Massachusetts-based Cambridge Trust Co., which recently expanded its wealth management business into Connecticut, plans to acquire another Massachusetts bank for its third bank deal in four years.
Cambridge Bancorp, Cambridge Trust’s parent company, announced Monday that it would acquire North Andover-based Northmark Bank in an all-stock deal valued at $63 million.
“This merger brings together two terrific, conservatively managed banks with a long track record of solid financial performance and a culture based upon deep customer relationships and service excellence,” Cambridge Trust President and CEO Denis Sheahan said during a conference call Tuesday to discuss the merger.
The transaction, which has been unanimously approved by the boards of directors at both companies, is expected to close in the fourth quarter. Jane Walsh, Northmark’s co-founder, president and CEO, will join Cambridge Bancorp and Cambridge Trust as a director.
Founded in 1987, Northmark Bank has about $442 million in assets and branches in three communities north of Boston: North Andover, Andover and Winchester. The merger will give Cambridge Trust, a publicly-traded stock bank, about $5.5 billion in assets.
“These are attractive, affluent communities, consistent with our private banking and wealth management business models,” Sheahan said.
Cambridge Trust has 19 branches and five wealth management offices in Greater Boston and New Hampshire. The bank had previously acquired Massachusetts-based Wellesley Bank in 2020 and New Hampshire-based Optima Bank & Trust in 2019.
Cambridge Trust last fall hired a five-person wealth management team from Bridgeport-based People’s United Bank before it was acquired by Buffalo-based M&T Bank. The team is led by Robert Maquat, who joined Cambridge Trust in November as senior vice president and senior private banker.
Cambridge Trust told The Commercial Record earlier this year that the bank plans to build its Connecticut wealth management business with organic growth over the next two years.
During the conference call to discuss the latest merger, Cambridge Trust’s chief financial officer, Michael Carotenuto, said the bank expects 35 percent in cost savings from the acquisition, with a 1.7 percent dilution in its tangible book value. The bank expects to earn that back in 2.25 years.
While Cambridge Trust expects wealth management opportunities among Northmark’s customers, Sheahan said these opportunities were not included in revenue forecasts from the merger. He said in response to an analyst’s question that the bank would begin training Northmark employees about wealth management soon after completing the merger.
“It takes time to grow wealth, and that’s our experience from our prior mergers,” Sheahan said. “But these are terrific markets, and we would expect to have significant wealth opportunity with that client base and in those markets over time.”
In addition to regulatory approval, the deal will need approval from the shareholders of Northmark, a privately held stock bank. Sheahan said in response to an analyst’s question that the board of directors holds 40 percent of Northmark’s stock, adding that board members have entered into a voting agreement to approve the merger
Northmark shareholders will receive 0.995 shares of Cambridge common stock for each share of Northmark stock. Based upon Cambridge’s closing price of $79.94 as of May 20, the transaction is valued at $79.54 per share of Northmark common stock, or approximately $63 million, Cambridge Trust said in a statement.
