SCRANTON, Pa., Sept. 27,
2023 /PRNewswire/ -- Peoples Financial Services Corp.
("Peoples") (Nasdaq: PFIS) and FNCB Bancorp, Inc. ("FNCB") (Nasdaq:
FNCB) today announced they have entered into a definitive agreement
under which Peoples and FNCB will combine in an all-stock strategic
merger valued at approximately $129.0
million based on a 20-day volume weighted average stock
price for Peoples' common stock of $44.13 as of September 26,
2023, resulting in an implied price per share to holders of
FNCB Common Stock of approximately $6.44 per share. Under the terms of the
definitive agreement, which was unanimously approved by the
boards of directors of both companies, upon the completion of the
merger, the FNCB shareholders would receive 0.1460 shares of
Peoples common stock for each share of FNCB common stock they
own. The pro forma post-merger shareholder ownership split
would be approximately 71% for Peoples and 29% for FNCB.
Highlights of the Transaction:
- Strategic merger that creates a bank holding company with
nearly $5.5 billion in assets and a
combined market capitalization of approximately $444 million;
- #2 ranked deposit market share in the Scranton-Wilkes
Barre metro statistical area and #5 ranked Pennsylvania-headquartered community bank
under $20 billion in total
assets;
- The headquarters of the combined holding company will be
located in Scranton, Pennsylvania
and the combined bank headquarters will be based in Dunmore, Pennsylvania;
- The combined bank holding company will operate under the name
"Peoples Financial Services Corp." and will trade under the Peoples
ticker symbol "PFIS" on the Nasdaq Stock Market. The combined bank
will operate under the "Peoples Security Bank and Trust Company"
brand; and
- Both companies have closely aligned leadership cultures
dedicated to the success of our customers, communities, employees
and shareholders.
Financial Benefits of the Merger:
The transaction is projected to deliver 59% EPS accretion to
Peoples 2025 estimated EPS and inclusive of all merger synergies,
with a tangible book value earn-back period of 2.4 years.
The transaction is projected to be 40+ accretive to FNCB's EPS.
In addition, post-closing, Peoples plans to raise its quarterly
dividend to $0.6175 per share, or to
$2.47 per share on an annual basis,
which will create no dilution for FNCB shareholders. Peoples'
post-closing annual cash dividend is projected to be 51%+
higher than current levels.
On a pro forma basis for the year 2025, the combined business is
expected to deliver top-tier operating and return metrics upon
fully phased-in integration plans, including:
- Annual Net Income of $63.6
million;
- Annual Earnings per Share of $6.29;
- Annual cash dividends per share $2.47 with a dividend payout ratio of 39%;
- Return on Average Assets of 1.11%; and
- Return on Average Tangible Common Equity of 15.8%.
The pro forma combined company financial metrics are based on
estimated combined company cost synergies, anticipated purchase
accounting adjustments, and the expected merger closing
time-frame.
Governance and Leadership:
The combined bank holding company's board of directors will have
16 directors, consisting of eight directors from Peoples and eight
directors from FNCB with Peoples' current Chair William E. Aubrey, II serving as Chair of the
combined board of directors and FNCB's current Chair, Louis DeNaples, Sr., will serve as Vice Chair of
the combined board of directors.
The combined company will be led by a highly-regarded management
team with significant financial services experience.
- Craig Best, Peoples' current
Chief Executive Officer, will continue to serve in that role for
the combined bank holding company and the combined bank.
- Gerard Champi, FNCB's current
President and Chief Executive Officer, will serve as President of
the combined bank holding company and the combined bank.
- John Anderson, Peoples' current
Chief Financial Officer, will continue to serve in that role for
the combined bank holding company and the combined bank.
- Thomas Tulaney, Peoples' current
Chief Operating Officer, will continue to serve in that role for
the combined bank holding company and the combined bank.
- James Bone Jr., CPA, FNCB's
current Chief Financial Officer, will serve as Chief Operations
Officer of the combined bank holding company and combined
bank.
- The remainder of the executive team will be drawn from both
Peoples and FNCB.
It is expected that at the one-year anniversary of the merger
closing, Craig Best will retire as
Chief Executive Officer, Gerard
Champi will be appointed to the position of Chief Executive
Officer of the combined bank holding company and the combined bank
and Thomas Tulaney will be appointed
to the office of President of the combined bank holding company and
the combined bank. Craig Best
will continue as a member of the Board of Directors of the combined
holding company and the combined bank after the one-year
anniversary of the merger.
From Craig Best, Peoples Chief
Executive Officer and Director
"This strategic merger accelerates our objective of creating a
dynamic, top-tier Pennsylvania
franchise in order to help our communities become a better place to
live and work while offering the best services possible to our
customers. Notably, this transaction will create a more diversified
and liquid balance sheet, which will enable the combined company to
accelerate its organic growth strategy. The close relationship
between both management teams and boards of directors will further
benefit us in exceeding our customers' expectations as we help them
achieve their financial goals. We are looking forward to utilizing
our combined management team's mutual financial expertise and
strengths to achieve our shared goals and vision to deliver value
to our customers and shareholders. I am extremely happy to be
working alongside Jerry who is an exceptional leader and
long-serving industry veteran."
From Gerard ("Jerry") Champi, FNCB Chief Executive Officer,
President, and Director
"We are excited to partner with Peoples with whom we share a
strong strategic vision. Due to the high degree of familiarity
between our businesses, we believe that our combined management
teams can leverage the benefits of both of our banks' strengths to
build long-term value for our customers, shareholders, communities,
and employees. FNCB and Peoples' mutual goal of constructing a
customer-first focused outlook will bolster our ability to serve
the communities in which we operate. We feel confident that this
strategic combination will unlock our ability to create the most
dynamic, well-equipped, and competitive Pennsylvania community bank franchise. We are
thrilled to have the opportunity to partner with Craig and his
team. We have a tremendous amount of respect for Craig's leadership
and the high-quality franchise that he and his team have built over
the years."
Timing and Approvals
The transaction is expected to close in the first half of 2024,
subject to satisfaction of customary closing conditions, including
regulatory approvals and shareholder approval from both Peoples and
FNCB shareholders. FNCB directors have entered into agreements with
Peoples pursuant to which they have committed to vote their shares
of FNCB common stock in favor of the merger. Peoples' directors
have entered into agreements with FNCB pursuant to which they have
committed to vote their shares of Peoples common stock in favor of
the merger. For additional information about the proposed merger of
FNCB with and into Peoples, shareholders are encouraged to
carefully read the definitive agreement that will be filed with the
Securities and Exchange Commission ("SEC") tomorrow.
Advisors
Cedar Hill Advisors, LLC acted as financial advisor to Peoples
in the transaction. D.A. Davidson & Co. acted as financial
advisor to Peoples and delivered a fairness opinion to the Board of
Directors of Peoples. Troutman Pepper Hamilton Sanders LLP served
as legal counsel to Peoples. Stephens Inc. acted as financial
advisor to FNCB and delivered a fairness opinion to the Board of
Directors of FNCB. Cozen O'Connor served as transaction legal
counsel to FNCB and Stevens & Lee served as regulatory legal
counsel to FNCB.
Investor Presentation Details
A presentation regarding the merger announcement will be filed
with the SEC and made available at the SEC's website
www.sec.gov or by accessing Peoples' website at www.psbt.com
under the "Investor Relations" link or by accessing FNCB's website
at www.fncb.com under the "About FNCB" link.
About Peoples Financial Services Corp.
Peoples Financial Services Corp. is the $3.7 billion bank holding company, headquartered
in Scranton, PA, for Peoples
Security Bank and Trust Company, an independent community bank
formed as a result of the merger between Peoples Neighborhood Bank
and Penn Security Bank & Trust Company. The combined bank
services its retail and commercial customers through twenty-eight
full-service community banking offices located within; Allegheny, Bucks, Lackawanna, Lebanon, Lehigh, Luzerne, Monroe, Montgomery, Northampton, Susquehanna and Wyoming Counties of Pennsylvania, Middlesex County in New Jersey and Broome County in New York. Learn more at www.psbt.com.
About FNCB Bancorp, Inc.
FNCB Bancorp, Inc. is the $1.9
billion bank holding company of FNCB Bank. Locally-based
since 1910, FNCB Bank continues as a premier community bank in
Northeastern Pennsylvania –
offering a full suite of personal, small business and commercial
banking solutions with industry-leading mobile, online and
in-branch products and services. FNCB currently operates through 16
community offices located in Lackawanna, Luzerne and Wayne Counties and remains dedicated to making
its customers' banking experience simply better. For more
information about FNCB please visit www.fncb.com.
Forward-looking Statements
This communication includes "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended,
with respect to the beliefs, goals, intentions, and expectations of
Peoples and FNCB regarding the proposed transaction, revenues,
earnings, earnings per share, loan production, asset quality, and
capital levels, among other matters; our estimates of future costs
and benefits of the actions we may take; our assessments of
expected losses on loans; our assessments of interest rate and
other market risks; our ability to achieve our financial and other
strategic goals; the expected timing of completion of the proposed
transaction; the expected cost savings, synergies, returns and
other anticipated benefits from the proposed transaction; and other
statements that are not historical facts.
Forward–looking statements are typically identified by such
words as "believe," "expect," "anticipate," "intend," "outlook,"
"estimate," "forecast," "project," "will," "should," and other
similar words and expressions, and are subject to numerous
assumptions, risks, and uncertainties, which change over time.
These forward-looking statements include, without limitation, those
relating to the terms, timing and closing of the proposed
transaction.
Additionally, forward–looking statements speak only as of the
date they are made; and except as may be required by law, Peoples
and FNCB do not assume any duty, and do not undertake, to update
such forward–looking statements, whether written or oral, that may
be made from time to time, whether as a result of new information,
future events, or otherwise. Furthermore, because forward–looking
statements are subject to assumptions and uncertainties, actual
results or future events could differ, possibly materially, from
those indicated in or implied by such forward-looking statements as
a result of a variety of factors, many of which are beyond the
control of Peoples and FNCB. Such statements are based upon the
current beliefs and expectations of the management of Peoples and
FNCB and are subject to significant risks and uncertainties outside
of the control of the parties. Caution should be exercised against
placing undue reliance on forward-looking statements. The factors
that could cause actual results to differ materially include the
following: the occurrence of any event, change or other
circumstances that could give rise to the right of one or both of
the parties to terminate the definitive merger agreement between
Peoples and FNCB; the outcome of any legal proceedings that may be
instituted against Peoples or FNCB; the possibility that the
proposed transaction will not close when expected or at all because
required regulatory, shareholder or other approvals are not
received or other conditions to the closing are not satisfied on a
timely basis or at all, or are obtained subject to conditions that
are not anticipated (and the risk that required regulatory
approvals may result in the imposition of conditions that could
adversely affect the surviving corporation or the expected benefits
of the proposed transaction); the ability of Peoples and FNCB to
meet expectations regarding the timing, completion and accounting
and tax treatments of the proposed transaction; the risks related
to capital actions of Peoples, FNCB and the combined entity,
including related to actions concerning dividends; the risk that
any announcements relating to the proposed transaction could have
adverse effects on the market price of the common stock of either
or both parties to the proposed transaction; the possibility that
the anticipated benefits of the proposed transaction will not be
realized when expected or at all, including as a result of the
impact of, or problems arising from, the integration of the two
companies or as a result of the strength of the economy and
competitive factors in the areas where Peoples and FNCB do
business; the risks related to Peoples and FNCB not achieving their
estimated financial performance; the risks related to changes in
the interest rate environment, including the recent increases in
the Board of Governors of the Federal Reserve System benchmark rate
and duration at which such increased interest rate levels are
maintained, which could adversely affect Peoples' and FNCB's
revenue and expenses, the value of assets and obligations, and the
availability and cost of capital and liquidity; risks related to
the uncertainty in U.S. fiscal and monetary policy, including the
interest rate policies of the Board of Governors of the Federal
Reserve System; risks related to the volatility and disruptions in
global capital and credit markets; risks related to the movements
in interest rates; risks related to reform of LIBOR, the credit
risks of lending activities, which may be affected by deterioration
in real estate markets and the financial condition of borrowers,
and the operational risk of lending activities, including the
effectiveness of Peoples' and FNCB's underwriting practices and the
risk of fraud; risks related to the fluctuations
in the demand for loans; risk related to the ability to develop and
maintain a strong core deposit base or other low cost funding
sources necessary to fund Peoples' and FNCB's activities
particularly in a rising or high interest rate environment; risks
related to the rapid withdrawal of a significant amount of deposits
over a short period of time; the risk related to the impact of
other bank failures or other adverse developments at other banks on
general investor sentiment regarding the stability and liquidity of
banks; risks related to the impact of natural disasters or health
epidemics; risks related to data security and privacy, including
the impact of any data security breaches, cyberattacks, employee or
other internal misconduct, malware, phishing or ransomware,
physical security breaches, natural disasters, or similar
disruptions; risks related to volatility in the trading price of
Peoples' and FNCB's common stock; certain restrictions during the
pendency of the proposed transaction that may impact the parties'
ability to pursue certain business opportunities or strategic
transactions; the possibility that the transaction may be more
expensive to complete than anticipated, including as a result of
unexpected factors or events; diversion of management's attention
from ongoing business operations and opportunities; the possibility
that the parties may be unable to achieve expected synergies and
operating efficiencies in the merger within the expected timeframes
or at all and to successfully integrate FNCB's operations and those
of Peoples; such integration may be more difficult, time-consuming
or costly than expected; revenues following the proposed
transaction may be lower than expected; Peoples' and FNCB's success
in executing their respective business plans and strategies and
managing the risks involved in the foregoing; the dilution caused
by Peoples' issuance of additional shares of its capital stock in
connection with the proposed transaction; effects of the
announcement, pendency or completion of the proposed transaction on
the ability of Peoples and FNCB to retain customers and retain and
hire key personnel and maintain relationships with their suppliers,
and on their operating results and businesses generally; the impact
of continuing inflation and risks related to the potential impact
of general economic, political and market factors on the companies
or the proposed transaction and other factors that may affect
future results of Peoples and FNCB; and the other factors discussed
in the "Risk Factors" section of Peoples' and FNCB's Annual Reports
on Form 10–K for the year ended December 31,
2022, in the "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" sections
of each of Peoples' and FNCB's Quarterly Reports on Form 10–Q for
the quarters ended March 31, 2023 and
June 30, 2023, and other reports
Peoples and FNCB file with the SEC.
Additional Information and Where to Find It
In connection with the proposed transaction, Peoples will file a
registration statement on Form S-4 with the SEC. The registration
statement will include a joint proxy statement of Peoples and FNCB,
which also constitutes a prospectus of Peoples, that will be sent
to shareholders of Peoples and shareholders of FNCB seeking certain
approvals related to the proposed transaction.
The information contained herein does not constitute an offer to
sell or a solicitation of an offer to buy any securities or a
solicitation of any vote or approval, nor shall there be any sale
of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. INVESTORS AND
SHAREHOLDERS OF PEOPLES AND FNCB AND THEIR RESPECTIVE AFFILIATES
ARE URGED TO READ, WHEN AVAILABLE, THE REGISTRATION STATEMENT ON
FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS TO BE INCLUDED
WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER
RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION
WITH THE PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT PEOPLES, FNCB AND THE PROPOSED TRANSACTION.
Investors and shareholders will be able to obtain a free copy of
the registration statement, including the joint proxy
statement/prospectus, as well as other relevant documents filed
with the SEC containing information about Peoples and FNCB, without
charge, at the SEC's website www.sec.gov. Copies of documents filed
with the SEC by Peoples will be made available free of charge in
the "Investor Relations" section of Peoples'
website, www.psbt.com under the heading "SEC Filings".
Copies of documents filed with the SEC by FNCB will be made
available free of charge in the "About FNCB" section of FNCB's
website, www.fncb.com.
Participants in Solicitation
Peoples, FNCB, and certain of their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction
under the rules of the SEC. Information regarding Peoples'
directors and executive officers is available in its definitive
proxy statement, which was filed with the SEC on April 5, 2023, and certain other documents filed
by Peoples with the SEC. Information regarding FNCB's directors and
executive officers is available in its definitive proxy statement,
which was filed with the SEC on April 10,
2023, and certain other documents filed by FNCB with the
SEC. Other information regarding the participants in the
solicitation of proxies in respect of the proposed transaction and
a description of their direct and indirect interests, by security
holdings or otherwise, will be contained in the joint proxy
statement/prospectus and other relevant materials to be filed with
the SEC. Free copies of these documents, when available, may be
obtained as described in the preceding paragraph.
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SOURCE Peoples Financial Services Corp.