A New Jersey bank has convinced Bank of New York Co. to sell it 11 branches, continuing the community bank's buying spree in South Jersey.
Sun Bancorp, Vineland, will pay an undisclosed sum for the Bank of New York branches in Atlantic, Mercer, Middlesex, and Somerset counties.
With the 11 branches and a pending acquisition of four branches from a New Jersey savings bank, Sun Bank expects to have 39 branches and $800 million of assets.
Robert F. Mack, Sun's chief financial officer, said the banking company has had its eye on the Bank of New York branches for a while.
"We received an unsolicited and attractive offer from Sun Bank for a small number of branches," said Janet Stoner, a Bank of New York spokeswoman. "It made sense."
Ms. Stoner said the branches, which are east of the Philadelphia area, were outside $58 billion-asset Bank of New York's primary market in New York City and its suburbs. The New York bank had acquired the branches in 1993.
"It wouldn't be wrong to think somebody else in the market wishes they would have asked Bank of New York too," said Elizabeth A. Summers, first vice president at Ryan, Beck & Co., East Orange, N.J. "Bank of New York is trying to rationalize their branch system."
Sun has been on an acquisition binge since 1994, when its board of directors and significant shareholders decided that it needed to grow to bring better returns. "It wasn't bringing a return that they would have hoped," Mr. Mack said.
Buying branches so far has proven a good strategy. Besides acquiring two whole banks in 1994, Sun bought eight branches in 1995 and four from First Union National Bank last week.
Sun also has a pending agreement to buy three Camden County branches from Oritani Savings Bank, Hackensack, N.J. That transaction is slated to close in July.
The aggressive acquisition strategy has increased return on equity from 9.61% at yearend 1993 to 11.99% at Dec. 31, 1996.
Mr. Mack said the bank purposely made no acquisition last year. "That was a really good time for us to absorb all the acquisitions, merge all the cultures, and kind of bring everything together," he said.
Branch sales by other large banks, including Charlotte, N.C.-based First Union Corp. and Cleveland's KeyCorp, have created similar acquisition opportunities for community banks.
James Moynihan, senior vice president in Boston of Advest Group, said he expects more sales of branches by large banks to small ones. And like Sun, he thinks community banks should take the initiative if they see something they like.
"I think if you're out there and see something that's a natural fit, you want to go to the owner and negotiate a deal," said Mr. Moynihan, who follows Sun. "It's usually much more efficient to buy branches than to buy an entire bank."