BOSTON - Berkshire Hills (NYSE:BHLB) Bancorp, Inc. (NYSE: BHLB) and Brookline Bancorp , Inc. (NASDAQ: NASDAQ:BRKL) announced today a definitive agreement for an all-stock merger valued at approximately $1.1 billion. The transaction will combine Berkshire's and Brookline's operations, resulting in a financial institution with $24 billion in assets and 148 branch offices. Berkshire, currently valued at $1.27 billion in market capitalization, has demonstrated strong momentum with a 47% price return over the past six months, according to InvestingPro data.
Under the terms of the agreement, Brookline shareholders will receive 0.42 shares of Berkshire stock for each share of Brookline stock they own. This exchange ratio values Brookline common stock at $12.68 per share based on the closing price of Berkshire stock on December 13, 2024. InvestingPro analysis indicates that Berkshire's shares are currently trading at Fair Value, with a P/E ratio of 32x and a steady dividend yield of 2.38%. The company has maintained dividend payments for 25 consecutive years, demonstrating consistent shareholder returns.
To support the merger, Berkshire has also entered into subscription agreements with investors to raise $100 million by issuing common stock at $29.00 per share. This capital raise, expected to close on December 19, 2024, will bolster the pro forma bank's balance sheet and regulatory capital ratios.
The combined company, which will announce a new name and ticker symbol before the merger's completion, is projected to be a major player in the Northeast market. The merger aims to capitalize on economies of scale, diversify business, and improve competitive positioning. The management teams from both institutions will join forces to minimize integration risks and enhance operational performance. According to InvestingPro's comprehensive analysis, Berkshire maintains a FAIR financial health score, with additional insights available in the Pro Research Report, which provides deep-dive analysis of 1,400+ US equities.
Governance of the new entity will consist of a Board of Directors with equal representation from both banks. The current Chairperson of Berkshire's Board, David Brunelle, will serve as Chairperson of the Board for the combined company. Paul A. Perrault, Brookline's Chairman and CEO, will become President and CEO of the merged entity.
The transaction is expected to close by the end of the second half of 2025, subject to customary closing conditions, including the receipt of necessary regulatory approvals and approvals from Berkshire and Brookline shareholders.
This merger announcement is based on a press release statement. Further details on the transaction and its implications for investors and clients will be disclosed in the coming months as the banks work towards finalizing the merger.
In other recent news, Berkshire Hills Bancorp reported robust financial results in its third quarter of 2024. The banking company disclosed operating earnings of $24.8 million, marking a significant increase in its operating earnings growth. In addition, the bank's capital ratios improved, with CET1 at 11.9% and TCE at 9.1%. The company also completed the sale of 10 New York branches and part of its Upstart (NASDAQ:UPST) loan portfolio.
The bank's digital deposit product rollout aims to enhance deposit generation and client experience, and management expects the net interest margin (NIM) to be between 3.10% and 3.20% in Q4 2024. Interestingly, the bank paused stock repurchases in Q3 to support balance sheet growth, and the share count has decreased by 18% since Q4 2020.
Berkshire Hills Bancorp's focus on organic growth is evident, with a 20% year-over-year increase in the loan pipeline. The bank also anticipates flat to slightly down revenue in Q4, with stable net charge-offs, excluding certain charge-offs from the Upstart loan sale. These recent developments highlight the company's strategic initiatives and expectations for the upcoming quarter.
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