Mid Penn to buy Philly area bank
Fresh off closing a merger in western Pennsylvania, Mid Penn Bancorp Inc. has turned east for its next acquisition.
The Millersburg-based parent of Mid Penn Bank said Tuesday it is buying Malvern-based First Priority Financial Corp.
The merger gives Mid Penn its first foothold in the attractive southeastern Pennsylvania market, which has a growing population with household incomes above the state average, said Rory G. Ritrievi, Mid Penn’s president and CEO.
"We feel really good about that," he added.
The all-stock deal, valued at roughly $82 million, has been approved by the boards of both banks, Mid Penn said in a statement. The transaction is expected to close in the third quarter of 2018, pending regulatory and shareholder approvals.
As a target, First Priority is something of a polar opposite to Mid Penn's last acquisition, of Scottdale Bank & Trust Co. in Fayette and Westmoreland counties, Ritrievi said.
While Scottdale was about a century old, First Priority was founded in 2005. Scottdale had a strong deposit base, but was not as active in lending, Ritrievi said. First Priority is an active lender, but deposits are harder to come by in the competitive Philadelphia-area banking market.
But they will mesh well, he suggested. "One market really complements the other."
Mid Penn has no plans for further acquisitions. But, Ritrievi said, "It's our longer-term objective to build a community bank that can service communities that like community banking throughout Pennsylvania."
Once the deal is complete, First Priority will operate as First Priority Bank, a division of Mid Penn Bank. First Priority has eight branches in Chester, Berks, Montgomery and Bucks counties, bringing Mid Penn’s total to 37. Its total assets will rise to $2.2 billion.
Four board members from First Priority will join the Mid Penn board, including First Priority’s chairman and CEO, David E. Sparks. Sparks also will lead the First Priority division and play a companywide role as chief strategic adviser.
Ritrievi said he and Sparks first met a few years ago and hit it off. The merger talks got serious last summer.
"He comes from the finance side. I come from the loan side of the bank," Ritrievi said. "Our skill sets are complementary to each other."
Under the terms of the merger agreement, shareholders of First Priority common stock will receive 0.3481 shares of Mid Penn common stock for each share of First Priority common stock they own. All options to purchase First Priority common stock will be cashed out upon completion of the merger.
Sandler O’Neill + Partners, LP served as financial adviser and Pillar+Aught served as legal adviser to Mid Penn in the transaction. Griffin Financial Group LLC acted as financial adviser and Stevens & Lee acted as legal adviser to First Priority.
Mid Penn posted net income of $2.25 million in the third quarter of 2017, up from $1.9 million for the same period in 2016.
First Priority reported net income of $719,000 in the third quarter of 2017, up from $476,000 from the same quarter in 2016.