The board of Pascack Bancorp in Waldrick, N.J., spent years debating whether to sell the company or remain independent.

Deliberations took on new meaning when the $3.7 billion-asset Lakeland Bancorp in Oak Ridge, N.J., began pursuing the company in early 2014, according to new disclosures tied to a proposed legal settlement with Pascack shareholders.

Lakeland reached an agreement in August to buy the $403 million-asset Pascack for $44 million in cash and stock.

Pascack was initially lukewarm on selling itself, the disclosures show. In November 2013, the company's board "determined that it was not the right time to sell," agreeing to direct potential suitors to Chairman Jon Hanson. In the fall of 2014, FinPro Capital Advisors and Windels Marx Lane & Mittendorf, Pascack's advisers, told directors that they "believed a sale was premature."

Lakeland, as disclosed in earlier filings, met with Pascack representatives several times during 2014 in an effort to make a deal happen, though no price was discussed.

A divide among Pascack directors surfaced in the fall of 2014. While most directors favored independence, the disclosures show that "several members … believed the company should explore a combination with Lakeland or other strategic alternatives." At least one of those directors had discussions with Lakeland.

Informal talks between Lakeside and Pascack resumed in February. In June, Lakeland presented a term sheet offering $12.75 a share. (Lakeland's board had already authorized management to pay up to $13.50 a share.)

The disclosures also reveal that an analysis by Sandler O'Neill, which also advised Pascack, found that "several parties" could have offered Pascack more than what Lakeland had proposed.

"Sandler O'Neill had not contacted these parties and so did not know whether they would, in fact, have any interest in a transaction with Pascack," the disclosures show.

Pascack's board considered Sandler's analysis before opting against an auction process, choosing instead to negotiate directly with Lakeland.

Lakeland in late June provided another nonbinding indication of interest that valued Pascack at $51 million, or $13.15 a share. Due diligence, however, turned up a difference of opinion on the valuation of real estate and fixed assets tied to Pascack's branches, eventually prompting Lakeland in late July to lower its offer to $11.35 a share.

That valuation was used when the companies announced the merger.

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