A thrift would become part of a commercial bank under a stock deal two New Jersey companies announced Tuesday.
Donald Mindiak, the president and chief executive officer of the $597 million-asset BCB Bancorp Inc., said in an interview that he has talked with Pamrapo Bancorp Inc. about the possibility of a merger for years and that he was pleased when the discussion got more serious over the past six months.
Both companies are based in Bayonne, and combining them should improve efficiency and boost earnings, Mindiak said.
Their deal calls for each Pamrapo share to be exchanged for one BCB share. Though the $593 million-asset Pamrapo has a thrift charter, BCB would remain a bank holding company with one subsidiary, a state-chartered commercial bank.
Absorbing Pamrapo would give BCB the fifth-largest deposit market share in Hudson County and help diversify its loan and investment portfolios, Mindiak said.
Pamrapo's noncurrent loans have been rising lately. Its ratio of noncurrent loans to total loans climbed to 3.41% at the end of the first quarter, from 1.09% a year earlier, according to data from the Federal Deposit Insurance Corp.
Mindiak called the increase "a little troubling," but said he is comfortable that the credit issues can be contained. "Their numbers are better than the industry averages," he said.
Kenneth Walter, Pamrapo's chief financial officer and interim president and CEO, would join BCB as its CFO. Walter has had the interim titles since February when William J. Campbell retired after more than 40 years.
Pamrapo Savings Bank, which has 10 retail branches, would be merged into BCB Community Bank, which has three.
The deal values Pamparo at roughly $47 million, based on a recent share price of $9.50 for BCB's thinly traded stock. The shares slipped 1.3% Tuesday, to close at $9.38.
The deal is expected to close by yearend.