In Pennsylvania, Emlenton-based Emclaire Financial Corp. agreed to acquire Reynoldsville-based Community First Bancorp Inc. in a stock-and-cash deal valued at approximately $17 million.
As part of the merger, Community First Bank will merge into Emclaire Financial's subsidiary, Farmers National Bank of Emlenton.
Community First shareholders will receive 1.2008 shares of Emclaire Financial common stock, par value $1.25 per share, and $6.95 in cash for each share of Community First common stock upon completion of the merger. In addition, about $4.1 million of outstanding shares of Community First Bank series A and series B non-cumulative perpetual preferred stock, other than dissenting shares, will be exchanged on a one-for-one basis for shares of two newly created series of Emclaire Financial non-cumulative preferred stock.
On a per-share basis, SNL calculates that the deal value is 190.9% of book; and is 13.63% of assets and 16.76% of deposits.
SNL valuations for bank and thrift targets in the mid-Atlantic region between May 24, 2017, and May 24, 2018, averaged 141.02% of book, 145.35% of tangible book and had a median of 35.98x last-12-months earnings, on a per-share basis.
The deal has a one-day premium of 115.59%, based on Community First Bancorp's $22.30 closing price as of May 23, and a one-month premium of 115.59%, based on its $22.30 closing price as of April 24.
The transaction is expected to be accretive to Emclaire Financial's earnings per share in the first full year of combined operations, excluding one-time charges.
The merger is expected to close in the fourth quarter, subject to regulatory approvals and the approval of shareholders of Community First and Community First Bank. All directors and executive officers of Community First have agreed to vote their shares in favor of the merger.
At March 31, Emclaire Financial had approximately $755.8 million in consolidated assets, $666.7 million in deposits, $584.5 million in net loans and $58.9 million in shareholders' equity. At March 31, Community First had about $130.6 million in assets, $106.6 million in deposits, $112.8 million in net loans and $13.3 million in total equity.
The combined company will have approximately $900 million in total assets and will broaden Emclaire Financial's presence in Clarion and Jefferson counties in Pennsylvania and increase the buyer's market capitalization to more than $90 million.
SNL data shows that in Pennsylvania, Emclaire Financial will expand in Jefferson County by three branches to be ranked third with a 14.09% share of about $887.1 million in total market deposits, and will expand in Clarion County by one branch to be ranked fourth with a 16.95% share of roughly $790.7 million in total market deposits.
Community First President and CEO Henry Deible, along with Henry Deible II, a director of Community First, will join the boards of Emclaire Financial and Farmers National Bank of Emlenton upon completion of the deal.
If the merger agreement is terminated, Community First may be required to pay Emclaire Financial a termination fee of $750,000 in certain circumstances.
Silver Freedman Taff & Tiernan LLP acted as legal counsel to Emclaire Financial in the transaction and Raymond James & Associates Inc. served as financial adviser. Bybel Rutledge LLP acted as legal counsel to Community First, and Commonwealth Advisors Inc. served as financial adviser.
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