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Citizens Financial Services acquiring MidCoast Community Bancorp

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Citizens Financial Services acquiring MidCoast Community Bancorp

Mansfield, Pa.-based Citizens Financial Services Inc. and Wilmington, Del.-based MidCoast Community Bancorp Inc. signed an agreement whereby MidCoast will merge with and into Citizens.

The agreement also provides that MidCoast's unit, MidCoast Community Bank, will merge with and into Citizens' unit, First Citizens Community Bank.

Under the deal, each holder of MidCoast's class A and class B common shares will be entitled to elect to receive $6.50 in cash, without interest; or Citizens' common shares based on a fixed exchange ratio of 0.1065 of Citizens' common stock for each MidCoast class A and class B common share; or a combination of cash and stock in exchange for each share of MidCoast class A and class B common stock owned at the closing of the transaction.

Based on the per-share cash offer and MidCoast's class A and class B common shares outstanding as of April 2018, S&P Global Market Intelligence calculates the deal value at about $30.0 million.

Elections are subject to proration and allocation to ensure that 75% of the outstanding MidCoast class A and class B common shares are exchanged for Citizens common shares and the remaining 25% are exchanged for cash.

The agreement also provides that upon the transaction's closing, which is expected in the first half of 2020, Citizens will create a corporate advisory board to serve the markets in which MidCoast Community Bank operates and will invite a majority of MidCoast's directors to serve on it.

On an aggregate basis, S&P Global Market Intelligence calculates the deal is 117.70% of common equity and tangible common equity and 12.57x earnings. The deal value is 11.19% of assets, 14.11% of deposits, and the tangible book premium to core deposits ratio is 3.00%.

The deal has a one-day premium of 2.59% and a one-month discount of 8.65%.

S&P Global Market Intelligence valuations for bank and thrift targets in the Mid-Atlantic region between Sep. 18, 2018, and Sep. 18, 2019, averaged 140.27% of book and 151.49% of tangible book and had a median of 17.15x last-12-months earnings, on an aggregate basis.

Citizens will enter Kent County, Del., with one branch to be ranked tenth with a 1.71% share of approximately $2.13 billion in total market deposits, will enter New Castle County, Del., with two branches to be ranked No. 14 with a 0.06% share of approximately $300.91 billion in total market deposits.

If the transaction is terminated under certain circumstances, MidCoast has agreed to pay Citizens a fee of $1.2 million.

Janney Montgomery Scott LLC is acting as financial adviser to Citizens and has rendered a fairness opinion to its board. Luse Gorman PC is the company's legal counsel. Boenning & Scattergood Inc. is acting as financial adviser to MidCoast and has rendered a fairness opinion to its board, while Barley Snyder LLP is its legal counsel.

To use S&P Global Market Intelligence's branch analytics tools to compare market overlap, click here. To create custom maps, click here.

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