Ending several weeks of speculation, Connecticut's Centerbank has agreed to acquire a neighboring bank that has struggled to meet regulatory capital deadlines.
Using its newly formed holding company, Center Financial Corp., the $3.1 billion-asset company will buy Ansonia-based Great Country Bank, a $336 million-asset bank that has been hampered by nonperforming assets.
Great Country has missed two regulator-imposed deadlines to raise its Tier 1 leverage capital ratio to 6%.
The final exchange ratio for the stock transaction depends on the average closing price of Waterbury-based Center Financial for the 15 days before the deal is approved by regulators.
The price will range from $4.12 to $5.59 per share, giving the deal a maximum value of $28.2 million, or 183% of Great Country's March 31 book value.
The purchase gives Center seven branches in south central Connecticut, in the Naugatuck Valley, adding to its strong presence in the central part of the state.
"We think it's a great addition to our franchise," said Robert J. Narkis, chairman of Center Financial. "We're very pleased to now be able to enter our fourth market area."
The deal will also help Centerbank achieve its goal of spreading its high operating costs over a larger business, said John Carusone, president of Hartford's Bank Analysis Center.
"It's a natural market extension for Centerbank," Mr. Carusone said. "Great Country has been the object of speculation and interest for a number of years by a number of different institutions, and Centerbank clearly would be an obvious choice of affiliation."
Great Country missed July 1993 and December 1994 deadlines from the Federal Deposit Insurance Corp. to raise its capital ratio, which is now about 4.7%. The bank, which is operating under a 1992 cease-and-desist order, had until July 15 to submit a new capital plan to regulators.
The acquisition, which is subject to shareholder and regulatory approval, is expected to close by the fourth quarter of 1995 or the first quarter of 1996.