First New England Bank
Another bank from outside the area has set its sights on the Philadelphia region through acquisition.
Berkshire Hills Bancorp (NYSE: BHLB) of Pittsfield, Massachusetts, said Monday that it has agreed to acquire privately held First Choice Bank of Lawrenceville, N.J., — a $1.1 billion bank with six branches in Central Jersey and two more in southeastern Pennsylvania — for $111.7 million.
The all stock deal would be 109 percent of First Choice's tangible book value as of March 31 and is expected to close in the fourth quarter.
Berkshire’s total assets will increase to $8.9 billion with 101 branches across the Northeast with its main subsidiary Berkshire Bank, which earned $50 million last year and $16 in the first quarter. First Choice reported $436 million in net loans and $906 million in deposits as of March 31. It is the second largest community bank by deposit market share in Mercer County, N.J.
In 2007, First Choice became the first startup community bank in the Lawrenceville area in 40 years. Since then it added five more branches in Mercer County and expanded across the bridge to Pennsylvania into the eastern Philadelphia suburbs. It largely serves Mercer and Bucks counties.
In 2009, it opened a mortgage division headquartered in East Brunswick, N.J. called First Choice Loan Services, which now has 12 loan production offices across six states and over 500 employees. Total mortgage production in 2015 was $2.5 billion and total revenue was $68 million.
First Choice has locations in Lawrenceville, Hamilton, Robbinsville, Mercerville, East Windsor and Kingston, N.J., as well as Yardley and Horsham, Pa.
Berkshire’s branch footprint consists of Massachusetts, New York, Connecticut and Vermont. Two years ago, it expanded outside New England for the first time when it paid $14 million to acquire 20 upstate New York branches from Bank of America (NYSE: BAC).
“This acquisition comes as a surprise to us as we were unaware of BHLB’s interest in moving meaningfully into the New Jersey market, " Keefe Bruyette & Woods analyst Collyn Gilbert told investors in a note Monday. "We also view this market as highly competitive, with weaker pricing dynamics than perhaps what BHLB would see in its core markets of Massachusetts and upstate, New York."
This is Berkshire Hills’ second acquisitions in this region in as many months. In May, it acquired Blue Bell, Pa.-based 44 Business Capital, the region’s largest U.S. Small Business Association lender, from Parke Bancorp.
Gilbert noted that while she was surprised by the market extension characteristics of the First Choice deal, she does think the financial components are favorable. Specifically, she noted that First Choice is located within 10 miles of 44 Capital and that the seller’s strong mortgage banking platform was an attractive feature.