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BHLB to Buy Brookline Bancorp for $1.14B, Expand Footprint
BHLBBerkshire Hills Bancorp(BHLB) ZACKS·2024-12-17 16:40

Core Viewpoint - Berkshire Hills Bancorp, Inc. (BHLB) has agreed to acquire Brookline Bancorp, Inc. (BRKL) in an all-stock transaction valued at approximately 1.14billion,expectedtoclosebySeptember30,2025,pendingregulatoryandshareholderapprovals[1][2][3]TransactionDetails−Uponclosure,BrooklinewillmergeintoBerkshire,andBrooklineBankwillmergeintoBerkshireBank,withanewnameandtickersymboltobeannounced[2]−Berkshirewillpay0.42sharesofitscommonstockforeachshareofBrookline[3]−Berkshireplanstoissue1.14 billion, expected to close by September 30, 2025, pending regulatory and shareholder approvals [1][2][3] Transaction Details - Upon closure, Brookline will merge into Berkshire, and Brookline Bank will merge into Berkshire Bank, with a new name and ticker symbol to be announced [2] - Berkshire will pay 0.42 shares of its common stock for each share of Brookline [3] - Berkshire plans to issue 100 million of its common stock at 29persharetosupporttheproformabank′sbalancesheetandregulatorycapitalratios[4]FinancialMetrics−BrooklineBancorphasapproximately29 per share to support the pro forma bank's balance sheet and regulatory capital ratios [4] Financial Metrics - Brookline Bancorp has approximately 11.7 billion in assets, 9.8billionintotalloans,and9.8 billion in total loans, and 8.7 billion in deposits as of September 30, 2024 [4] - The combined entity is expected to have around 24billionintotalassets,24 billion in total assets, 19 billion in total loans, and 18.3billionintotaldeposits[5]−Berkshireanticipatesa1418.3 billion in total deposits [5] - Berkshire anticipates a 14% and 40% accretion to its earnings per share for 2025 and 2026, respectively, assuming successful execution of cost savings [9] Strategic Rationale - The merger is expected to enhance BHLB's deposit mix and expand its footprint, with a top 10 deposit market share in 14 out of 19 Metropolitan Statistical Areas [7] - Cost savings of 12.6% of combined non-interest expenses are anticipated, with one-time pre-tax merger expenses estimated at 93 million [8] - The transaction aligns with Berkshire's long-term inorganic growth strategy, emphasizing strategic buyouts for revenue and cost benefits [12] Governance and Future Outlook - The board of the combined entity will consist of eight directors from each company [6] - Berkshire expects to increase its dividend to $1.29 per share annually post-closure [6] - The tangible book value is projected to dilute by 16.7%, with an earn-back period of approximately 2.9 years [10]