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Evans Bancorp buying New York-based FSB Bancorp in $34.7M stock-and-cash deal

Hamburg, N.Y.-based Evans Bancorp Inc. agreed to acquire Fairport, N.Y.-based FSB Bancorp Inc. for $17.80 per share for total consideration of about $34.7 million.

Under the terms of the deal, FSB Bancorp stockholders can elect to receive either 0.4394 of an Evans Bancorp common share or $17.80 in cash for each FSB Bancorp common share, subject to possible adjustment and 50/50 proration.

The merger consideration represents an 8% premium to FSB Bancorp's tangible book value as of Sept. 30 and a 5.9% premium to FSB Bancorp's closing share price on Dec. 18. Evans Bancorp's management expects the deal to be 4.7% accretive to 2021 earnings with a tangible book value earnback period of approximately 3.5 years, according to a news release.

On a per-share basis, S&P Global Market Intelligence calculates the deal value to be 108.4% of book and tangible book. The deal value is also 10.71% of assets and 14.93% of deposits, and the tangible book premium to core deposits ratio is 1.84%.

S&P Global Market Intelligence valuations for bank and thrift targets in the Mid-Atlantic region between Dec. 19, 2018, and Dec. 19, 2019, averaged 149.52% of book and 158.75% of tangible book and had a median of 16.27x last-12-months earnings, on a per-share basis.

The stock-and-cash deal is expected to close in the second quarter of 2020.

FSB Bancorp and its unit Fairport Savings Bank will merge into Evans Bancorp and its subsidiary Evans Bank NA at the closing of the transaction.

As of Sept. 30, Evans Bancorp had $1.46 billion in assets, while FSB Bancorp had $324.8 million in assets, according to S&P Global Market Intelligence data. Based on information as of Sept. 30, the combined company will have 20 financial centers with approximately $1.8 billion in total assets, according to the news release.

Upon completion of the deal, Evans Bancorp will enter Monroe County, N.Y., with five branches to be ranked ninth with a 1.63% share of about $14.29 billion in total market deposits, according to S&P Global Market Intelligence data.

Keefe Bruyette & Woods Inc. served as financial adviser and Covington & Burling LLP acted as legal adviser to Evans Bancorp. Sandler O'Neill & Partners LP served as financial adviser and Luse Gorman PC acted as legal adviser to FSB Bancorp.

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