New Haven-based NewAlliance Bank’s acquisition of Stamford-based Cornerstone Bancorp was approved last week.
New Haven-based NewAlliance Bank last week received final approvals to acquire Stamford-based Cornerstone Bancorp for $48.7 million. The acquisition is expected to close in January.
The state Department of Banking on Sept. 21 issued a notice not to disapprove the acquisition of all the outstanding voting securities of Cornerstone Bancorp Inc. and, indirectly, Cornerstone Bank. Earlier in September, Banking Commissioner John P. Burke approved the merger of Cornerstone Bank with and into NewAlliance. The Federal Deposit Insurance Corp. also approved the acquisition.
“We are genuinely pleased to receive the final approvals to combine two great community banks,” said Peyton R. Patterson, the chairman, president and chief executive officer of NewAlliance, in a prepared statement. “It is also our first step into Fairfield County and a great complement to our existing franchise. By entering Fairfield County, we see excellent potential for growth from our wealth management and trust services to our business and retail banking operations.”
The bank also has expanded into the state’s capital city, having opened its first Hartford branch earlier this week. The new branch, located in the West End of Hartford, is at 1700 Park St.
The Cornerstone acquisition was the bank’s second in recent months. In March, NewAlliance reached an agreement to acquire Hartford-based Trust Co. of Connecticut for $19.3 million in cash and stock. That acquisition will add more than $700 million to the bank’s assets under management.
“Basically, we are trying to fill in branches where they are needed to complete our footprint,” said Paul McCraven, senior vice president at NewAlliance.
The acquisition of Cornerstone – which has six branches in Stamford, Greenwich, Norwalk and Westport – will add assets of $231 million, as well as deposits of $195 million, as of June 30.
At the end of this year’s second quarter, the bank had 64 branches in Hartford, Middlesex, New Haven, Tolland and Windham counties. It had $6.6 billion in assets and $3.8 in deposits.
‘Excellent Potential’
Cornerstone Bank’s presence in Fairfield County – one of the most attractive banking areas in the country – was likely a reason NewAlliance decided to acquire the bank, bank analyst Kevin Timmons said after the initial announcement of the acquisition.
“Fairfield County obviously has an attractive demographic,” Timmons, a senior analyst at New York-based CL King & Assoc., said in April.
Patterson said the acquisition would be an opportunity for the bank to expand some operations.
“This transaction builds on our proven track record of several successful acquisitions and complements our strategy to be a dominant player in the region’s community banking market,” she said in an April prepared statement. “It is also our first step into Fairfield County and a great complement to our existing franchise. By entering Fairfield County, we see excellent potential for growth from our wealth management and trust services to our business and retail banking operations.”
Merrill J. Forgotson, president and chief executive officer of Cornerstone, will become senior vice president of NewAlliance and head of business banking in NewAlliance’s Fairfield County region after the transaction closes.
“This is a great partnership for Cornerstone Bancorp as it brings together two companies with the same commitment to community banking and personal service,” Forgotson said in a prepared statement in April. “We are pleased we will be able to provide our customers with a broader array of products and services.”
NewAlliance likely will continue shopping for new acquisition possibilities in their market, Timmons said.
“I don’t see them doing anything dramatic [like buying a bank in the South] … but they are clearly looking for new deals,” he said in April.
Cornerstone shareholders will be entitled to receive either 2.52 shares of NewAlliance common stock or $35 in cash for every share of Cornerstone Bancorp stock owned, provided that 70 percent of total consideration will be paid with NewAlliance stock, under the terms of the agreement. At $35, the purchase price represents 197 percent of book value and 23.6 times Cornerstone’s trailing earnings as of Dec. 31, 2004.
The transaction has been approved by the boards of directors of NewAlliance Bancshares and Cornerstone Bancorp. It is now subject to the approval of Cornerstone shareholders, as well as the FDIC, the Federal Reserve Bank and the Connecticut banking commissioner. Proxy materials providing detailed information relating to the acquisition will be sent to Cornerstone Bancorp shareholders for their consideration.
NewAlliance is the third-largest banking institution that maintains its headquarters in Connecticut.
