With a merger in place to acquire Abington Savings Bank’s 17 locations, the
parent company of Compass Bank has secured the pieces to bridge recently acquired
locations in the Brookline area to its established locations across southeastern
Massachusetts, Cape Cod and the islands.
On Oct. 21, Seacoast Financial Services Corp. and Abington Bancorp Inc. announced the deal for the Abington branches scattered along the Route 3 corridor in the southeastern metropolitan Boston area. Kevin G. Champagne, president and CEO of Seacoast Financial Services Corp., said his New Bedford-based bank has been eyeing Abington as a “logical extension” for more than a decade.
“We’re pleased to go to the altar with them,” Champagne said. “We were able to complete the deal for a reasonable price and this is a bank that would be very hard and very expensive for someone else to replicate.”
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The merger will solidify Seacoast’s position as the largest independent savings bank headquartered in Massachusetts and as the state’s fifth-largest bank branch network with 64 locations. Overall, the company will rank seventh in deposit market share in the state.
Laurie Hunsicker, an analyst with Friedman, Billings, Ramsey & Co. Inc. in Arlington, Va., said her company reiterated its “outperform” rating for Seacoast twice in one week – first after the planned merger was announced and again when the company posted its third-quarter earnings.
Both times, the price target for Seacoast’s stock was raised, from $24 to $27 after the merger and to $28 after Seacoast posted third-quarter results of $9.7 million, or 38 cents per share, earnings 3 cents ahead of the FBR estimates for controlled expenses.
The outperform rating means that Seacoast is expected to outperform similar companies in the banking industry over the next year to 18 months.
While Hunsicker said there’s been a huge amount of takeover activity in the New England banking industry over the past year, she said Seacoast has separated itself from the pack.
“They’ve really created a phenomenal franchise in terms of community banks,” she said. “This deal will give them $5.4 billion in assets, making them the largest independent bank headquartered in Massachusetts by far. The No. 2 is standing at $1.5 billion.”
Coupled with the deal to acquire six Bay State Bancorp. branches, which closed in May and added six branches to Seacoast in the Brookline area, Hunsicker said Seacoast has proved itself to no longer be just a New Bedford area bank. She also agreed with Champagne that the move toward expansion in the suburban Boston area had ultimately brought Seacoast into a “growthier” market, as opposed to heading south of the state line and into Rhode Island territory.
“It’s a nice fill-in,” said Hunsicker, noting the jumps the acquisition will mean for Seacoast’s deposit share in the Norfolk, Plymouth and Suffolk counties. “It completes that almost-triangle in southeastern Massachusetts.”
Champagne said Seacoast isn’t ruling out Rhode Island as a place for future expansion. While the most recent opportunities have presented themselves toward the Greater Boston area, he said the company has looked to Westerly and southern Rhode Island in the past, but is merely waiting and retaining “cordial relationships” for now.
“It takes two to tango and not everybody wants to dance,” Champagne said. “Some are willing to talk and some aren’t. There’s less players in Rhode Island, but we’ll strike deals where there are deals to be made.”
While Champagne says the $139.5 million acquisition won’t lead to the closing of any Abington branches, he did say Seacoast expects to see cost savings of 25 percent through the integration of systems and support services, adding that worst-case scenario, there will only be a “minimum loss of jobs.” Seventy-five percent of the acquisition cost will be stock, the remainder will be paid in cash.
The deal will likely be finalized in April, after receiving regulatory approvals
and approval by stockholders of Abington Bancorp Inc. Abington shareholders
will be entitled to $34 in cash and 1.4468 shares of Seacoast. Upon completion
of the transaction, Seacoast will have approximately $5.4 billion in assets,
$3.6 billion in deposits and $511 million in shareholder equity.
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