With its $105 million deal for Slade's Ferry Bancorp., Independent Bank Corp. in Rockland, Mass., said it is accelerating a plan to expand southeast into the state's fastest-growing region.
Slade's Ferry, of Somerset, has nine branches in Bristol County, where proposals for a casino and rail line and highway extensions could end up attracting more people and businesses, Christopher Oddleifson, Independent's president and chief executive officer, said during a conference call Friday.
"This is a very important market extension move for us into southeastern Massachusetts," Mr. Oddleifson said. "Slade's will provide us with a real attractive Providence-to-New Bedford corridor."
Independence would absorb the $628 million-asset Slades Bank into its Rockland Trust Co., which has $2.7 billion of assets and 52 branches in four counties. Three of those are in the northern part of Bristol.
The acquisition would propel Independence from No. 23 in deposit market share in that county to No. 7. It would have $509 million, or 5.5%, of the deposits there.
While real estate in the Slade's Ferry market area remains relatively inexpensive with large pieces of undeveloped land, Mr. Oddleifson said, "There's a huge effort under way to extend the rail systems down from Boston and from Providence, which would obviously be a boon to the region."
He said Bristol County has a mixture of wealthy and working-class residents, with a strong small business base.
Independent agreed to pay $25.50 in stock and cash for each Slade's Ferry share, a 67% premium over the market price.
On news of the deal, Slade's Ferry shares shot up 59% Friday, to close at $24.33. Independent's slipped 0.07%, to $30.23.
Independent said it expects to trim 40% of the expenses at Slade's Ferry, or $6 million. With those savings, the deal price is about 217% of the seller's tangible book value and a 16.7% core deposit premium, the company said.
Bryce W. Rowe, an analyst with Robert W. Baird & Co. Inc., said in an interview, said that the acquisition would help fuel Independent's growth. "There are not that many attractive acquisition candidates in that area. The fact that they're able to pick up Slade's Ferry and pick up market share makes their franchise more attractive, and eliminates a competitor," Mr. Rowe said.
David W. Darst, an analyst with First Horizon National Corp.'s FTN Midwest Securities, said in an interview that because of Slade's Ferry's emphasis on commercial loans, Independent could be taking on credit risk. But he said Slade's Ferry seems "to have its arms around that," with its nonperforming assets at only 0.39% of total assets and its 0% chargeoff rate.
Mary Lynn D. Lenz, the president and CEO of Slade's Ferry, said that her company began looking to sell a few months ago because it lacked the "sheer size" needed to continue adding commercial customers.
"We'd grown the company to significant proportions, and said perhaps now is the time to look for a partner to get to the next step," she said in an interview. "Rockland Trust in our mind was exactly the right fit for our company."
Ms. Lenz said she would not be staying on after the deal closes.
Independent, which announced the deal late Thursday, said during Friday's call that the acquisition would be accretive to next year's earnings by a penny or two, excluding $9.9 million in one-time acquisition charges. It is expected to close in the first quarter.
