Investors Bancorp, Inc. to Acquire The Bank of Princeton

On May 4, 2016

Short Hills-based Investors Bancorp, Inc. and The Bank of Princeton today announced an agreement under which Investors Bank, the wholly-owned subsidiary of Investors Bancorp, Inc., will acquire The Bank of Princeton for $154 million.

Upon completion of the transaction, Investors Bank will add 13 branches primarily in the greater Princeton area and in Philadelphia, PA.  As of March 31, 2016, The Bank of Princeton had assets of $1.0 billion, loans of $842 million and deposits of $820 million. 2015 net income was $11 million, implying a return on average assets of 1.12 percent and return on average equity of 13.0 percent.

With approximately $22 billion in assets post-closing, Investors Bancorp will be positioned to deliver a wide range of comprehensive retail and commercial banking services through a combined network of 156 branches throughout the Philadelphia to New York City corridor.  Pro forma for the acquisition, Investors Bancorp will rank fourth in deposits in Mercer County, an area with per capita income well above national and regional averages.

“We are pleased to partner with The Bank of Princeton, a commercial bank with a track record of strong profitability and growth,” said Investors Bancorp’s President & CEO, Kevin Cummings. “This merger will establish an important presence for Investors Bank in Princeton and will introduce us to the Philadelphia market. It will also add scale to our current Mercer County markets.”

Edward Dietzler, The Bank of Princeton’s President, commented, “We believe The Bank of Princeton’s customers and stockholders will benefit greatly from this transaction. Investors Bank brings additional retail and business banking products, expanded lending capabilities and capital strength that will enable the combined company to better compete in our marketplace. Our officers and employees look forward to joining the Investors Bank team.”

Under the terms of the agreement, 60 percent of The Bank of Princeton’s common shares will be converted into Investors Bancorp common stock and the remaining 40 percent will be exchanged for cash. The Bank of Princeton’s stockholders will have the option to elect to receive either 2.633 shares of Investors Bancorp common stock or $30.75 in cash for each common share of The Bank of Princeton, subject to proration to ensure that in the aggregate 60 percent of The Bank of Princeton’s shares will be converted into Investors Bancorp common stock.

The transaction is expected to be 6 ercent, or $0.04, accretive to analyst consensus 2017 earnings per share and 2 percent, or $0.19, dilutive to tangible book value, with a tangible book value earnback of approximately 3.5 years using the “crossover” method. The estimated internal rate of return exceeds 15 percent.  Key transaction assumptions include cost savings of at least 35 percent, a gross pre-tax credit mark of $19 million, and an after-tax restructuring cost of $6 million.

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