January 2, 2020
OceanFirst Financial Corp. has exceeded $10 billion in assets after completing previous announced, separate acquisitions of banks in New Jersey and New York.
The bank has closed on its purchases of Two River Bancorp (NASDAQ:TRCB) of Tinton Falls in Monmouth County for $197 million and Country Bank Holding Co. (OTC: CYHC) of New York City for $112.8 million. The deals pushed Toms River-based OceanFirst (NASDAQ:OCFC) into the competitive metro New York market.
The deal prices for both have increased since the transactions were announced on Aug. 9. That’s largely because OceanFirst’s stock price increased from $22.36 the day of the announcements to $25.54 on Dec. 31. The Tinton Falls deal was originally $182.8 million and the Country Bank Holding Co. was supposed to be $102.2 million.
Former Two River shareholders received $5.375 in cash without interest and 0.6663 shares of OceanFirst common stock for each share of Two River common stock they held plus cash in lieu of any fractional shares of OceanFirst common stock. Former CYHC shareholders became entitled to receive 2,000 shares of OceanFirst common stock for each share of CYHC common stock they held.
As part of the deals Two River Chairman and CEO William D. Moss and CYHC President Joseph M. Murphy Jr. were both appointed to the boards of directors of OceanFirst and OceanFirst Bank.
Two River and CYHC will operate as divisions of OceanFirst Bank until the integrations of their respective operating systems are completed, which are expected to occur separately during 2020. They will then be rebranded as OceanFirst Bank.
In completing the deals, OceanFirst now exceeds the $10 billion threshold that triggers heightened regulatory scrutiny and costs. Banks have fretted moving past that figure. National Penn Bancshares decided to sell itself to BB&T Corp. in 2016 rather than exceed that barrier. Customers Bancorp tried to sell its BankMobile subsidiary to avoid it in recent years.
And the banks that did grow past $10 billion chose to do so in a big way. WSFS Financial Corp. was $7 billion in assets before acquiring $6 billion Beneficial Bancorp in March. The extra $3 billion gives the bank the critical mass to better deal with the additional cost burden.
But OceanFirst CEO Christopher Mahertold analysts in August that he could see the bank settling in at around $10.5 billion and sees no need to complete another transaction to buffer its size. He cited three reasons:
- Changes in accounting standards.
- A new law that raises the threshold requiring state-member banks to conduct their company-run stress tests from $10 billion in assets to $250 billion
- Declining negative impact from the Durbin Amendment that limits fees banks can charge retailers for debit-card processing.
Analysts still see OceanFirst as a willing and able buyer in Philadelphia, though the roster of attractive targets has dwindled.