The Federal Deposit Insurance Corporation approved Investors Bank’s acquisition of eight New Jersey and eastern Pennsylvania branches of Berkshire Bank on Monday.
Investors announced in December 2020 that it would acquire the wholly-owned subsidiary of Berkshire Hills Bancorp, Inc., adding approximately 8,000 new retail and commercial customers.
“This is a good opportunity to strengthen our central New Jersey deposit franchise and reduce higher-cost wholesale funding,” Investors’ Chairman and CEO Kevin Cummings said. “We are also pleased to expand our branch footprint and add two branches in affluent Pennsylvania markets.”
The acquisition is expected to be completed on Aug. 27, 2021, subject to closing conditions outlined in the purchase agreements. With the FDIC approval, Investors Bank has received all the required regulatory approvals for the transaction.
The transaction includes the assumption and acquisition of approximately $633 million in deposits and $253 million in consumer and commercial loans, as well as the related operations.
As part of the agreement, Investors will pay a 3 percent deposit premium on deposits acquired at the close. Additionally, Investors plans to use the lower-cost funding to extinguish an estimated $250 million in FHLB borrowings, which is expected to reduce Investors’ wholesale borrowing ratio, lower its loan to deposit ratio, and enhance its overall net interest margin.
“This is a low risk, in-market transaction with a minimal impact on capital levels,” said Mr. Cummings, “and given the improved economic outlook and our strong tangible capital levels, we have decided to resume repurchasing our shares.”