Banking & Finance

Middlefield Banking Co. Agrees to Buy Liberty Bank

MIDDLEFIELD, Ohio — Middlefield Banc Corp., parent of the Middlefield Banking Co., announced today that it will acquire Liberty Bank N.A., Beachwood, and pay $40.8 million for its three offices in Beachwood, Solon and Twinsburg and loan production office in Wooster.

One of The Middlefield Banking Co.’s 10 offices is in Cortland.

Pro forma, the larger Middlefield Banc Corp. would have $970 million in total assets, $820 million in total deposits and 13 branches in seven counties in Ohio, adding Cuyahoga and Summit counties to its footprint. The larger bank would have between 180 and 185 employees.

As of June 30, Liberty had $223 million in assets and $190 million in deposits.

“Middlefield expects the transaction to be accretive to earnings in year one and to earn back tangible book value dilution in less than four years,” Thomas G. Caldwell, president and CEO of Middlefield, said.

Middlefield will give Liberty shareholders the choice of receiving 1.1934 shares of its stock for each share of Liberty or $37.96 in cash per share in addition to receiving a special cash dividend of $3.13 per share just before the merger is completed.

Based on the 20-day average stock price of Middlefield as of July 26, the value of the purchase is $40.8 million (cash consideration of $20 million plus an indicated stock consideration of $16.6 million as well as the $3 million special dividend and $1.1 million paid to option holders).

On a per share basis, the value to Liberty shareholders is $41.09 for those who choose to accept cash. Those who chose to accept Middlefield shares get $3.13 plus the 1.1934 shares of Middlefield stock (combined, $41.68 based on the 20-day average).

In the aggregate, 45% of Liberty shares would be converted to Middlefield common stock. William Valerian, chairman, president and CEO of Liberty, and Thomas W. Bevan, a director, will join the board of directors of Middlefield Banc Corp. before the acquisition takes effect and all Liberty directors have agreed to vote their shares in favor.

Shareholders of both companies must vote on the transaction – no dates have been set but proxies will be mailed in August — and the customary regulatory approvals must be secured. The directors of both banking companies hope to complete their agreement before the end of the year.

Published by The Business Journal, Youngstown, Ohio.