New England Bancshares Inc. in Enfield, Conn., has agreed to buy the struggling Apple Valley Bank and Trust Co. in Cheshire, Conn., for $7.3 million in cash and stock.

The $84.6 million-asset Apple Valley would be merged into the buyer's Valley Bank.

Apple Valley has lost money for the past eight quarters, and its total risk-based capital ratio was 8.95% as of Sept. 30, according to data from the Federal Deposit Insurance Corp. (That ratio must be at least 10% for a company to be considered well capitalized.)

New England Bancshares said its capital levels would remain healthy after the acquisition, which is expected to close next quarter.

The company said it conducted "thorough due diligence" before striking the deal.

Buying Apple Valley would increase New England Bancshares' assets to $624 million and add three branches, bringing its total to 15.

Each share of Apple Valley would be exchanged for either $8.50 in cash or one share of New England Bancshares.

The deal price works out to 119% of Apple Valley's tangible book value and is a 2% premium on its core deposits.

New England Bancshares said it expects the transaction to be accretive to earnings per share next year.

David J. O'Connor, the company's president and chief executive officer, said in a press release Wednesday that the deal came along at "a good time" because New England Bancshares is already consolidating its thrift and bank units. It aims to be more efficient by combining Enfield Federal Savings and Loan Association with Valley Bank, he said, and adding Apple Valley at the same time fits into that plan well.

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