Bank merger is ‘ridiculously compatible’

The planned merger of Orrstown Bank and PeoplesBank, with combined assets of $5.2 billion, is expected to benefit customers, employees, shareholders and the communities. 

Craig Kauffman, president and CEO of Codorus Valley Bancorp, Inc., parent company of PeoplesBank, of York, said the merger with Orrstown Financial Services, Inc., parent company of Orrstown Bank, Shippensburg, is “ridiculously compatible.” 

Kauffman said the “merger of equals” is bringing two companies of very similar size together to provide more benefits and opportunities to everyone involved. Orrstown Bank has assets of about $3 billion and PeoplesBank has about $2.2 billion, he said. Combined, that’s $5.2 billion, he said. 

“Our partnership will significantly increase our size and scale, which we believe will benefit our clients, employees and communities through broader product offerings, higher lending limits, an improved customer experience, and increased career opportunities,” said Thomas Quinn, Jr., Orrstown’s president and CEO.  “Both banks have served their communities for over 100 years.  I am excited about the opportunity to bring them together to build the premier community banking franchise in our Pennsylvania and Maryland markets.”  

Although Orrstown Financial Services, Inc. will be the legal acquirer, this is not the case of a larger bank acquiring a smaller one, Orrstown said in a statement. Rather, the merger will combine similarly sized companies with similar cultures and philosophies focused on superior client service and impactful community support. 

 “We have no overlap of our brick-and-mortar branches, which is unusual,” Kauffman said, noting that PeoplesBank is in York County with four branches in Maryland, while Orrstown has a presence from Shippensburg to Harrisburg and Lancaster, also with four branches in Maryland, none of which overlap with PeoplesBank. 

PeoplesBank also has a presence in Lancaster in several large senior living facilities.  

Because of the geographical locations, Kauffman said he hopes to see the new entity grow quickly.  

Kauffman, who said neither bank was looking to merge, said the deal came about through “a genesis of conversations.” 

“We  would dream and aspire about what the future looks like,” he said. “We thought we could build an incredible and significant community bank if we were willing to put them together.” 

Kauffman said the conversations evolved and as both worked harder, they could see the benefits of the merger. 

“Our talks accelerated in late summer,” he said. “I don’t know when they started because we have been fierce competitors with a mutual respect for each other for a long time. We worked together through the COVID regulations and that laid the foundation for future conversations.” 

Those benefits, he said, include an increase in the number of branches and ATMs in 10 counties. Combined, Kauffman said, there will be 51 offices, twice what each institution has now. 

“We will also be able to offer new products and services that neither offers now,” he said. “Our scope and scale will be enhanced, and we will be able to increase commercial lending.” 

For employees, Kauffman said there will be more opportunities for growth and development, creating upward mobility. He said, too, that employees will have more branches to choose from. He said he’s already heard from some employees that they are looking to move to a branch closer to where they live. 

“This is a great move for the communities we serve,” Kauffman said. “Both community banks are vesting in supporting our communities, not only financially, but with volunteer hours. We expect that to be amplified.” 

And shareholders will see an increase in earnings which Kauffman said will allow the new company to create value.  

Most importantly, he said, the bank will stay a community bank. 

“That is who we are. I’ve heard the term regional community bank, but community doesn’t drop. Our customers and our employees are from here,” he said.  

Moving forward, the merger will enable the new entity to offer more digital products that Kauffman said will give it a greater ability to serve customers how they choose.  

As for the name, Kauffman said the choice weighed heavily on him. 

“PeoplesBank has a long history, especially the name,” he said. “We are second in York County for market share of deposits.” 

That said, Kauffman said Orrstown was chosen because it is more unique and easier to brand. 

“There are a lot of People’s Banks in the U.S.,” he said. “I don’t know how many, but there are a lot. Our reputation is not going away, and we both have 100 plus year histories and share a legacy to our communities.” 

While the two banks will be one company moving forward, Kauffman said the structure, teams, and leadership are coming from both sides. 

Quinn will serve as president and CEO and Kauffman will be executive vice president and COO at the time of closing. Kauffman will take over as president and CEO when Quinn retires around June 1, 2025. 

“We’re excited about the future as we embark on the path to complete the merger,” he said. “We expect it to be completed by the third quarter of 2024. While there will be changes, the people will be the same. We’re a strong dedicated combined company with a bullish view.”