Meridian Bancorp continued its march down the acquisition trail by purchasing a failed southern New Jersey thrift for $41.6 million in cash.
Security Federal Savings Bank, taken over by the Resolution Trust Corp. in 1992, is the sixth acquisition by Meridian during the past 12 months and its third in New Jersey.
In Friday's deal, Reading, Pa.-based Meridian increased its stronghold in southern New Jersey from eight branches to 37.
Formerly based in Vineland, N.J., Security Federal opened its doors Monday as Meridian Bank, New Jersey.
Meridian's new leap into southern New Jersey came at a hefty price, analysts said. "They paid a very high premium for it, about 8.5%," said Kerry Pitkin, senior analyst at SNL Securities.
Ms. Pitkin said picking up 29 branches in the heady New Jersey market was probably worth it. But she added that the regular premium for "thrift deposits is 3% for a non-government-assisted grant purchase."
The premium was high but fair, Ms. Pitkin said, considering that others have paid similar premiums to the RTC recently.
$49 Million of Assets
In addition to the $487 million in deposits Meridian acquired, the bank will take over $49 million of the failed institution's assets, which include home equity lines of credit, unsecured personal lines of credit, and cash equivalents.
Michael Hughes, Meridian's senior vice president of corporate development, characterized the assets as having "no credit or [interest] rate risk" because almost all are liquid cash equivalents.
"It's a very good market extension for us," said George Biechler, a Meridian spokesman.
The bank now has branches in five contiguous counties in southern New Jersey, added to its 270 branches in Pennsylvania and the 26 it operates in the Delaware Valley.
Meridian, with $14.5 billion in assets and $11.6 billion in deposits, had acquired eight bank branches in southern New Jersey before the Security Federal deal. In April 1993, it bought four branches from Cherry Hill National Bank, and it acquired four more branches in November from Provident Savings.