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Independent Bank (INDB) Closes MNB Bancorp Buyout for $55.5M

Independent Bank Corp. INDB has completed the acquisition of MNB Bancorp for $55.5 million. The cash and stock deal was announced in May.

Also, The Milford National Bank and Trust Company, the main banking subsidiary of MNB Bancorp was merged with and into Rockland Trust, the wholly owned subsidiary of Independent Bank.

Deal Details& Benefits

Per the terms of the transaction, each of MNB Bancorp’s shareholders will either receive 3.55 shares of Independent Bank or $275 in cash. This is subject to a pro-ration procedure, which results in a consideration mix of 75% stock and 25% cash. Thus, Independent Bank issued nearly 528,353 shares (in aggregate) to MNB Bancorp’s shareholders and paid $13.6 million in cash.

Notably, at the time of announcement of deal, Independent Bank is expected to incur one-time expenses of nearly $5.3 million in 2018 and 2019. Excluding these charges, the transaction is anticipated to be accretive to Independent Bank’s earnings in 2019 by 10 cents. Also, the company projected the deal to generate an internal rate of return of 19%. It expected the transaction to be dilutive to its tangible book value per share by 1.2%.

With a handful of branches located in Worcester County, MA, the acquisition of MNB Bancorp will likely strengthen Independent Bank’s loan and deposit balances.

What to Expect Next?

Acquisitions seem to be a major strategy that has supported Independent Bank. Over the past six years, the company has completed as many acquisitions.

In September, Independent Bank had announced a deal to buy Blue Hills Bancorp, Inc. BHBK for $726.5 million.Per the agreement, the bank will pay 0.2308 of a share of its common stock and $5.25 in cash for each share of Blue Hills. (Read more: Independent Bank to Buy Blue Hills Bancorp for $727M)

We believe opportunistic acquisitions will continue to be part of Independent Bank’s growth strategy. The company’s strong liquidity position and debt/equity ratio lower than the industry average will provide support. Additionally, easing banking regulations is expected to be beneficial.

Shares of Independent Bank have rallied 15% so far this year against 11.3% decline for the industry it belongs to.

Currently, Independent Bank carries a Zacks Rank #3 (Hold).

Stocks Worth a Look

A couple of better-ranked banks in the same industry are Webster Financial Corporation WBS and Farmers & Merchants Bancorp Inc. FMAO. Both carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the past 30 days, the Zacks Consensus Estimate for Webster Financial’s current-year earnings has moved nearly 1% upward. Its share price has gained 13.2% in the past year.

Farmers & Merchants Bancorp’s earnings estimates for 2018 remained unchanged over the past 30 days. Its shares have rallied 9.4% in a year’s time.

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