Connecticut-based SI Financial buying Rhode Island-based Newport Bancorp in $61.3M deal

Willimantic, Conn.-based SI Financial Group Inc. ($953.2 million), the parent of Savings Institute Bank and Trust Co., agreed to acquire Newport, R.I.-based Newport Bancorp Inc. ($449.4 million), the holding company for Newport Federal Savings Bank.

The transaction is valued at $17.55 per share, or approximately $61.3 million in the aggregate, based upon SI Financial's five-day average closing price of $11.60 on March 4.

According to the news release, the contemplated deal represents 116% of Newport Bancorp's tangible book value at the end of 2012, plus a core deposit premium of 3.0%.

Under the terms of the definitive merger agreement, SI Financial will offer stockholders of Newport Bancorp the right to exchange their shares for a choice of $17.55 in cash per share, or 1.5129 shares of SI Financial common stock per share, subject to proration procedures under which 50% of all outstanding Newport Bancorp common shares will be converted into

SI Financial common stock and the rest into cash, according to a March 5 deal announcement.

SI Financial expects that the acquisition, excluding onetime transaction expenses, will have an immediately accretive impact on its EPS. The integration of Newport Bancorp will add approximately $449.4 million in assets, $355.0 million in loans and $289.7 million in deposits to its existing businesses before acquisition accounting adjustments. Additionally, the merger would extend SI Financial's depositor footprint into Rhode Island, where it will add locations in Newport and Washington counties, while adding one branch in Stonington, Conn.

The deal should close in the third quarter, subject to further approvals from stockholders and regulators. 

Keefe Bruyette & Woods served as financial adviser to SI Financial, while Sandler O'Neill & Partners LP advised Newport Bancorp. Kilpatrick Townsend & Stockton LLP acted as SI Financial's legal counsel, and Luse Gorman Pomerenk & Schick PC represented Newport Bancorp. Additionally, Keefe Bruyette & Woods and Northeast Capital & Advisory Inc. rendered fairness opinions to SI Financial. Sandler O'Neill & Partners rendered a fairness opinion to Newport Bancorp.

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