(For more retail coverage, click GlobeSt.com/RETAIL.)
CHESTER SPRINGS, PA-Conestoga Bancorp Inc. has signed a definitive agreement to acquire PSB Bancorp Inc., the holding company for First Penn Bank, for $17 a share, or approximately $87.4 million. That number represents a 53.6% premium over shareholder equity value at the time the agreement was reached. Locally based Conestoga is a privately owned bank holding company that was formed this July and currently operates from a single 5,400-sf location here.
Philadelphia-based PSB operates 13 First Penn Bank branches, nine in Center City and one each in Montgomery, Delaware, Chester and Bucks counties. As of June 30, it had consolidated assets of $562.4 million, deposits of $508.9 million, and shareholders' equity of $46.9 million.
The agreement is for a cash transaction, and the price per share is subject to a potential downward adjustment if certain assets are not sold by PSB. If PSB elects not to sell the unidentified assets or any part of them, the maximum downward adjustment could be 66 cents a share.
Those assets do not include branches, Richard Elko, Conestoga's president and CEO, tells GlobeSt.com. "We are taking all 13 branches." Even at $16.34 a share, the deal represents a 47.6% premium over the current market price. "We think we're getting a bargain," Elko says. Although acquisition was not a part of Conestoga's original growth plan, he says, "growing from one to 14 branches all at once is not a bad way to start off."
PSB's directors, which hold 16.3% of the outstanding stock, agreed to vote their shares in favor of the transaction. The sale, subject to regulatory and PSB shareholder approval, is expected to reach completion in this fourth quarter or the first quarter of 2007.
The agreement, "fulfills our long-standing commitment to deliver a strong premium to our shareholders," says Anthony DiSandro, PSB's president, in a statement. He adds that the affiliation with a de novo institution will result in "the retention of the vast majority of PSB's employees and no adverse impact on our customer base or the communities we serve."
PSB trades on the Nasdaq. Following announcement of the sale agreement, shares of PSBI shot up nearly 43.4% to $15.86 a share, compared with $11.07 a share at the close of trading the previous day.
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