Columbia Financial, the holding company for Columbia Bank, and Stewardship Financial, the holding company for Atlantic Stewardship Bank, signed a definitive merger agreement in a transaction valued at approximately $137 million.

Pursuant to the terms of the merger agreement, Stewardship shareholders will receive $15.75 in cash for each share of Stewardship common stock held. The per share merger consideration represents 166.8% of Stewardship’s tangible book value as of March 31, 2019 and equates to approximately 17.4x Stewardship’s trailing twelve-month net income through March 31, 2019.

Established in 1985, Atlantic Stewardship Bank is a full-service commercial bank serving individuals, businesses and their communities through 12 banking offices in northern New Jersey. As of March 31, 2019, Stewardship Financial had total assets of $961 million, loans of $747 million and deposits of $784 million.

Thomas J. Kemly, Columbia president and CEO, commented, “We are pleased to announce the strategic combination of the two banks, both of which are strong community banks dedicated to serving their local communities. We greatly admire the philanthropic support Stewardship provides through its tithing program and the Columbia Bank Foundation is proud to continue various aspects of Stewardship’s charitable mission. We believe the merger represents a significant step towards profitably deploying capital we raised in our public offering and is a great fit with our growth plan.”

Paul Van Ostenbridge, who has served as president and CEO of Stewardship since 1997 and of Atlantic Stewardship Bank since 1985, commented, “We are excited about the combination with Columbia Bank and the amazing opportunities this presents to our customers and the community through an expanded platform with greater financial resources.”

The transaction has been unanimously approved by each company’s board of directors and is subject to satisfaction of customary closing conditions, including receipt of various regulatory approvals and the approval of the Stewardship shareholders. The merger is expected to close in the fourth quarter of 2019.

Upon closing, Van Ostenbridge will join the Board of Directors of Columbia and Columbia Bank and a board member of Stewardship will be selected by the Columbia Bank Foundation to serve on its board of directors.

Columbia expects the parties, in the aggregate, will incur one-time pre-tax cash transaction expenses of approximately $14 million. Columbia expects to achieve cost savings of approximately 48% of Stewardship’s non-interest expenses with 80% of the savings recognized in 2020. On a pro forma basis, the transaction is expected to be accretive to Columbia’s 2020 earnings per share by approximately 16.2%, excluding one-time costs. Columbia expects initial tangible book value dilution associated with the transaction to be earned back, based on the crossover method, in less than five years.

Columbia was advised in this transaction by Boenning & Scattergood and represented by Kilpatrick Townsend & Stockton. Stewardship was advised by Sandler O’Neill + Partners and represented by McCarter & English.

Columbia Financial is a majority-owned subsidiary of Columbia Bank, a federally chartered savings bank headquartered in Fair Lawn, NJ, which offers traditional financial services to consumers and businesses.