By Arianna MacNeill
---- — NEWBURYPORT — The Institution for Savings is poised to make a major expansion: It plans to acquire Rockport National Bank, under an agreement announced by the Newburyport regional financial institution late yesterday afternoon.
The agreement would create a single institution with 11 branches stretching from Salisbury to Gloucester and Rockport, with assets totaling $1.6 billion. The bank would remain headquartered in Newburyport.
The deal, according to the Institution for Savings, is an all-cash transaction valued at approximately $28.3 million.
The agreement requires approval from at least two-thirds of the Rockport-based bank’s shareholders, as well as customary regulatory approvals, before the deal is finalized, Institution for Savings officials said in their announcement. But these are expected to be completed in the last quarter of 2014, the Institution for Savings statement indicated.
Michael J. Jones, Institution for Savings president and chief executive officer, said the Newburyport-based bank is looking forward to venturing into Cape Ann.
“We are committed to remaining a mutually owned regional savings bank and Cape Ann and Beverly are a natural extension to our existing banking office,” he said in a prepared statement. “We will continue to offer the best products and customer service in the marketplace while retaining a talented team of employees and recruiting the best banking professionals in the industry.”
The announcement also said that the anticipated new institution would not be closing any branches or offices. The Institution for Savings has 130 full-time employees and $1.1 billion in loans, while Rockport has 46 full-time employees and loans totaling $145 million. Rockport National’s assets were listed at $200 million.
Rockport National Bank, founded in 1851, has branches on Main Street and King Street in Rockport, another on Parker Street in Gloucester and a fourth in Beverly.
Under the agreement, those will be added to Institution for Savings’ seven existing offices in Newburyport, Topsfield, Ipswich, Salisbury and Rowley. Institution for Savings will also continue to have banking outlets in five area high schools — Beverly, Ipswich, Masconomet Regional, Triton Regional and Newburyport High.
Additionally, the Institution for Savings will fund a Charitable Foundation in the amount of $2 million for the benefit of not-for-profit organizations in the Cape Ann community — a step hailed by Rockport National Bank board of directors Vice Chairman Michael Shea.
“The Institution for Savings has had a rich tradition of stability and charitable giving since 1820,” Shea said in a prepared statement. “Our four contiguous retail banking offices will provide a powerful geographic footprint for the Institution for Savings on Cape Ann and Beverly.”
Institution for Savings, a mutual savings bank that opened the doors to its first branch in Newburyport in 1820, has an estimated $1.691 billion in assets, as estimated for Dec. 31 of last year, according to its website.
The Institution was ranked the seventh most profitable bank in the state in 2013, according to a letter to the community from Jones. The full letter appears as a full-page ad on Page 3 of today’s Daily News.
Jones also said in the letter that the Institution has donated $3 million to local nonprofit organizations over the last three years.
Part of the agreement with the Rockport acquisition is to form a new $2 million charitable foundation geared specifically for Cape Ann organizations.
The announcement comes seven months after the retirement of longtime Rockport National Bank CEO and President Peter Anderson, who stepped down last September after a 21-year run. Margaret Murphy had taken on the role as the bank’s president after serving in a variety of roles since joining Rockport National in 1993.
Under the agreement, shareholders of Rockport National Bancorp will receive $138.58 in cash in exchange for each share of Rockport common stock.
That represents a premium of some 127 percent over the recent closing price of $60.95 per share, roughly 193 percent of Rockport’s tangible book value as of Dec. 31, 2013, and approximately 29 times Rockport’s earnings for 2013, the statement indicated.