OceanFirst Financial, parent company of OceanFirst Bank, and Partners Bancorp, parent company of The Bank of Delmarva (and its division, Liberty Bell Bank), headquartered in Seaford, DE, and Virginia Partners Bank (and its division, Maryland Partners Bank), headquartered in Fredericksburg, VA, entered into a definitive agreement and plan of merger pursuant to which Partners will merge into OceanFirst, with OceanFirst surviving. Upon completion of the Partners merger, The Bank of Delmarva and Virginia Partners Bank will each successively merge into OceanFirst Bank, with OceanFirst Bank surviving each bank merger.

Based on Sept. 30 results and the impact of purchase accounting, the combined company is expected to have, pro forma, approximately $13.5 billion in assets, $9.3 billion in loans and $11.2 billion in deposits. The proposed acquisition of Partners would expand OceanFirst’s footprint into Delaware, Maryland, Virginia and the Washington, D.C., metro area. The transaction is expected to result in approximately 10% earnings per share accretion in 2023 (the first full year of fully phased-in synergies).

Partners is the multi-bank holding company that owns The Bank of Delmarva and Virginia Partners Bank. At Sept. 30, Partners had $1.64 billion in assets, $1.11 billion in loans, $1.44 billion in deposits and $139.5 million in stockholders’ equity.

Under the terms of the merger agreement, which was approved by the boards of directors of both companies, in exchange for each share of Partners common stock, Partners stockholders may elect to receive $10 in cash or 0.4512 shares of OceanFirst common stock. The merger agreement provides that only up to 40% of Partners common stock will be exchanged for cash and the remaining shares exchanged for OceanFirst common stock, subject to proration. Assuming 80% of the shares of Partners common stock are converted into OceanFirst common stock and 20% of the shares of Partners common stock are converted into cash, the aggregate consideration to be paid in exchange for the Partners common stock will consist of approximately 6.5 million shares of OceanFirst common stock and $37 million in cash. Certain stockholders of Partners owning in the aggregate approximately 44% of Partners’ outstanding common stock have entered into support agreements with OceanFirst pursuant to which they have agreed to vote in favor of the merger agreement.

“The banks that comprise Partners Bancorp are each strong organizations operating community commercial banking models and have demonstrated strong growth in their markets,” Christopher D. Maher, chairman and CEO of OceanFirst, said. “Joining the OceanFirst family will allow these highly professional commercial bankers to continue to build new relationships while leveraging the technology and operating efficiency offered by our company.

“The addition of the customers and employees of The Bank of Delmarva and Virginia Partners Bank, along with their respective operating divisions of Liberty Bell Bank and Maryland Partners Bank, joining our OceanFirst team provides an exciting opportunity to expand our digitally-focused commercial banking franchise further into Delaware, Maryland, Virginia and the Washington, D.C., metro area. We believe the foundation and core values of OceanFirst are consistent with the teams at the Partners Bancorp banks and together we can achieve enhanced value for our stockholders while delivering an extraordinary experience for our customers.”

“This partnership creates a powerful and innovative financial services provider better able to serve its clients and communities of today and tomorrow,” Lloyd B. Harrison III, CEO of Partners, said. “The team at OceanFirst has built and maintains a high-quality banking franchise, and there is no better team with which to unite to deliver community-style banking and to capitalize on the opportunities presented by an evolving industry.”

“We are thrilled to be partnering with OceanFirst in this merger. As part of a larger and more diverse institution, our employees will have additional opportunities to grow and develop, our customers will have greater access to expanded banking services and our shareholders should benefit from our increased profitability, liquidity and increased market capitalization,” John W. Breda, president and COO of Partners, said.

The merger is expected to close in the first half of 2022, subject to Partners receiving the requisite approval of its stockholders, receipt of all required regulatory approvals and fulfillment of other customary closing conditions.

Raymond James & Associates served as financial advisor to OceanFirst and Skadden, Arps, Slate, Meagher & Flom served as OceanFirst’s legal counsel. Piper Sandler served as financial advisor to Partners and Troutman Pepper Hamilton Sanders served as Partners’ legal counsel.