The Boards of Directors of Lakeland Bancorp, Inc., the parent company of Lakeland Bank, and Pascack Bancorp, Inc., the parent company of Pascack Community Bank, announced today that the companies have entered into a definitive Agreement and Plan of Merger, pursuant to which Pascack Bancorp will be merged with and into Lakeland Bancorp, with Lakeland Bancorp as the surviving bank holding company, and Pascack Community Bank will merge with and into Lakeland Bank, with Lakeland Bank as the surviving bank. The Merger Agreement provides that shareholders of Pascack Bancorp will receive, at their election, for each outstanding share of Pascack Bancorp common stock that they own at the effective time of the merger or would own upon conversion of preferred stock immediately prior to such effective time, either 0.9576 shares of Lakeland Bancorp common stock or $11.35 in cash, subject to proration as described in the Merger Agreement so that 90 percent of the aggregate merger consideration will be shares of Lakeland Bancorp common stock and 10 percent will be cash.
Lakeland Bancorp expects to issue an aggregate of approximately 3.3 million shares of its common stock in the merger, and will cash out outstanding Pascack Bancorp options. The transaction is valued at approximately $43.8 million on a fully diluted basis, or $11.35 per share, which represents a 53.4 percent premium over the closing sale price per share of Pascack Bancorp common stock on July 30, 2015. The transaction is expected to be approximately 4.5 percent accretive to Lakeland Bancorp’s earnings per share in 2016 and approximately 2.7 percent dilutive to tangible book value with an estimated earn back in approximately 3.5 years.
Thomas J. Shara, Lakeland Bancorp’s President and Chief Executive Officer, remarked: “We are delighted to be combining with Pascack, and expanding Lakeland’s presence in Bergen and Essex counties. Both banks share a focus on community banking and providing the highest level of service to our customers. We look forward to working with the Pascack team in delivering to all of our customers and shareholders the benefits that we expect from this transaction.”
Jon F. Hanson, Pascack Bancorp’s Chairman, stated: “We are very excited to be partnering with such a strong, well managed organization as Lakeland. Together, our franchises create a great presence in one of the most attractive banking markets in the country.”
Nancy E. Graves, Pascack Bancorp’s President and Chief Executive Officer, added: “In addition to sharing a commitment to providing first class customer service, we each bring complimentary products and services to the combined company that we believe will be well received by our customers, and ultimately benefit our shareholders.”
Lakeland Bank has 48 New Jersey branch offices in Bergen, Essex, Morris, Passaic, Somerset, Sussex, Union and Warren counties, five New Jersey regional commercial lending centers in Bernardsville, Montville, Newton, Teaneck and Wyckoff and two commercial loan production offices serving Middlesex and Monmouth counties in New Jersey and the Hudson Valley region of New York. Lakeland Bank offers an extensive array of consumer and commercial products and services, including online and mobile banking, localized commercial lending teams, and 24-hour or less turnaround time on consumer loan applications. As of June 30, 2015, Lakeland Bancorp had consolidated total assets, total loans, total deposits and total stockholders’ equity of $3.70 billion, $2.76 billion, $2.84 billion and $390.9 million, respectively.
Pascack, a state-chartered commercial bank that focuses on serving consumers and small-to-medium-size businesses in Bergen and northern Essex counties, has offices in Waldwick, Westwood, Hillsdale, Rochelle Park, Lodi and Nutley, as well as in Hackensack, where it has two branches. As of June 30, 2015, Pascack Bancorp had consolidated total assets, total loans, total deposits and total stockholders’ equity of $402.7 million, $334.0 million, $304.8 million and $33.3 million, respectively.
The Boards of Directors of both companies have unanimously approved the mergers. Closing is subject to receipt of approvals from regulators, approval of the holding company merger by Pascack Bancorp’s shareholders and other customary conditions. No approval is required from Lakeland Bancorp’s shareholders. The closing is expected to occur in the fourth quarter of 2015.
Pascack Bancorp’s directors, owning in the aggregate approximately 40 percent of Pascack Bancorp’s outstanding shares on July 30, 2015, have signed voting agreements pursuant to which they have agreed to vote their shares in favor of the holding company merger.
Keefe, Bruyette & Woods is acting as financial advisor to Lakeland Bancorp. Sandler O’Neill & Partners, L.P. and FinPro Capital Advisors, Inc. are acting as financial advisor to Pascack Bancorp. Lowenstein Sandler LLP is acting as Lakeland Bancorp’s legal advisor. Windels Marx Lane & Mittendorf, LLP is acting as Pascack Bancorp’s legal advisor.