Takeover #3 for 2019. 2.8 times return on invested capital.

This is a big one. Its 2.8 times our purchase price for a 27% annualized return. It is a 73% one day gain in the stock! CLBK is not cheap and the earnback is too long so lets just book the gains today.

Columbia Financial, Inc. (CLBK) ("Columbia"), the holding company for Columbia Bank, and Stewardship Financial Corporation (SSFN) ("Stewardship"), the holding company for Atlantic Stewardship Bank, announced today the signing of a definitive merger agreement.

Pursuant to the terms of the merger agreement, Stewardship shareholders will receive $15.75 in cash for each share of Stewardship common stock held. The aggregate consideration in the transaction is approximately $137 million and the per share merger consideration represents 166.8% of Stewardship's tangible book value as of March 31, 2019 and equates to approximately 17.4x Stewardship's trailing twelve-month net income through March 31, 2019.

Stewardship's wholly-owned subsidiary, Atlantic Stewardship Bank, has 12 banking offices in northern New Jersey. Established in 1985, Atlantic Stewardship Bank is a full-service commercial bank serving individuals, businesses and their communities. As of March 31, 2019, Stewardship Financial Corporation had total assets of $961 million, loans of $747 million and deposits of $784 million.

Mr. Thomas J. Kemly, Columbia's President and Chief Executive Officer, commented: "We are pleased to announce the strategic combination of the two banks, both of which are strong community banks dedicated to serving their local communities. Our companies share common values with a strong culture focused on relationships and serving our communities, making this combination a perfect partnership. We greatly admire the philanthropic support Stewardship provides through its tithing program and the Columbia Bank Foundation, one of the largest private charitable foundations in New Jersey, is proud to continue various aspects of Stewardship's charitable mission. We believe the merger represents a significant step towards profitably deploying capital we raised in our public offering and is a great fit with our growth plan."

Mr. Paul Van Ostenbridge, who has served as President and Chief Executive Officer of Stewardship since 1997 and of Atlantic Stewardship Bank since 1985, commented: "We are excited about the combination with Columbia Bank and the amazing opportunities this presents to our customers and the community through an expanded platform with greater financial resources. Columbia has a history of delivering quality, competitive financial services and a positive customer experience along with making a difference in the communities we serve. These shared philosophies make the blending of our two companies the faithful evolution for Atlantic Stewardship Bank."

The transaction, which has been unanimously approved by each company's board of directors, is subject to satisfaction of customary closing conditions, including receipt of various regulatory approvals and the approval of the Stewardship shareholders, and is expected to close in the fourth quarter of 2019 after all such conditions are met. Upon closing, Atlantic Stewardship Bank will merge into Columbia Bank.

Upon closing, Mr. Van Ostenbridge will join the Board of Directors of Columbiaand Columbia Bank and a board member of Stewardship will be selected by the Columbia Bank Foundation to serve on its board of directors.

Columbia expects the parties, in the aggregate, will incur one-time pre-tax cash transaction expenses of approximately $14 million. Columbia expects to achieve cost savings of approximately 48% of Stewardship's non-interest expenses with 80% of the savings recognized in 2020. On a pro forma basis, the transaction is expected to be accretive to Columbia's 2020 earnings per share by approximately 16.2%, excluding one-time costs. Columbia expects initial tangible book value dilution associated with the transaction to be earned back, based on the crossover method, in less than five years.

Columbia was advised in this transaction by the investment banking firm of Boenning & Scattergood, Inc. and represented by the law firm of Kilpatrick Townsend & Stockton LLP. Stewardship was advised by the investment banking firm of Sandler O'Neill + Partners, L.P. and represented by the law firm of McCarter & English, LLP.

Posted to Banking on Profit on Jun 07, 2019 — 10:06 AM
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