On Thursday, Keefe, Bruyette & Woods updated their outlook on shares of Independent Bank Corp (NASDAQ: NASDAQ:INDB), increasing the price target to $82 from $77 while maintaining a Market Perform rating.
The adjustment follows the announcement of Independent (LON:IOG) Bank Corp's acquisition of EBTC, which holds assets worth $4.7 billion, in a deal valued at $562 million. This transaction, which is a mix of cash and stock, is expected to close in the second half of 2025.
The analyst from Keefe, Bruyette & Woods commented on the acquisition as a positive move both financially and strategically, noting that it is projected to add 16% to the earnings per share (EPS) by 2026 and result in a tangible book value (TBV) dilution of 9.8%. This dilution is anticipated to be earned back within approximately three years, including a predicted subordinated debt raise of $250 million.
The deal is seen favorably because it promises double-digit EPS accretion and a reasonable period for earning back the dilution. It is expected to boost Independent Bank Corp's return on tangible common equity (ROTCE) to above-peer levels of 15% for the year 2026. EBTC's strong performance, with a year-to-date return of 38.63% and trading near its 52-week high, adds to the deal's appeal.
InvestingPro subscribers can access additional insights and metrics about both companies' valuations and growth potential. Moreover, the acquisition will enable Independent Bank Corp to expand into New Hampshire markets without significantly altering its commercial real estate concentration.
In light of these factors, Keefe, Bruyette & Woods has raised their estimates and set a new price target of $82. This target is based on 1.85 times the pro forma TBV and 16 times and 12 times the estimated earnings for 2025 and 2026, respectively. The firm has reiterated its Market Perform rating for Independent Bank Corp's stock.
In other recent news, Enterprise Bancorp has announced a quarterly dividend of $0.24 per share, reflecting the company's ongoing financial activities and commitment to shareholder value. The dividend is scheduled for payment in December 2024 to shareholders of record as of November 2024.
In a significant shift within its executive team, Enterprise Bancorp's long-serving Chief Operating Officer, Stephen J. Irish, is set to resign and transition to a Technology and Operations Advisor role before retiring in March 2025. Brian M. Collins, a seasoned leader within the Bank, will succeed Irish as the COO.
In conjunction with these executive changes, the Bank's board has approved an amendment to the Supplemental Executive Retirement and Deferred Compensation Plan (SERP) 2024 Addendum.
Furthermore, Enterprise Bancorp has appointed David Lynch as the new Managing Director and Chief Investment Officer of Enterprise Wealth Management. These recent developments highlight the ongoing activities at Enterprise Bancorp as it continues to evolve its leadership structure and strengthen its wealth management division.
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