ConnectOne Gets Regulatory Nod for Bancorp of New Jersey Deal

ConnectOne Bancorp, Inc. CNOB, the parent company of ConnectOne Bank, has received the required approvals from the New Jersey Department of Banking and Insurance, and the Federal Deposit Insurance Corporation to acquire Bank of New Jersey, the wholly-owned subsidiary of Bancorp of New Jersey, Inc for nearly $113 million.

The deal, which was announced in August 2019, is expected to close in the first quarter of 2020, subject to the approval of shareholders of both companies along with other customary closing conditions.

Terms & Benefits

At the time of announcement, it was agreed that shareholders of Bancorp of New Jersey will have the right to receive either 0.78 shares of ConnectOne common stock or $16.25 in cash for each of their shares.

The shareholders of Bancorp of New Jersey can elect either an all-stock consideration, an all-cash consideration or a combination of both, which is expected to result in a stock-cash consideration mix of 80-20%.

The deal is expected to be accretive to ConnectOne’s earnings per share (on a fully phased in basis) by 5%, excluding the impact of potential revenue enhancement opportunities.

At the time of closing, it will likely be dilutive to ConnectOne’s tangible book value per share by 3%. Using the cross-over method and excluding any contemplated revenue enhancements, the earnback of tangible book value dilution is projected to be 3.5 years.

The deal is expected to strengthen ConnectOne’s scale and competitive position in the New York metro market. The acquisition represents an in-market purchase of a complementary banking model, which utilizes the same core systems. Further, it is expected to create economies of scale, with significant cost synergies.

Following the completion of the deal, the combined company is expected to have $7 billion in assets.

ConnectOne Bank’s chairman & CEO, Frank Sorrentino, stated, “The combination is a natural fit, creating opportunities to grow our company in a way that enhances operational efficiency, allowing us to further invest in the future. Our newly acquired clients will benefit from ConnectOne’s extensive suite of products and technological offerings.”

So far this year, shares of ConnectOne have rallied 35.4%, outperforming the industry’s growth of 15.4%.

Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Of late, consolidation in the banking sector is on the rise, mainly driven by the easing of stringent regulations. Several mid-sized banks, including Fifth Third Bancorp FITB, SVB Financial Group SIVB and Prosperity Bancshares, Inc PB, have undertaken opportunistic buyouts, which will not only lead to geographic expansion but also help diversify revenue base.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Fifth Third Bancorp (FITB) : Free Stock Analysis Report
 
ConnectOne Bancorp, Inc. (CNOB) : Free Stock Analysis Report
 
Prosperity Bancshares, Inc. (PB) : Free Stock Analysis Report
 
SVB Financial Group (SIVB) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research