First Bank (OTC BB:FRBA) announced today that it has entered into a definitive merger agreement with Heritage Community Bank (HCB) headquartered in Randolph, New Jersey. The combined entity will have over $500 million in assets with 7 branches in three counties in New Jersey.
According to terms of the Agreement, HCB shareholders will receive 0.4534 shares of FRBA stock in an all-stock exchange, subject to adjustment based on HCB’s shareholders equity as of the month-end prior to closing. Assuming Heritage satisfies the minimum shareholders equity requirement outlined in the agreement, First Bank expects to issue 875,251 new shares to consummate this transaction. HCB will be merged into First Bank, and the transaction is expected to be a tax-free exchange with respect to the stock consideration received by the shareholders of HCB. The merger has been unanimously approved by the boards of directors of both companies. The transaction is subject to closing conditions typical of merger transactions, including approval by the respective shareholders and bank regulatory authorities.
“We are extremely excited about this combination with Heritage Community Bank,” stated First Bank President and CEO Patrick L. Ryan. “HCB’s focus on relationship lending to quality commercial borrowers, with a particular emphasis on commercial and industrial (C&I) lending, fits perfectly with the First Bank model. Furthermore, we love the demographics of HCB’s markets. Morris County, with strong income, growth, and density characteristics, presents an attractive opportunity for us. Heritage has created a platform that can become a real engine for growth and profitability as we leverage the improved infrastructure and administration capabilities of the combined franchise. Together with our currently pending new Somerset branch, we believe Morris County is a natural extension of our market.”
Peter Kenny, President and CEO of Heritage, will be joining First Bank as an employee and a Board member. At least one additional director from Heritage will be added to the First Bank Board of Directors. “First Bank is an ideal partner for us,” Kenny said. “We have similar business models, similar relationship-lending philosophies, and a similar emphasis on community relations in our markets. Plus, the enhanced risk diversification and larger lending limit will allow us to expand our coverage area and attract new customers.”