Farmers National Banc Corp. (“Farmers” or the “Company”) (NASDAQ: FMNB), the holding company for The Farmers National Bank of Canfield (“Farmers National Bank”), and Maple Leaf Financial, Inc. (“Maple Leaf”), the holding company for Geauga Savings Bank (“Geauga”), announced today they have entered into an agreement and plan of merger (the “Agreement”).
Kevin J. Helmick, President and CEO of Farmers, stated, “We are pleased to announce the acquisition of Geauga Savings Bank and welcome their customers and employees to Farmers. The transaction increases Farmers’ market share in Cuyahoga and Geauga Counties and enables Farmers to continue building local scale throughout Northeast Ohio.”
“By combining with Farmers, we are able to offer our shareholders liquidity and our customers a home in a strong and growing community bank,” said James Kleinfelter, President and CEO of Maple Leaf.
Pursuant to the Agreement, each shareholder of Maple Leaf may elect to receive either $640.00 per share in cash or 45.5948 of Farmers’ common shares, subject to an overall limitation of 50% of the shares being exchanged for Farmers’ shares and 50% for cash. Based on Farmers’ closing share price of $13.73 on August 29, 2019, the transaction is valued at approximately $39.6 million. The merger is expected to qualify as a tax-free reorganization for those shareholders electing to receive Farmers’ shares. The transaction is subject to receipt of Maple Leaf shareholder approval and customary regulatory approvals. The Company expects the transaction to close in the fourth quarter of 2019 or first quarter of 2020.
Upon consummation of the transaction, Geauga will be merged with and into Farmers National Bank and Geauga branches will become branches of Farmers National Bank. Upon closing, Farmers estimates it will have approximately $2.7 billion in assets and 42 locations throughout Ohio and western Pennsylvania. Farmers expects the transaction to be accretive to earnings per share for the first full year of operation, excluding one-time merger costs, and expects any tangible book value dilution created in the transaction to be earned back in under two years (using the cross over method). Following consummation of the transaction, it is expected that Farmers National Bank will exceed “well-capitalized” thresholds under all regulatory definitions.
As of June 30, 2019, Maple Leaf had total assets of $277.8 million, which included gross loans of $186.4 million, deposits of $191.0 million and equity of $32.9 million.
Raymond James & Associates, Inc. is serving as financial advisor to Farmers and Vorys, Sater, Seymour and Pease LLP is serving as legal counsel to Farmers on the transaction. Boenning & Scattergood, Inc. is serving as financial advisor to Maple Leaf and Ulmer & Berne LLP is serving as legal counsel to Maple Leaf on the transaction.
