The largest state-chartered bank in Connecticut has just gobbled up one of the state’s largest community banks.

People’s United Bank announced this morning that it will acquire the parent company of Farmington Bank in an all stock transaction valued at roughly $544 million and 180 percent tangible book value.

Shareholders of First Connecticut Bancorp, the parent company of Farmington Bank, will receive 1.725 shares of People’s United Financial stock for each one of their shares, giving each share a value of $32.33 based on the closing price of People’s United’s common stock on June 18.

With the purchase of Farmington Bank, the $43.86 billion asset People’s United Bank will add $3.1 billion in assets and 28 branches in Central Connecticut and Western Massachusetts.

“At People’s United, community partnership matters and we are committed to maintaining both [bank] legacies and to give back to where we live and work,” Jack Barnes, CEO of People’s United, said on a conference call this morning. “This a low execution risk transaction given our significant knowledge of Farmington’s business.”

The deal did not include any board seats for Farmington Bank executives.

“People’s United Bank is a premier brand with a rich 176-year history in the state of Connecticut,” John Patrick, chairman, president and CEO of Farmington Bank, said in a statement. “Our customers will benefit from their broader array of products, enhanced access to technology and digital capabilities, as well as the bank’s seven-day-a-week Stop & Shop branch locations.”

Barnes said that branch consolidation is inevitable, due to the fact that 71 percent of Farmington Bank’s branches are within 2 miles of People’s United Bank branches, and that 100 percent of Farmington branches are within 5 miles of a People’s United Bank branch. He did say, however, that he expects the company will retain many Farmington employees.

Farmington Bank started as a mutual bank before going public in 2011. Since the end of 2011 and the end of 2017, the bank has nearly doubled in size, growing from roughly $1.6 billion in assets to about $3.1 billion, according to the FDIC. In the same time period, the company’s loan book has more than doubled from $1.3 billion to $2.75 billion.

In the first quarter of 2018, Farmington Bank’s parent reported net income of $6 million, or $0.38 diluted earnings per share, compared to net income of $5.1 million or $0.32 diluted earnings per share for the first quarter of 2017. The bank also reported fierce deposit competition, with the cost of interest-bearing liabilities increasing to 97 basis points in the first quarter of 2018 from 76 basis points in the prior year quarter. Barnes said this is one of the primary challenges Farmington has had in recent years.

He also said the deal was not an auction, but rather negotiated from People’s United’s close relationship with the bank and shared credit exposure for nearly a decade. Some investors pressed Barnes on whether the deal was worth it, but he said he saw many synergies between the new entities in the product base and balance sheet benefits.

People’s United CFO David Rosato said the deal will improve People’s United deposit share in the state from 12.9 percent to 14.5 percent, giving the bank the second largest deposit share in Connecticut.

The move also bolsters People’s United’s “hub & spoke” strategy of traditional and in-store branches, and grows its presence in some of wealthiest suburbs in Connecticut such as Farmington, West Hartford and Avon. In the suburbs of West Hartford, median household income is above $106,000 and expected to grow. 

The deal shows that merger and acquisition activity in Connecticut might be picking up. 

When asked by investors, Barnes did not rule out doing another acquisition in the near future, even potentially before closing on the Farmington deal.

“We appreciate that the regulatory environment around transactions has improved significantly,” he said.

The transaction is expected to close in the last quarter of this year, with systems integration slated for the first quarter of 2019.