North Jersey banks ConnectOne Bancorp Inc. and Center Bancorp Inc. have agreed to merge in a deal estimated at $243 million, creating the fourth largest bank headquartered in New Jersey.
The combined entity will have about $3 billion in assets and 24 branches. Executives from both companies described the deal as a merger of equals with compatible cultures and footprints that match well.
"This is a very strategically compelling merger between two of New Jersey's best and top performing banks," said ConnectOne CEO Frank Sorrentino, who will be chief executive of the combined company. "This puts two very attractive franchises together and will increase our size, scale and geographical footprint."
The transaction is expected to close in the second or third quarter, pending shareholder and regulatory approval. The new company will be called ConnectOne.
Sorrentino said the combined entity will have a more robust loan portfolio, focused on serving middle-market commercial businesses in the state's northern counties. Center will be able to tap in ConnectOne's strength in construction loans and multifamily home loans, Sorrentino said, plus the new entity will benefit from better loan execution.
Englewood-based ConnectOne has eight branches, mostly in Bergen County. Union-based Center has 16 branches in Bergen, Morris, Mercer and Union counties.
Sorrentino said both bank's territories complement each other and doesn't expect closures as a result of the merger, though the combined company will continue to revaluate its strategic allocation of branches as circumstances require. Asked by an analyst about the merged company's light footprint in Hudson and Essex counties, Sorrentino said ConnectOne is adding a branch in the Ironbound section of Newark.
The merger is expected to generate annual savings of $7 million, of which the largest cost reduction will be compensation and benefits. The companies didn't say how many redundant positions will be eliminated but Sorrentino said it will be a "very small percentage" of the work force. The merged company will employ about 275 with about 100 from ConnectOne and 175 from Center.
"We don't expect a lot of bloodshed," Sorrentino said. "The whole underpinning of this transaction is the growth and value it will create."
Center CEO Anthony Weagley will be chief operating officer and ConnectOne chief financial officer William Burns will continue that role with the combined company.
"The compatible cultures of our two organizations make this partnership a natural fit," Weagley said in a statement. "We are excited about our combined growth prospects and believe we are well positioned in the marketplace to continue our industry leading growth."
Under terms of the agreements, ConnectOne shareholders will receive 2.6 shares of Center common stock for each share of ConnectOne stock they own.
Upon closing, Center shareholders will own about 54 percent of the combined company's stock while ConnectOne shareholders will own about 46 percent of the company. The company will trade under the symbol "CNOB" on Nasdaq.
Shares of both companies rallied on the news. ConnectOne shares rose $8.72, or 21.9 percent, to $48.55 in afternoon trading on the Nasdaq while Center shares rose $1.58, or 9 percent, to $19.12.
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