A rapidly growing southern New Jersey bank company is buying an upstate bank that its chairman helped start more than 25 years ago.
Commerce Bancorp, a $2.7 billion institution based in Cherry Hill, agreed on Monday to acquire $375 million-asset Independence Bancorp of Ramsey in a stock swap valued at $76 million, or 2.5 times book value.
Commerce offered to exchange stock worth $25 for each share of Independence.
"The timing just seemed to be right," said Vernon W. Hill 2d, Commerce's chairman and chief executive. "We wanted to step up our expansion in the northern New Jersey market."
For Mr. Hill, the acquisition reunites him with Independence Bancorp's chairman, James R. Napolitano. The two men co-founded the Ramsey bank in 1975 - two years after Mr. Hill started running Commerce Bancorp.
"It was so long ago and we were so small," Mr. Hill said. "I probably never imagined we would merge the two."
Commerce Bancorp currently owns about a 4.9% interest in Independence Bancorp and considers the smaller bank part of its "retail network." Commerce performs back-office operations such as loan review, auditing, and marketing support for Independence.
"It's the same bank, in essence," said Elizabeth A. Summers, a bank analyst at Ryan, Beck & Co. in West Orange, N.J.
Mr. Hill said because there is no overlap and back-office functions are already performed by Commerce, there will be no consolidation of branches or staff layoffs. Mr. Napolitano is to stay on as chairman of Independence until the merger is completed and then become a Commerce executive, a Commerce spokesman said.
Mr. Hill said Commerce's strategy is to "step up the pace" of growth at Independence, which has been opening one or two branches a year. Upon completion of the deal, expected next year, he said, Commerce plans to open four or five new offices each year in northern New Jersey.
The acquisition would mark Commerce's second purchase of a bank it held a stake in and supplied with back-office and operational support. When what is now Commerce Bank Pennsylvania started operations in 1984, Commerce Bancorp owned 4.9% and provided management, operational, and marketing support. Commerce bought the bank three years later.
But growing by acquisition is hardly Commerce's style.
Since its inception as a one-branch bank in 1973, the philosophy has been to grow branch by branch. Using what analysts say is a McDonald's-like strategy, the bank has opened identical branches throughout southern New Jersey and the Philadelphia area. The bank now boasts 45 branches in New Jersey and another 13 in Philadelphia and its Pennsylvania suburbs.