Merchants Bancshares in South Burlington, Vt., has agreed to buy NUVO Bank & Trust in Springfield, Mass.
The $1.7 billion-asset Merchants said in a press release Monday that it will pay $21.8 million, or $7.15 a share, in cash and stock for the $153 million-asset NUVO. The deal, which valued NUVO at 133% of its tangible book value, is expected to close in the fourth quarter.
NUVO, which also has $139 million in loans and $134 million in deposits, has a focus on small and midsize businesses in western Massachusetts.
Springfield "has witnessed a great deal of change recently," Michael Tuttle, Merchants' president and chief executive, said in the release. "The NUVO team is extremely experienced and the growth opportunity is significant. We plan to invest in and grow the NUVO team and business. While operational areas will be combined, the value created in this merger will be more attributable to revenue growth than expense reduction."
Merchants said it expects the acquisition to be accretive to its earnings in the first full year of combined operations.
"There is tremendous opportunity in our market, and we believe that we can best capitalize on it by leveraging the liquidity, expanded lending limits, lower cost deposit base and broader product range of a strong partner like Merchants," Donald Chase, NUVO's chairman, said in the release.
Chase will join Merchants' board. Dale Jones, NUVO's chief executive, and Jeffrey Sattler, the bank's president and chief loan officer, entered into employment agreements with Merchants. NUVO's will retain its name, operating as a division of Merchants Bank.