People’s Bank acquires Mass. and N.Y. lenders

Bridgeport-based People’s United Bank made a splash Thursday, announcing the acquisition of two separate banks in New York and Massachusetts, which will add nearly $3 billion in assets to the banking company.

The lenders People’s has acquired are Bank of Smithtown, a subsidiary of Smithtown Bancorp, based in Hauppauge, N.Y. and RiverBank, a subsidiary of LSB Corp. based in North Andover, Mass.

The Smithtown Bancorp deal is valued at about $60 million, with about half of that amount being paid in cash and the rest in common stock.

The LSB acquisition is an all-cash transaction valued at $96 million.

Smithtown has $2.43 billion in assets, total deposits of $1.87 billion, and 30 branches, 29 of which are on Long Island and one in New York City.

LSB has $807 million in assets, total deposits of $504 million and seven branches, five of which are in the greater Boston area, and two in southern New Hampshire.

“Both banks will be valuable additions to the People’s United franchise,” said Jack Barnes, interim chief executive officer of People’s United.

People’s United, which is the parent company to People’s Bank, has been under pressure from shareholders to make acquisitions, amid billions of dollars of cash it has been holding onto.

In April, People’s pushed out its former CEO Philip R. Sherringham for moving too slowly to build up the lender through acquisitions.

Earlier this year the bank did acquire Massachusetts-based Butler Bank, adding about $237 million in assets and four bank branches to its portfolio.

In terms of the latest deals, both transactions, which will require regulatory and shareholder approval, are expected to close in the fourth quarter 2010.

Smithtown Bancorp, shareholders will receive $30 million in cash and about 2.1 million shares of People’s common stock at closing.

Based on the average closing price of People’s for the five-day period ended July 14, the transaction is valued at $4 per Smithtown Bancorp share.

LSB Corporation shareholders will receive $96 million in cash at closing. The transaction is valued at $21 per LSB Corporation share.

Morgan Stanley acted as financial advisor and Simpson Thacher & Bartlett acted as legal counsel to People’s United in both transactions.