Hubco Inc. furthered its reach in the Northeast when it announced Tuesday that it would spend more than $400 million to buy two thrifts.
The Mahwah, N.J., banking company said it would buy Dime Savings Bank, a $961 million-asset company based in Wallingford, Conn., for $201 million. And it announced it would buy IBS Financial Corp., a $734 million-asset thrift headquartered in Cherry Hill, N.J., for $227 million.
The deals, scheduled to close in the third quarter, would be the biggest to date for Hubco, which has bought or agreed to buy 12 banks or thrifts since the beginning of 1996.
By some measures, the IBS acquisition would be extremely expensive. Hubco has agreed to pay 37 times IBS' 1997 earnings for the thrift, which has 10 branches in the suburbs of Philadelphia. Hubco executives said the earnings multiple is closer to 16 times when IBS' employee stock ownership program is accounted for.
Dime is not so dear, selling for 19 times last year's earnings.
Hubco chairman and chief executive Kenneth T. Neilson said in a press release that the latest acquisitions "significantly strengthen our market share and penetration in Connecticut and South Jersey, two markets we consider attractive."
He said the mergers are expected to add to earnings per share within a year after closing.
The company expects to incur post-merger restructuring costs of $31.8 million, and to cut the operating expenses at both thrifts by 50%. Hubco has not determined how many branches it will close or how many employees will lose their jobs for the company to hit its desired numbers. Mr. Neilson said in a conference call that job cuts "would not be a major source (of savings), especially at IBS."
Although consolidation came early to the Northeast because the early 1990s real estate crisis forced many banks to sell, a handful of companies like Hubco have grown rapidly in recent months by buying community banks and thrifts. Hubco's pending acquisitions would drive its asset size to over $7 billion, more than double its 1996 level.
"The company's game plan is to position itself in markets similar to its own in New Jersey," said Frank Barkocy, bank analyst at Josephthal & Co. "These latest acquisitions fit right in."
Last month Hubco said it would acquire Community Financial Holding Co. of Westmont, N.J., and in February it acquired 22 branches from First Union Corp. The bank also has struck deals that would expand its reach into Connecticut and Poughkeepsie, N.Y.