The
$5 billion-asset Cambridge said in a press release Monday that it will pay $63
million in stock for the $442 million-asset Northmark. The deal, which is
expected to close in the fourth quarter, priced Northmark at 118% of its
tangible book value.
The
deal is expected to be 5.8% accretive to Cambridge’s 2023 earnings per share, excluding
merger-related expenses. It should take about two years for Cambridge to earn
back an estimated 1.7% dilution to its tangible book value.
Cambridge
expects to incur $10.7 million of merger-related expenses. The company plans to
cut 35% of Northmark’s annual noninterest expenses.
Northmark
has three branches, $314 million of loans and $381 million of deposits.
Jane
Walsh, Northmark’s president and CEO, will join Cambridge’s board.
“Since
Northmark’s founding in 1987, the management team and board have created a
franchise that provides exceptional service to its clients in locations where
Cambridge currently does not have banking offices,” Denis Sheahan, Cambridge’s
chairman, president and CEO, said in the release.
"We believe financial metrics for this acquisition appear reasonable and
expansion in strategically adjacent Merrimack Valley markets should add
shareholder value assuming key relationship officers from Northmark ... transition to" Cambridge, Jake Civiello, an analyst at Janney Montgomery Scott, wrote in a note to clients.
"Revenue synergies
such as larger commercial lending capacity and wealth management should
materialize over time," Civiello added.
Piper
Sandler and Hogan Lovells US advised Cambridge. Griffin Financial Group and
Goodwin Procter advised Northmark.
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