Mifflinburg Bancorp, Inc. (OTCPK:MIFF) and Northumberland Bancorp (OTCPK:NUBC) jointly announced the signing of a definitive merger agreement to combine the two companies in a strategic merger of equals. The combined company would have approximately $1.3 billion in total assets, $1.1 billion of total deposits, $850 million in total loans, and $93 million of combined shareholders’ equity based upon reported year end December 31, 2023 financial statements.
This strategic combination of high performing Central Pennsylvania community banks will create a premier financial institution with greater scale, operating leverage, and resources to compete in the highly competitive Susquehanna Valley PA market. Northumberland Bancorp will merge with and into Mifflinburg Bancorp, Inc. (“Mifflinburg”) and Northumberland’s subsidiary bank, The Northumberland National Bank (“Norry Bank”) will merge with and into Mifflinburg Bank and Trust Company (“Mifflinburg Bank”), Mifflinburg’s banking subsidiary. In connection with the closing, Mifflinburg Bancorp, Inc. will be renamed Steele Bancorp, Inc. Mifflinburg Bank will be rebranded to a more suitable name, more reflective of the combined financial institution, and jointly determined by the parties. The combined company will achieve efficient staff levels through early retirement and severance package offerings to existing Mifflinburg Bank and Norry Bank employees, as well as the natural attrition of the workforce.
In this all-stock transaction with a total deal value of $34.2 million (calculated on the basis of Mifflinburg’s closing price as of September 23, 2024), Northumberland Bancorp shareholders will receive a fixed exchange ratio of 1.1850 shares of Mifflinburg for each Northumberland share they own. The transaction is expected to qualify as a tax-free reorganization (except to the extent of cash received for fractional shares). At the close, Northumberland shareholders are expected to own approximately 46% of the combined company. The Boards of Directors of the combined company and combined bank will consist of six members from Mifflinburg and six from Northumberland. Donald J. Steele, Jr., currently Chairman of the Boards of Directors of Northumberland Bancorp and Norry Bank, will become Chairman of the Boards of Directors of the post-merger Steele Bancorp, Inc. and the post-merger Mifflinburg Bank. Richard J. Drzewiecki, currently Chairman of the Boards of Directors of Mifflinburg and Mifflinburg Bank will become Vice Chairman of the Boards of Directors of the post-merger Steele Bancorp, Inc. and the post-merger Mifflinburg Bank.
Jeffrey J. Kapsar, Mifflinburg’s and Mifflinburg Bank’s current President and CEO, will be the President and CEO of the post-merger Steele Bancorp, Inc. and post-merger Mifflinburg Bank. J. Todd Troxell, currently President and CEO of Northumberland Bancorp and Norry Bank, will be Senior Executive Vice President and Chief Administrative Officer of the post-merger Mifflinburg Bank and Corporate Secretary of Steele Bancorp, Inc. Messrs. Kapsar and Troxell will also be directors of the post-merger Steele Bancorp, Inc. and Mifflinburg Bank. Other members of senior management of both banks will continue to be key leaders of the post-merger Mifflinburg Bank.
In announcing this combination of two community focused financial institutions, Mr. Kapsar stated, “This combination brings together two community-minded organizations that are unified by a shared vision, values, and a solid approach to the future of banking. Our similar cultures strategically position us for growth opportunities and lay the foundation for nurturing current and future relationships while remaining a respected and strong community bank.”
Mr. Troxell stated, “This is exciting. Two similar community banks, each in existence for more than a century, are coming together in a strategic merger of equals creating a greater expanded footprint in which to compete. Our customers will benefit from the scale and varied talent of the combined organization while they continue to enjoy the personal service this stronger community bank will provide with enhanced products and services. Shareholders will enjoy a sound investment in a larger bank with continued strong capital, earnings and dividends. This merger will provide more career opportunities for our employees as well.”
The combination of Mifflinburg and Northumberland is the result of a long-term relationship built over many years and extensive discussions over the past five months between the management teams of each company.
The merger agreement was unanimously approved by the boards of directors of both companies. The combination is expected to be completed in the first or second quarter of 2025, subject to approval by Northumberland’s shareholders, regulatory approvals, and other customary closing conditions. Customers of both institutions will continue to receive the extraordinary service and customer experience they have been accustomed to.
The Kafafian Group, Inc. is acting as financial advisor and provided a fairness opinion to Mifflinburg Bancorp, Inc., with Stevens & Lee serving as its legal counsel. Alden Investment Group is serving as financial advisor and provided a fairness opinion to Northumberland Bancorp, with Mette, Evans & Woodside serving as its legal counsel.
