On the Move
Merchants Bank to Acquire NUVO Bank & Trust Co.
M. Dale Janes says customers won’t feel any impact when NUVO Bank & Trust becomes a subsidiary of Merchants Bank later this year — no negative impacts, anyway.
“From our point of view, this is an outstanding marriage, for us and Merchants,” Janes said of the agreement announced last week, in which Merchants plans to acquire Springfield-based NUVO for about $21.8 million in stock and cash, representing $7.15 per share.
“We’re a good bank; we’re growing, and we’re doing well,” said Janes, NUVO’s CEO, who will become regional president under the deal. “But Merchants has a wider array of products for businesses and consumers, like a trust division with investment-management options.
“But, most importantly, we’re a small-business, mid-market lender, and this allows us to bring more capital and more loans to the community, and approach larger businesses,” he told BusinessWest. “Our legal lending limit is $3 million, and our in-house limit is $2.5 million. Their comfort level is around $20 million. That’s a big, big difference for us. They’re a great-performing bank, and they’re really good folks who understand community banking, and they want to be in Springfield and Western Mass.”
NUVO, which launched eight years ago, focuses on providing business loans, deposits, and cash-management services to small and medium-sized businesses and individuals in Western Mass. On Dec. 31, 2014, NUVO reported approximately $153 million in assets, $139 million in loans, and $134 million in deposits. Merchants had approximately $1.7 billion in total assets as of Dec. 31, 2014.
“Merchants is a 166-year-old community bank, and NUVO is not quite that old,” Geoffrey Hesslink, Merchants’ president and CEO, told BusinessWest, with more than a bit of understatement. “But it’s a very similar business. It’s a commercially oriented business, and we were impressed with their track record, impressed with their management team, and what they’ve done over the past eight years, while going through a tough economic cycle.”
When leaders of Vermont-headquartered Merchants and NUVO’s leaders, including Janes and President and Chief Loan Officer Jeffrey Sattler, sat down to discuss a possible partnership, “it occurred to us that, by joining forces, we could make NUVO, this great bank, even better, and grow it even faster in its core commercial business, but also add some ancillary business,” Hesslink continued. “It was really a cultural fit, and the management expertise was a major attractor for us — and, of course, the Springfield market has a breadth and depth that appeals to us.”
Michael Tuttle, president and CEO of Merchants Bancshares, added that the market has witnessed a great deal of change recently, but he too is impressed with the NUVO team and the growth opportunity presented by the bank’s market. “We plan to invest in and grow the NUVO team and business. While operational areas will be combined, the value created in this merger will be more attributable to revenue growth than expense reduction.”
The agreement has been approved by both institutions’ boards of directors. The closing is anticipated to occur during the fourth quarter of 2015, subject to approval by NUVO shareholders, receipt of required regulatory approvals, and other customary closing conditions.
NUVO’s chairman, Donald Chase, is expected to join the board of directors of Merchants Bank. In addition, Merchants has entered into employment agreements with Janes and Sattler. NUVO will remain a distinct brand and operate as a division of Merchants Bank.
“There is tremendous opportunity in our market, and we believe that we can best capitalize on it by leveraging the liquidity, expanded lending limits, lower-cost deposit base, and broader product range of a strong partner like Merchants,” Chase said. “Additionally, Merchants’ publicly traded stock and dividends will be attractive to our shareholders. We have admired Merchants for some time, and getting to know their team better has reinforced the fact that we share common values and a similar operating philosophy.”
While Janes becomes regional president, Sattler will be managing director and remain the bank’s chief lender in the Greater Springfield market. “But neither of us is concerned about titles,” Janes told BusinessWest. “All we’re concerned about is being able to continue to grow at a better pace, and we’re excited about that.
“There aren’t any negatives for customers,” he reiterated. “The lending team is staying in place, the leadership team is staying, and almost all the employees will be here. This is not a slash-and-burn acquisition; this is about growth.”
— Joseph Bednar