A Naugatuck residential lender has agreed to merge with a New Haven commercial lender in a stock deal valued at $19.5 million.
Under the deal announced Tuesday, Naugatuck Valley Financial Corp. , operator of Naugatuck Valley Savings & Loan, would absorb Southern Connecticut Bancorp, parent of The Bank of Southern Connecticut. The deal is expected to close in the third quarter, once regulators, shareholders and depositors approve.
Founded in 1922, Naugatuck Valley Financial has $542.3 million in assets and 10 banking offices in the Naugatuck Valley.
Southern Connecticut Bancorp launched in 2000 as a lender to small- to medium-sized businesses. It has $137.9 million in assets and four offices in the New Haven area.
In connection with the merger, Naugatuck Valley Mutual would convert from an institution partly owned by its depositors to a stock-owned institution, selling to the public a 60 percent stake in the company.
Naugatuck Valley CEO John C. Roman said the acquisition gives his institution “the unique opportunity to utilize a portion of the capital raised to strategically expand into a contiguous market area.”
John H. Howland, Southern Connecticut’s president and chief operating officer, said his bank sought out a partner “that would continue and expand upon our commitment to our customers in this marketplace.”
As part of the transaction Naugatuck Valley Savings and Loan will become the wholly-owned subsidiary of a new stock holding company, Newco.
Southern Connecticut Bancorp shareholders can choose between cash, shares of Newco common stock, or a combination.
Naugatuck Valley Financial has hired law firm Kilpatrick Stockton LLP as its legal counsel and Ostrowski & Co. Inc. as its financial advisor.
Southern Connecticut Bancorp retained Day Pitney LLP as legal counsel and Stifel, Nicolaus & Co. Inc. and Northeast Capital & Advisory Inc. as financial advisors.
