors, in the Short Hills section of Millburn, increased its offering price from $10.3 million to $11 million — or 87 cents per share — following shareholder class-action lawsuits over the deal.
Brooklyn Federal is the parent of Brooklyn Federal Savings Bank, which has $470 million in assets and $411 million in deposits, with five branches in Brooklyn and on Long Island.
As part of the deal, Investors and Brooklyn Federal arranged to sell Brooklyn Federal's commercial loan portfolio, to help managed the risk associated with the acquisition, Cummings said.
If the deal is completed, Brooklyn Federal — which was founded in 1887 under the name Brooklyn City Savings and Loan Association — would be folded into Investors' operations, and its branches will soon carry the Investors Bank name.
Once the transaction is completed early next year, Investors Bank plans to have 10 branches in New York.
"We pick up a headquarters in Brooklyn, and that's going to be our regional headquarters for expansion in Brooklyn, Queens and Long Island," Cummings said.
The Brooklyn Federal merge is part of Investors' aggressive expansion effort into more densely populated and urban areas. It has added more than 30 branches since 2008, bringing the total to 82 branches in New Jersey and New York now, and the bank has doubled its assets — to $10.3 billion — from $4.8 billion in 2005.
"Not only is it a transformation of our business plan, it's a transformation of our culture, a transformation of our employees. It's a new company. We've taken a company that was 80 years old, and in the last five years, changed it into something entirely different," Cummings said.
The Brooklyn federal deal will be Investors' fifth acquisition since June 2008. In 2008, Investors picked up Summit Federal Savings Bank, a federal savings bank with five branches. In 2009, Investors acquired American Savings Bank, with five branches, and bought six branches from Banco Popular. In 2010, Investors got 17 Millennium Bank branches in New Jersey, New York and Massachusetts.
CORRECTION: A previous version of this story contained an incorrect spelling of Kevin Cummings' name. It has been corrected above.