DeWitt, N.Y.-based Community Bank System Inc. agreed to acquire Hornell, N.Y.-based Steuben Trust Corp. in a cash-and-stock deal valued at around $106.8 million.
Steuben Trust shareholders will receive a combination of $12.60 in cash and 0.8054 of a Community Bank System common share for each Steuben Trust common share they own. The deal values Steuben Trust at around $63.00 per share and represents around 167% of the company's tangible book value as of June 30.
Community Bank System had assets of around $11.6 billion and Steuben Trust had assets of around $580 million as of June 30, according to a news release. The combined company is expected to have more than $12.0 billion in assets upon deal closing, expected in the second quarter of 2020.
S&P Global Market Intelligence calculates the deal value to be 170.6% of common equity, 170.8% of tangible common equity and 15.5x earnings, on an aggregate basis. The deal value is 18.87% of assets and 22.46% of deposits, and the tangible book premium to core deposits ratio is 11.55%.
S&P Global Market Intelligence valuations for bank and thrift targets in the Mid-Atlantic region between Oct. 21, 2018, and Oct. 21, 2019, averaged 138.90% of book and 147.51% of tangible book and had a median of 15.60x last-12-months earnings, on an aggregate basis.
The deal will enable Community Bank System to expand in New York by 15 branches. These will be ranked no. 50 with a 0.28% share of approximately $2.65 trillion in total market deposits.
Community Bank System expects the deal to be around 8 cents to 9 cents per share accretive to the first full year of GAAP earnings and 9 cents to 10 cents per share accretive to cash earnings, excluding one-time transaction costs.
D.A. Davidson & Co. Inc. is Community Bank System's exclusive financial adviser in the deal, while Cadwalader Wickersham & Taft LLP is the legal adviser. PNC FIG Advisory is Steuben Trust's exclusive financial adviser in the deal and Pillar Aught LLC is the legal counsel.
Community Bank System also reported its earnings for the third quarter, recording adjusted net income of $45.8 million, or 88 cents per share, up from $44.0 million, or 84 cents per share, in the year-ago period.
The S&P Global Market Intelligence consensus normalized EPS estimate for the quarter was 81 cents.