Canfield, Ohio-based Farmers National Banc Corp. will acquire Newbury, Ohio-based Maple Leaf Financial Inc. in a deal valued at roughly $39.6 million, based on Farmers National's Aug. 29 closing price of $13.73.
Maple Leaf shareholders may choose to receive either $640 per share in cash or 45.5948 Farmers National common shares, with the total deal consideration mix to be evenly split in cash and stock. Maple Leaf unit Geauga Savings Bank will be merged into Farmers National Banc unit Farmers National Bank of Canfield upon completion of the transaction, which is expected to occur in the fourth quarter of 2019 or first quarter of 2020.
Farmers National expects the deal to be accretive to EPS in the combined company's first full year of operation, excluding one-time deal costs, and it also expects the earn-back period for tangible book value dilution to be just under two years using the crossover method. The company expects its banking unit to exceed "well-capitalized" regulatory thresholds following closing of the deal.
S&P Global Market Intelligence calculates the deal is 120.0% of common equity and 120.0% of tangible common equity and 43.0x earnings on an aggregate basis. The deal value is 14.31% of assets, 20.48% of deposits and has a tangible book premium to core deposits ratio of 7.42%.
S&P Global Market Intelligence valuations for bank and thrift targets in the Midwest region between Aug. 30, 2018, and Aug. 30, 2019, averaged 172.87% of book and 181.24% of tangible book and had a median of 19.82x last-12-months earnings on an aggregate basis.
Farmers National had total assets of $2.41 billion as of June 30, according to S&P Global Market Intelligence data. Maple Leaf had total assets of $277.8 million, including gross loans of $186.4 million, deposits of $191.0 million and equity of $32.9 million as of June 30, according to a news release. The combined company is expected to have roughly $2.7 billion in assets and 42 locations across Ohio and Western Pennsylvania.
Farmers National will expand in Cuyahoga County, Ohio, by one branch to be ranked No. 18 with a 0.14% share of approximately $53.54 billion in total market deposits. It will enter Geauga County, Ohio, with one branch to be ranked eighth with a 5.03% share of approximately $2.45 billion in total market deposits.
Raymond James & Associates Inc. is Farmers National's financial adviser, while Vorys Sater Seymour and Pease LLP is the legal counsel. Boenning & Scattergood Inc. is Maple Leaf's financial adviser and Ulmer & Berne LLP is the company's legal counsel.
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