CANFIELD, Ohio – Farmers National Banc Corp.’s merger with Emclaire Financial Corp. will provide the Canfield-based community bank with the opportunity to acquire scale in attractive western Pennsylvania markets, including the Pittsburgh metropolitan area, Farmers President/CEO Kevin Helmick said.
Farmers announced March 24 that it had entered into an agreement and plan of merger with Emlenton, Pa.-based Emclaire, the holding company for The Farmers National Bank of Emlenton. The community bank operates 19 full-service bank offices in Venango, Allegheny, Butler, Clarion, Clearfield, Crawford, Elk, Jefferson and Mercer counties.
The acquisition follows Farmers’ recent completion of its merger with Cortland Bank. It’s the company’s seventh acquisition in as many years, six of which are banks.
Acquisition of the Pennsylvania banking company, with assets of $1.1 billion, is the largest acquisition in Farmers’ history, Helmick said. The combined company will have assets of $5.2 billion and 66 locations throughout northeastern Ohio and western Pennsylvania.
The deal represents “one of the few meaningful acquisition opportunities that will allow us to enter western Pennsylvania,” Helmick said during a conference call with analysts.
After the merger, William March, president and CEO and chairman of Emclaire and Emlenton Bank, will join Farmers as senior vice president and market president of Pennsylvania.
Farmers intends to name one director from Emclaire to its board after the merger and appoint the remaining nonemployee directors of Emclaire to a newly formed advisory board for the Pennsylvania region.
“We are excited to be joining with The Farmers National Bank of Canfield and believe that the combination will benefit our shareholders, customers and the communities we serve,” Marsh said in a prepared statement. “We are thrilled to be joining such a premier regional banking franchise. We are excited about the new products and services that will be available to our customers and the communities we serve..”
After the transaction, Emlenton Bank will be merged into Farmers Bank and all Emlenton branches will become Farmers branches.
Based on Farmers’ closing share price March 23 of $17.02, the transaction is valued at approximately $105 million, or $37.62 per share.
According to the agreement, Emclaire shareholders may elect to receive either $40 per share in cash or 2.15 shares of Farmers’ common stock, subject to an overall limitation of 70% of the shares being exchanged for Farmers’ shares and 30% for cash.
The purchase price is approximately 145% of Emclaire’s book value and 10.5 times its earnings for the past 12 months, said Troy Adair, Farmers chief financial officer.
The merger will result in a larger legal lending limit for Farmers. This will permit the bank to better compete for loan growth in new markets, and to offer its “robust management services” such as trust, investment, retirement and private banking to Emclaire’s customers, along with a “broad array of digital capabilities and technology enhancement,” Helmick said.
Helmick further anticipates opportunities in the Cranberry Township corridor near Pittsburgh, where March and his team have “done a great job,” he said, as well as Emclaire’s northern footprint along Interstate 80.
“We’re very excited about this opportunity to expand in appealing western Pennsylvania markets,” Helmick said. “This is a quality company that offers tremendous upside for our shareholders.”
The transaction ideally would close as early as Aug. 1 but could close Sept. 1, with conversion taking place in October or November, according to Helmick. Since the two companies operate on the same core technology platform, he anticipates a “smooth transition.”