The Federal Deposit Insurance Corp. has approved a planned merger of Naugatuck Valley Savings and Loan into Liberty Bank, the banks announced Tuesday.
The transition remains subject to the approval of the state Department of Banking and Naugatuck Valley Savings and Loan stockholders, which are slated to vote on the deal Oct. 8.
Naugatuck shareholders will be entitled to receive $11 in cash for each common share of the bank’s stock.
Naugatuck Valley Financial Corp., parent of the Naugatuck bank announced in early June that they had reached an agreement to merge, in a deal estimated at $78 million. The deal, expected to close in the first quarter of 2016, has been unanimously approved by both banks’ boards.
The proposed merger was announced after NVSL had gotten its financial house in order under William Calderara, the bank’s president and chief executive officer hired in September 2012 to turn around the struggling bank.
In April, the bank reported net income of $1 million, or 10 cents per diluted share, for 2014, after selling off $20 million in bad loans in 2013 and $11 million in 2014. It also posted net income of $660,000, or 10 cents per diluted share, for the year’s fourth quarter, up from net loss of $2.4 million, or 36 cents per diluted share, a year earlier.
In May, the U.S. Treasury Department’s Office of the Comptroller of the Currency notified Naugatuck Valley Financial it had ended a formal agreement signed in January 2012 requiring the bank to improve its practices related to asset quality, management and credit risk. The OCC also lifted a requirement imposed in January 2013 that it maintain strict minimal capital levels.
Largely due to developing the bad loan portfolio, the bank recorded net losses of $15.3 million, or $2.31 per diluted share, for 2012 and $8.8 million, or $1.33 per diluted share, for 2013.
NVSL, founded in 1922, is a federal stock savings bank with assets of about $500 million. The bank has nine branches in eight towns — two in Naugatuck, and single branches in Beacon Falls, Cheshire, Derby, Seymour Shelton, Southbury and Waterbury.
Liberty Bank, founded in 1825 and the state’s oldest chartered bank, is a mutual bank with $4 billion in assets and $600 million in capital. The bank has 50 branches in Connecticut, including in Bristol, Cheshire and Southington.