UPDATED: Farmers CEO Hails Merger Agreement with Emclaire
Update: 1:20 p.m., 3/24 | Includes commentary from Farmers CEO Kevin Helmick from a Thursday morning conference call.
CANFIELD, Ohio – Farmers National Banc Corp.’s merger with Emclaire Financial Corp. will provide the Mahoning Valley-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 Thursday morning 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 commercial bank operates 19 full-service offices in Venango, Allegheny, Butler, Clarion, Clearfield, Crawford, Elk, Jefferson and Mercer Counties.
The deal 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.
The deal represented ”one of the few meaningful acquisition opportunities that will allow us to enter western Pennsylvania,” Helmick said during a late-morning conference call with analysts and reporters.
After the merger, William March, current president and CEO and chairman of the board 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’s board to join its board of directors immediately after the merger and appoint the remaining non-employee directors of Emclaire to a newly formed advisory board for the Pennsylvania region, according to the release.
“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. “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. I believe that this partnership will provide great value for the entire Emclaire family.”
After the transaction, Emlenton Bank will be merged with and into Farmers Bank and all Emlenton branches will become Farmers branches.
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.
Based on Farmers’ closing share price of $17.02 on March 23, 2022, the transaction is valued at approximately $105 million, or $37.62 per share, according to the news release announcing the deal. Per 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, Troy Adair, chief financial officer, said during the call.
The merger will result in a larger legal lending limit for Farmers, which will permit it 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.
He also anticipated opportunities in the Cranberry Township corridor near Pittsburgh, where March and his team have “done a great job,” 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 anticipated a “smooth transition.”
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