More than a year after going public, Danvers Bancorp Inc. has agreed to buy a nearby Massachusetts banking company in a deal that one analyst said would leave it with the capital to do more.
The former mutual thrift said Wednesday that it would pay $61.95 million in stock for Beverly National Corp., which has $485 million of assets, $350 million in deposits and eight branches in Essex County.
Kevin T. Bottomley, the chairman, president and chief executive officer of the $1.7 billion-asset Danvers, said in an interview that using stock instead of cash made more sense, though the company raised $171 million when it converted in January of last year.
He said the decision had more to do with accounting benefits than plans to do more deals, though he did not rule out the possibility.
"We're certainly prepared to evaluate other opportunities that may come our way," he said.
Bottomley described Beverly as a good match for his company, which has 17 branches in Essex, Middlesex and Suffolk counties.
"Both are more commercial banking franchises than not," he said. "And they are in our market, so we know them very well."
The deal calls for each Beverly share to be exchanged for 1.66 shares in Danvers. The price works out to $23.04 per share, or roughly 1.45 times Beverly's tangible book value, Bottomley said.
Danvers estimated that it could trim 30% to 40% of Beverly's expenses, he said.
Theodore Kovaleff, the bank and thrift analyst at Broad Street Securities in Plantation, Fla., applauded the deal. "This is a situation where Danvers is not going to be too big," he said. "The amalgamation will strengthen them."
Danvers' stock has held up well through the downturn, so using it to pay for this deal was smart, Kovaleff said. "Using stock saves them ammunition if they have some other ideas," he said. "I would not be surprised to see another acquisition down the road, because of the fact that they used no cash."
Bottomley said the deal would be about 8% dilutive to earnings. But, he added, Danvers expects to earn that back in about four years because Beverly is "very strong."
Its Beverly National Bank reported an $896,000 first-quarter profit, roughly even with the year earlier, according to data from the Federal Deposit Insurance Corp. It had no noncurrent loans and almost no chargeoffs.
The bank, which is more than 200 years old, would be merged into Danversbank. Donat A. Fournier, Beverly's president and CEO, would stay on as an executive vice president after the deal closes, which is expected to happen in the fourth quarter.