The merger will create the largest locally managed bank in Hampden County, Massachusetts and the second largest bank in terms of deposit market share in the county.
The combined company will have total assets of $2.1 billion, tangible equity of over $215 million and 21 branch locations serving customers throughout western Massachusetts and northern Connecticut.
Under the terms of the agreement, Chicopee shareholders will be entitled to receive 2.425 shares of Westfield common stock for each share of Chicopee common stock, equal to $20.42 per share, based on the closing price for Westfield common stock on April 4, 2016. The common stock options of Chicopee will be converted into Westfield options with the same relative economic value and expiration date.
Upon closing, Westfield shareholders will own approximately 59% of stock in the combined company, and Chicopee shareholders will own approximately 41%. The transaction is valued at approximately $110 million in the aggregate, based on the closing price for Westfield common stock on April 4, 2016.
"We are excited to combine with such a strong partner as Chicopee," stated James C. Hagan, President and Chief Executive Officer of Westfield.
"As we have gotten to know Bill Wagner and his team over time, we have been pleased at the commonality of our cultures, operating models and the customer service focus of our two institutions. Although headquartered in the same county, we currently serve two distinct customer bases, which, when combined, will complement each other tremendously. A merger of our two banks will be extremely favorable for the shareholders, customers, employees and communities of both institutions."
Following completion of the transaction, James C. Hagan will be President and CEO of the combined company and Donald A. Williams will be Chairman of the Board. William J. Wagner, Chairman, President and CEO of Chicopee, will join the executive management team of Westfield, and will become Vice Chairman of the Board of Directors.
Four additional board members of Chicopee will also join the board of Westfield. Following closing, the combined bank will do business under the Westfield Bank name, with the holding company to be renamed Western New England Bancorp with the Nasdaq trading symbol WNEB. The Chicopee Savings Bank Charitable Foundation will remain in place with its original philanthropic mission in the greater Chicopee area unchanged.
"Westfield is the ideal partner for Chicopee," stated Mr. Wagner. "This is the first in-market merger our community has seen in over 25 years, and as such, will not result in a significant outflow of resources or shift the focus of our franchise elsewhere, but rather will intensify and strengthen our combined ability to serve our local markets, consumers and businesses that make both Westfield and Chicopee successful. I look forward to our future together as a combined institution and to the substantial impact our bank will have in Western New England."
"Westfield has a strong reputation in commercial business lending to large scale customers that will enhance our lending platform and ability," Wagner continued. "Moreover, the larger lending limit, breadth of product mix and deep and sophisticated support functions will allow our bank to be a major competitor in Western New England for years to come."
The transaction is expected to be significantly accretive to the earnings per share of the combined institution, beginning in the first full year. Initial tangible book value dilution of approximately 6% is expected to be earned back within five years, utilizing the crossover method.
The merger agreement has been unanimously approved by both of the Boards of Directors of Westfield and Chicopee. Closing is anticipated to occur during the fourth quarter of 2016, subject to approval by the shareholders of both companies, receipt of required regulatory approvals and other customary closing conditions.
Griffin Financial Group, LLC acted as financial advisor to Westfield Financial, Inc. and rendered a fairness opinion to its Board of Directors. Hogan Lovells US, LLP acted as legal counsel to Westfield. Piper Jaffray & Co. acted as financial advisor to Chicopee Bancorp, Inc. and rendered a fairness opinion to its Board of Directors. Luse Gorman, PC acted as legal counsel to Chicopee.
