News Column

Local bank merger approved

June 25, 2014

By Richard Newman, The Record (Hackensack, N.J.)



June 25--The pending merger of ConnectOne Bancorp and Center Bancorp was approved by the companies' shareholders in separate meetings on Tuesday, clearing the way for a July 1 closing of the stock transaction, the companies said.

The stock swap will create a $3 billion institution based in Englewood Cliffs that will focus on lending to small and midsize New Jersey businesses.

"This is a great merger for our clients and the shareholders we serve," said Frank Sorrentino, ConnectOne's chairman and chief executive, who will be chairman and CEO of the combined companies.

Sorrentino led the 8:30 a.m. ConnectOne meeting in Englewood Cliffs and attended the Center Bancorp meeting in Florham Park later in the day. Anthony Weagley, CEO of Center Bancorp, will be chief operating officer of the merged bank.

More than 3.7 million shares of Con nect One Bank's holding company were voted in favor of the deal versus 150 against, with 7,480 abstentions.

The way the deal is structured, the larger Center Bancorp, based in Union Township, will be the surviving holding company, and it will change its name to ConnectOne Bancorp next Tuesday. Center Bancorp's main subsidiary, Union Center National Bank, will merge into ConnectOne Bank. The stock symbol will remain the same as ConnectOne's current symbol, CNBC.

Although Center Bancorp is the acquirer, and will pay Con nect One's shareholders 2.6 shares of Center Bancorp stock for each of their ConnectOne shares, the combined bank will take the smaller company's name. The headquarters will relocate to ConnectOne's Englewood Cliffs offices on Sylvan Avenue.

The Center Bancorp voting numbers were not immediately available, but shareholders approved "by a substantial margin" the name change and the doubling of the number of shares the company is authorized to issue to 50 million, an outside auditor said at the meeting.

Center Bancorp will issue more than 14 million shares to complete the merger.

"The company will be one of the premier banks in the whole region," Lawrence B. Seidman, Center Bancorp's largest shareholder, said in an interview after the shareholder meeting in Florham Park'sPark Avenue Club.

Both banks have been expanding their loan portfolios and increasing profits, despite economic headwinds.

Center Bancorp, which has 16 branches, including ones in Englewood, Oakland and Saddle River, earned $4.4 million in the first quarter, down from $4.9 million in the year-earlier period. First-quarter results included $703,000 in after-tax merger expenses.

In 2013, Center Bancorp earned $19.8 million, up from $17.2 million the year before. Loans increased 8 percent to $960.9 million.

ConnectOne, which has eight offices, reported net income of $2.6 million, for the first quarter, up from $2.3 million a year earlier. Excluding merger costs, net income was $3.3 million, reflecting an increase of more than 40 percent over net income for the first quarter of 2013.

Loans receivable increased 8.1 percent during the three months, to $1.25 billion.

ConnectOne said on Tuesday that it will pay a dividend to common shareholders of 7.5 cents a share on Aug. 1, the first time to do so as a public company.

Seidman, an activist investor, helped pave the way for the deal by agreeing to reduce his Center Bancorp holdings and resign from the Union Township bank's board.

He has agreed to bring his ownership stake down below 5 percent from about 9 percent within a year of the merger's closing date.

He will serve as a consultant to the merged companies for two years, he said.

At the time of the Jan. 21 announcement, the agreement valued ConnectOne at $243 million, or $45.60 a share, based on Center Bancorp'sJan. 17 closing price.

In 2013, the average price paid in bank mergers as a percentage of tangible book value _ the measure that investors most often focus on _ was 1.24 times tangible book. The price of the Center Bancorp-ConnectOne deal is 1.79 times tangible book value.

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(c)2014 The Record (Hackensack, N.J.)

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Source: Record (Hackensack, NJ)


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