You'll need a scorecard to figure out the complex deal announced in New Jersey late Wednesday, but here's the bottom line: Investors Bancorp (ISBC) Chief Executive Kevin Cummings just landed that next big fish he was seeking.
The Short Hills, N.J., company has agreed to buy Roma Financial Corp. (ROMA) in Robbinsville, N.J. The deal, scheduled to close in the second quarter, would bring together two mutual thrifts and create a company with assets of more than $13 billion.
Roma's "branch network complements our presence in central and southern New Jersey and provides a strong foothold in the greater Philadelphia market," Cummings said in a news release. "Roma Bank's customers can look forward to an enhanced array of products and services."
The total price tag on the deal was unclear, but it would pay $15 per Roma share based on Investors' average closing stock price for the ten-day trading period ended Tuesday, Investors' news release said. Minority shareholders in Roma would receive $113.5 million, the release said.
Investors has been seen as a possible consolidator in the New York City region. It bought Brooklyn Federal Savings Bank and Marathon National Bank this year. The Roma deal is its seventh since 2008, Investors said.
American Banker this week named Cummings one of its 10 CEOs to watch in 2013 because he aimed next year to complete Investors' second-step conversion from a mutual, and because of his M&A bent.
"We consider ourselves a buyer, and we consider ourselves a company that has executed both on the pricing side and on the integration side," he said in a recent interview, before the Roma deal was announced. "[I]n our three-year plan, organic growth and acquisitions are part of our plan to expand the bank to the next level, to $16 billion in assets."
In that interview he discussed the prospects of Investors doing a deal with another mutual thrift: "If a mutual thrift or another mutual holding company came along, it would certainly be of interest because of the favorable financial impact to us on our second-step conversion [for us to buy one]. … But we would not acquire one outside the New York/New Jersey area. I think we've spoken to most of the ones that are in the New York/New Jersey area. And, really, your stars have to be aligned."
Combining two mutuals would "enhance the value of a potential second-step conversion" by Investors, Cummings said in the release Wednesday about the Roma deal.
Roma had assets of $1.84 billion, deposits of $1.49 billion and stockholders' equity of $218.8 million as of Sept. 30. It operates 26 branches in five New Jersey counties: Burlington, Ocean, Mercer, Camden and Middlesex. Roma is 74.5%-owned by Roma Financial Corp. MHC and is the holding company for Roma Bank in Robbinsville and RomAsia Bank in South Brunswick.
Under the deal, shares of Roma Financial would be converted into Investors Bancorp common stock. Each Roma Financial share, including those owned by Roma MHC, would be converted into 0.8653 shares of Investors Bancorp stock.
Shares to be issued to Investors Bancorp's mutual holding company that represent stock held by Roma MHC, would be reissued in the expected second-step conversion by Investors Bancorp. To complete the deal, Investors Bancorp expects to issue nearly 26 million shares of common stock.
Investors was advised by Stifel Nicolaus Weisel and received a fairness opinion from RBC Capital Markets. Luse, Gorman, Pomerenk & Schick was its legal counsel.
Sandler O'Neill and Partners was financial advisor to Roma; its legal counsel was Spidi & Fisch.