Rockland Trust hopes to complete its acquisition of Slades Bank, formerly known as Slade’s Ferry Bank, by early 2008.
Two of Massachusetts’ stock banks intend to merge, lessening the state’s already tiny number of publicly owned institutions by one and removing a CEO and several board members from the picture.
Meanwhile, banking industry experts are saying the deal between the two Bay State companies will benefit the community.
Rockland Trust, a $2.7 billion commercial bank in Rockland that celebrated its centennial last month, hopes to complete its acquisition of Slades Bank (formerly Slade’s Ferry Bank), a $628 million, Somerset-based commercial bank and trust company founded in 1959, by early 2008.
The announcement was made just weeks after the decision to merge – quickly, so as to have minimal effect on either bank’s stock price.
The deal is valued at $105 million, based on an agreement which calls for 75 percent of the outstanding shares of Slade’s Ferry Bancorp (holding company for Slades Bank) to be converted to 0.818 shares of Independent Bank Corp. (holding company for Rockland Trust) stock, and 25 percent to be purchased for $25.50 apiece in cash.
Individual Slade’s Ferry Bancorp shareholders will be allowed to elect their preference as to how they would like their own shares divided, and to the extent all preferences can be satisfied, they will be, according to Rockland Trust and Independent Bank Corp. President and Chief Executive Officer Chris Oddleifson. If they can’t, the difference will be prorated among all shareholders, he said.
On Oct. 10, the day before the merger was announced, Independent Bank Corp. shares closed at $31.17 and Slade’s Ferry Bancorp shares commanded $15. Last Thursday, INDB shares were trading at $28.67 and SFBC shares had reached $23.73.
Oddleifson said the merger would be “the perfect major extension of our presence, and a really good cultural fit.”
“We think it is a great match, and we couldn’t be more enthusiastic,” added Slades Bank President and Chief Executive Officer Mary Lynn Lenz.
Lenz said as bank CEO for the past five years, she’s always been out and about, networking with other CEOs and “looking for a good opportunity to partner.” She found plenty of appetite among banks looking to acquire Slades, which, she said, has raised its asset size considerably in recent years.
She added that Slades’ opportunity to do its own acquiring was limited – even though, with $628 million in assets, the bank was big enough to do so – because publicly traded banks are only allowed to acquire publicly traded companies.
Lenz said there will be “no redundancies” between Slades Bank’s and Rockland Trust’s branch locations, which are in neighboring communities.
Slades Bank has nine branches in Somerset, Fall River and New Bedford. Rockland Trust’s 51 branches, nine commercial lending centers, five mortgage origination offices and three investment management offices are scattered throughout southeastern Massachusetts and Cape Cod.
“We are retaining the branch personnel and commercial lenders, so from a customer’s perspective there should be little or no interruption in service,” noted Lenz.
But she herself, along with Slades Bank Chief Financial Officer and Chief Operating Officer Deborah McLaughlin, will be leaving. All but one Slades Bank board member also will step down, and the Slades Bank name will disappear.
Lenz, who’s 52, noted, “I’m too young to retire.” But she declined to say where she’s headed next – except that she wants to stay in financial services.
McLaughlin, who came to Slades from the energy industry in 2003, hasn’t decided where she’ll go next, according to Lenz.
‘It Makes Sense’
Industry observers said the merger will be a good one for the community, in part because both banks are local.
“Rockland Trust is an outstanding financial institution. It’s well-established in Massachusetts,” said Stanley Ragalevsky, a partner at Kirkpatrick & Lockhart Preston Gates Ellis in Boston. “Slade’s Ferry was a smaller commercial bank operating in a well-defined geographic market, which would be a useful complement to Rockland Trust’s service area.”
Ragalevsky noted that in mergers between publicly owned companies, “stockholders have the only meaningful say,” because price is paramount.
“The expense savings that can be realized from merging the two institutions together generally justifies paying a premium,” he added. Still, “both parties are getting a good deal,” he said.
Arthur Warren, an executive compensation and benefits consultant in Walpole who advises Slades Bank but said he is not involved in the current merger transaction, described both banks as “true community banks,” as opposed to national banks with a local presence.
“This kind of merger is the least threatening. It makes sense, because it’s two Massachusetts organizations and both are community-oriented,” he said.
Nevertheless, it took some convincing to get all Slades Ferry Bancorp board members on board.
“We still have some board members who were original founders of the bank, and I think there was a great love for the company that they built,” Lenz said. ” It took a great deal of education and patience for the directors to come to consensus that this was the right thing.”
But the final decision was unanimous, she said. And shareholders she’s talked to are “thrilled” with the return they’ll be getting.
The merger also has been given the green light by the board of directors of Independent Bank Corp. It is too small to require the approval of Rockland Trust shareholders.
State and federal bank regulators and Slade’s Ferry Bancorp shareholders also must approve the deal.
The Securities and Exchange Commission, which oversees publicly traded companies, will review disclosures that Slades Bank will send out to solicit shareholders’ approval for completeness and adequacy but does not have to approve the merger.
Rockland Trust has acquired three businesses, including one bank – Falmouth Bank on Cape Cod, in a $160 million deal – since Oddleifson’s arrival.
It also acquired Compass Exchange Advisors, a company that assists commercial real estate investors, in January, and expects to close on a deal to acquire wealth management firm O’Connell Investment Services next month.
