Peoples Financial Services Corp. (Peoples) and FNCB Bancorp, Inc. (FNCB) have reached a definitive agreement for a strategic merger valued at approximately $129.0 million. The merger will be an all-stock transaction, with FNCB shareholders receiving 0.1460 shares of Peoples common stock for each share of FNCB common stock they own. Upon completion of the merger, the pro forma post-merger ownership split will be 71% for Peoples and 29% for FNCB.
The merger will create a bank holding company with nearly $5.5 billion in assets and a combined market capitalization of approximately $444 million. The new company will have the #2 ranked deposit market share in the Scranton-Wilkes Barre metro statistical area and will be the #5 ranked Pennsylvania-headquartered community bank under $20 billion in total assets. The headquarters of the merged company will be located in Scranton, Pennsylvania, and the 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 ticker symbol “PFIS” on the Nasdaq Stock Market. The combined bank will operate under the brand “Peoples Security Bank and Trust Company.”
The merger is expected to deliver significant financial benefits. It is projected to result in 59% EPS accretion to Peoples’ 2025 estimated EPS, with a tangible book value earn-back period of 2.4 years. It is also projected to be 40+% accretive to FNCB’s EPS. After the merger, Peoples plans to raise its quarterly dividend to $0.6175 per share, creating no dilution for FNCB shareholders. The combined company is expected to achieve top-tier operating and return metrics, including annual net income of $63.6 million, annual earnings per share of $6.29, and a return on average tangible common equity of 15.8%.
The governance and leadership of the combined bank holding company will be a collaborative effort between Peoples and FNCB. The board of directors will consist of 16 directors, with eight directors from each company. William E. Aubrey, II, current Chair of Peoples, will serve as Chair of the combined board, and Louis DeNaples, Sr., current Chair of FNCB, will serve as Vice Chair. The management team of the combined company will be led by Craig Best, current CEO of Peoples, and Gerard Champi, current CEO of FNCB. Best will continue to serve as CEO for the first year of the merger, after which Champi will take over as CEO.
In a statement, Best expressed excitement about the merger and the opportunity to create a top-tier Pennsylvania franchise. He emphasized the mutual financial expertise and strengths of the combined management team to achieve their shared goals. Champi also expressed enthusiasm for the merger and highlighted the strong leadership and industry experience of both companies.
The merger is expected to be completed in the near future, subject to regulatory and shareholder approvals.
– EPS: Earnings per Share – a financial metric that measures the profitability of a company on a per-share basis.
– Tangible Book Value: The net value of a company’s assets minus intangible assets and liabilities.
– Ticker Symbol: A unique series of letters representing a particular stock on a stock exchange.
– Accretive: The increase in value or earnings of a company as a result of a merger or acquisition.
– Pro Forma: A projection or estimation based on assumptions and hypothetical situations.
– PRNewsWire: /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 ….”