OceanFirst Financial Corp. Acquires Two Banks

On Aug 9, 2019

OceanFirst Financial Corp. has completed two separate merger agreements to acquire Two River Bancorp and, separately, Country Bank Holding Company, Inc.

Two River Bancorp is the parent company of Two River Community Bank, headquartered in Tinton Falls. Upon completion of the Two River merger, Two River Community Bank will merge into OceanFirst Bank. Under the second agreement, Country Bank Holding Company, Inc., parent company of Country Bank, headquartered in New York, New York, will merge into OceanFirst. Upon completion of the CYHC merger, Country Bank will merge into OceanFirst Bank.

“We are excited for both Two River and CYHC shareholders to join the OceanFirst family, as both institutions share a similar operating philosophy and this provides us an opportunity to further enhance our presence in New Jersey and build upon our lending initiatives in metropolitan New York,” said Christopher D. Maher, OceanFirst Chairman and Chief Executive Officer. “We believe the addition of these two high-performing franchises will further leverage the significant investments we have made in people, processes and technology and positively impact our earnings potential. We look forward to continuing to provide our customers with extraordinary service and deliver enhanced value to our stockholders.”

Based on June 30, 2019 results and the impact of purchase accounting, the combined company is expected to have pro forma approximately $9.9 billion in assets, $7.5 billion in loans and $7.7 billion in deposits. The proposed acquisition of CYHC would expand OceanFirst’s retail branch footprint into metropolitan New York. The two transactions combined are expected to result in approximately 8% earnings per share accretion in 2021 (the first full year of fully phased-in synergies) and approximately 5% tangible book value per share dilution at closing with a projected earnback period of less than 4 years using the cross-over method.

Founded in 2000, Two River is a full-service community bank operating 14 branch locations and 2 loan production offices in Monmouth, Ocean, Union and Essex Counties. At June 30, 2019, Two River had $1.2 billion in assets, $953.1 million in loans, $972.6 million in deposits and $121.4 million in shareholders’ equity. Under the terms of the Two River merger agreement, upon completion of the merger, shareholders of Two River will be entitled to receive 0.6663 shares of OceanFirst common stock and $5.375 in cash for each outstanding share of Two River common stock. Based on OceanFirst’s closing stock price on August 8 of $23.14, the Two River transaction is valued at approximately $20.79 per Two River common share or approximately $182.8 million in the aggregate. “I am excited by the prospects of uniting our company with OceanFirst, whose community banking approach and customer focus is highly consistent with the model that has made Two River successful. This combination will provide our customers with enhanced product and service offerings,” said William D. Moss, Chairman, President and Chief Executive Officer of Two River. “In addition to benefits for our customers, our employees and community will benefit from our combined history of making a difference in the communities we serve, which is consistent with one of the founding principles of Two River Community Bank.”

CYHC was founded in 1988 and provides banking services to small businesses and individuals through its network of five Country Bank branches located in the metropolitan New York market. At June 30, 2019, CYHC had $783.4 million in assets, $592.4 million in loans, $649.7 million in deposits and $67.5 million in shareholders’ equity. Under the terms of the CYHC merger agreement, upon completion of the merger, shareholders of CYHC will be entitled to receive 2,000 shares of OceanFirst common stock for each outstanding share of CYHC common stock. Based on OceanFirst’s closing stock price on August 8 of $23.14, the CYHC transaction is valued at approximately $46,280.00 per CYHC common share or approximately $102.2 million in the aggregate. “We are very pleased about partnering with a high-performing company that shares our community banking culture and values. We find the strategic fit of the two organizations compelling, especially for our customers that will benefit from the broader array of products and services, and for our stockholders,” said Joseph M. Murphy, CYHC Chairman and Chief Executive Officer. “We will leverage the new resources and products available to us through OceanFirst Bank and are attracted to the opportunity to operate in our current markets with a significantly larger scale.”

Each of the Two River and CYHC merger agreements have been unanimously approved by the OceanFirst Board of Directors. The Two River Board of Directors has unanimously approved the Two River merger agreement. The Two River merger is expected to close in the first quarter of 2020, subject to Two River receiving the requisite approval of its shareholders, receipt of all required regulatory approvals, and fulfillment of other customary closing conditions. The CYHC Board of Directors has unanimously approved the CYHC merger agreement. The CYHC merger is expected to close in the first quarter of 2020, subject to CYHC receiving the requisite approval of its shareholders, receipt of all required regulatory approvals, and fulfillment of other customary closing conditions. Neither transaction is conditioned on the completion of the other.

Piper Jaffray & Co. served as financial advisor to OceanFirst and Skadden, Arps, Slate, Meagher & Flom LLP served as OceanFirst’s legal counsel. Boenning & Scattergood, Inc. served as financial advisor to Two River and Stevens & Lee served as Two River’s legal counsel. Sandler O’Neill & Partners, L.P. served as financial advisor to CYHC and Luse Gorman, PC served as CYHC’s legal counsel.

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