Berkshire Hills Bancorp in Boston has agreed to buy SI Financial Group in Willimantic, Conn.
The $12 billion-asset Berkshire said in a press release Tuesday that it will pay $180 million in stock for the $1.6 billion-asset parent of Savings Institute Bank and Trust. The deal, which is expected to close in the second quarter, prices SI Financial at 118% of its tangible book value.
SI Financial has 23 branches in eastern Connecticut and Rhode Island. The company has $1.3 billion in loans and $1.3 billion in deposits.
It is Berkshire’s first acquisition since it announced the sudden departure of CEO Michael Daly. The deal also gives the bank its first branches in Rhode Island.
"This transaction is a natural fit and brings with it a stable, longstanding deposit base with leading market position,” Richard Marotta, who succeeded Daly as CEO, said in the release. SI Financial “is a well-established and trusted financial institution with deep client and community relationships.”
Berkshire has acquired 10 banks since 2005.
The deal is expected to be 5% accretive to Berkshire’s 2020 earnings per share. It should take Berkshire less than three years to earn back the expected 2.4% dilution to its tangible book value.
Berkshire plans to cut about 30% of SI Financial’s annual operating expenses, or $12.5 million. The company expects to incur $12.9 million in pretax merger-related expenses.
Rheo Brouillard, SI Financial’s president and CEO, will join Berkshire’s board.
Berkshire was advised by Piper Jaffray and Luse Gorman. SI Financial was advised by Keefe, Bruyette & Woods and Kilpatrick Townsend & Stockton.
