Sussex Bancorp Buys Community Bank, Expands In New Jersey

On Apr 11, Sussex Bancorp (NASDAQ:SBBX) signed an all-stock merger agreement with Community Bank of Bergen County, NJ. The deal is anticipated to close in third-quarter 2017.

Per the agreement, Community Bank will merge with Sussex Bank, the subsidiary bank of Sussex Bancorp. Having received the unanimous consent from the board of directors of both the banks, the deal awaits the approval of shareholders and the concerned regulatory authorities.

Terms of the Agreement

The deal has been valued at $45.4 million or $23.52 per share of Community Bank. The valuation has been based on 10 day volume weighted average share price of $24.25 for Sussex Bancorp as of Apr 7.

The shareholders of the acquired bank will receive 0.97 shares of Sussex Bancorp for each share they hold.

Moreover, Peter A. Michelotti, President and CEO of Community Bank, will be designated as Chief Operating Officer, Senior Executive Vice President and a member of the Board of Directors of both Sussex Bancorp and Sussex Bank. Additionally, two members of the acquired bank’s board of directors will become the board members of Sussex Bancorp and Sussex Bank.

Benefits of the Deal

On a pro forma basis, the deal is anticipated to be accretive to Sussex Bancorp's earnings per share in 2018 by almost 12% and to tangible book value per share by approximately 1%. These expectations are based on the assumption that the deal is concluded in the third quarter.

According to the figures provided as of Dec 31, 2016, the deal shall result in a combined company with $1.2 billion worth of assets, $925 million in gross loans, and $965 million in deposits.

Apart from expanding Sussex Bank’s presence in New Jersey with three full service branches in Bergen County, this deal also complements its current location of operation in Oradell.

The bank’s efforts to achieve growth through such inorganic strategies are encouraging.

Shares of Sussex Bancorp rallied 45.7% in the past six months, outperforming the Zacks categorized Banks - Northeast industry’s growth of 21.6%.

Currently, Sussex Bancorp carries Zacks Rank #3 (Hold).

Some better-ranked financial stocks are SVB Financial Group (NASDAQ:SIVB) , Preferred Bank (NASDAQ:PFBC) and SmartFinancial, Inc. (NASDAQ:SMBK) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SVB Financial’s earnings estimates were revised upward by 1.5% for the current year, in the past 30 days. Also, its share price jumped 67.6%, in the last one year.

Preferred Bank’s current year earnings estimates were revised 0.7% upward, in the last 30 days. Further, its shares increased 68.9%, in the last one year.

SmartFinancial witnessed 1.1% upward earnings estimates revision for the current year in the past 30 days. Moreover, its shares have gained 15.4% in the last one year.

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