Pittsfield-based Berkshire Hills Bancorp Inc. is set to acquire The Connecticut Bank and Trust Co. (CBT) for approximately $30 million, fulfilling a "longstanding" goal of entering the Connecticut market.
CBT, which was founded in 2004, has $283 million in assets and operates eight banking offices in the Greater Hartford area. Berkshire, the parent of Berkshire Bank, currently has more than $4 billion in assets and more than 60 branches serving customers in Massachusetts, New York and Vermont.
This is Berkshire Hill’s third merger over the past year. In April, Berkshire completed its acquisition of Rome Bancorp Inc. and its subsidiary, The Rome Savings Bank, a $327 million bank with five banking offices serving Rome, Lee, and New Hartford, N.Y. In July, the Berkshire Hills completed its acquisition of Legacy Bancorp, adding $1 billion and 19 branches. With those successful mergers, Berkshire’s total assets have grown this year by 42 percent to $4.1 billion, according to a statement.
Under the terms of the CBT merger agreement, 70 percent of the outstanding CBT shares will be exchanged for Berkshire shares at a fixed exchange ratio of 0.3810 Berkshire shares for each share of CBT. The remaining 30 percent of CBT shares will be exchanged for cash in the amount of $8.25 per share. The transaction is valued at $7.90 per CBT share based on Berkshire’s average closing stock price of $20.35 for the ten trading days ended Oct. 21. This represents a 29 percent premium to the $6.13 average CBT share price for the same period. The merger is valued at 138 percent of CBT’s tangible book value per share and a 4 percent premium to core deposits based on financial information for the period ended June 30, 2011.
"We are very pleased to attain our longstanding goal of entering the Connecticut marketplace through this merger with CBT," said Michael P. Daly, Berkshire’s president and chief executive officer. "We will now have a total of 20 branches serving the Hartford/Springfield area, the second largest economic area in New England. CBT has built a solid franchise in the Greater Hartford area, and this combination will provide more lending capacity and product diversity to this market. Like CBT, Berkshire has a local focus and a strong record of community involvement. Based on our demonstrated success in our other regional markets, we are well positioned to build our presence in Hartford."
In its third quarter earnings statement, Berkshire Hills reported $4.4 million in net income, up from $3.45 million during the same period in 2010. For the nine months ended Sept. 30, the bank reported a decline – dropping to $9.1 million from $10.2 million.
"With this merger, we will be able to bring more services and capabilities to our growing customer base. This combination provides a very attractive immediate return to our shareholders and a positive outlook for the long term performance of Berkshire’s stock. Our shareholders will also benefit from the larger and more liquid market for Berkshire shares," said David A. Lentini, CBT’s president and chief executive officer. "As we considered our strategic alternatives, there were compelling reasons for us to enter this partnership. Berkshire has earned a strong reputation for its commercial and personal banking services, and also has solid insurance and wealth management offerings. Berkshire has been a good merger partner with other area banks, and with its current Springfield regional headquarters it is well positioned to combine with our operations."
The merger is expected to be completed early in the second quarter of 2012.
