Investors Bancorp, a Short Hills-based commercial bank, is buying the Bank of Princeton, a locally grown operation founded in 2007. The deal is a $154 million payday for Bank of Princeton investors, but it brings uncertainty to the employees of the bank and its 13 branches.
“It’s evolving, but certainly there are some opportunities for branch consolidation, be it in our branches or in other branches,” said Investors CEO Kevin Cummings. “There will probably be about a 35 percent cost savings.”
Cummings said the Bank of Princeton was a natural target for expansion for Investors, which will have 156 branches in the Philadelphia to New York corridor. In 2013 Investors merged with Roma Bank in Robbinsville, giving it a foothold in Mercer County. The Bank of Princeton is the ninth acquisition for Investors since 2008. “The Bank of Princeton fits in from a franchise and geography point of view very well,” Cummings said. “In addition, I met with the senior management team and really our cultures are very similar.”
Steve Distler, vice chairman of Bank of Princeton, is also its co-founder. In an interview last summer, Distler said he founded the community bank along with Ross Wishnick with $30 million in money from investors (U.S. 1, June 17, 2015,). At first it was a savings bank but became a commercial bank after five or six years of operation. Anyone who took up Distler’s offer to invest in the bank in 2006 and then held on to their shares would triple their investment from the Investors Bank sale. “People aren’t going to be walking around buying Bentleys, but it was a good thing,” Distler said. In addition to being a Bank of Princeton co-founder, Distler is the owner of the Elements restaurant in downtown Princeton.
The deal, which has been approved by both institutions’ boards of directors, is expected to close by the end of the year. It is a 60 percent stock, 40 percent cash split.
Cummings said Investors was well practiced in integrating new banks into its existing structure, and that he expected the merger to go smoothly. He said the low-interest financial environment, in addition to the high cost of complying with regulations, was driving bank mergers such as this one. He said the Bank of Princeton recently passed the milestone of having $1 billion in assets, which caused some additional regulations to kick in, increasing the pressure to merge with a larger institution. “Banks are not bought, they’re sold,” he said.
Distler said that to continue to have grown the way the Bank of Princeton was growing would have required a “whole new level of complication” and that it had gone as far as it could as a small community bank. It had been in negotiations with Investors for about a year.
After the merger, existing Bank of Princeton customers will have access to some new products, including Investors Bank’s mobile banking platform, cash management services for small businesses, and an increase in the maximum loan size. “Now we can offer $20 or $30 million loans,” Cummings said. He also said Investors would continue the Bank of Princeton’s tradition of being a community bank, by investing in local philanthropic projects. Investors gave about $5 million to charity in 2015.