People’s United Financial in Bridgeport, Conn., has agreed to buy First Connecticut Bancorp in Farmington.
The $44 billion-asset People's United said in a press release Tuesday that it will pay $544 million in stock for the $3.1 billion-asset parent of Farmington Bank. The deal, which is expected to close in the fourth quarter, prices First Connecticut at 187% of its tangible book value.
It is the first bank acquisition deal for People’s United since lawmakers increased the threshold for becoming a systemically important financial institution.
Farmington Bank has “a long-standing relationship-based approach to serving their customers and complementary commercial and retail capabilities,” Jack Barnes, People's United’s CEO, said in the release. “This, coupled with their experienced team and similar culture, will strengthen our well-established presence in the region."
Farmington, formed in 1851, has 28 branches in central Connecticut and western Massachusetts. It has $2.8 billion in loans and $2.4 billion in deposits.
People's United said it expects the transaction to be 3% accretive to its earnings per share, based on fully phased-in cost savings. It should take a little more than three years to earn back the expected 2% dilution to People’s United’s tangible book value.
People's United said it plans to cut about half of First Connecticut's annual noninterest expenses, or $33 million. The company said it will likely incur about $45 million in merger-related expenses.
Keefe, Bruyette & Woods and Simpson Thacher & Bartlett advised People's United. Piper Jaffray and Hinckley Allen & Snyder.