The cost of a bank merger

The amount of money tossed around in mergers and acquisitions is huge — but so are the costs surrounding them.

The expense of some recent and proposed midstate mergers reach seven figures and will continue to climb as the deals get done.

“At the end of the day, yes, it can be expensive with pre- and post-merger costs,” said Brian Bisignani, a principal at Post & Schell PC in Harrisburg and chairman of the practice’s business and corporate practice group. “But most of the time, people wouldn’t be making these deals if they weren’t making money.”

In earnings and proxy reports filed with the Securities and Exchange Commission in January, Susquehanna Bancshares Inc. of Lititz revealed it had spent $885,000 on merger-related costs in the fourth quarter, while Integrity Bancshares Inc. of Camp Hill reported it had spent $683,000 in the fourth quarter on its merger with S&T Bancorp Inc.

BB&T Corp. of North Carolina, which is buying Lititz-based Susquehanna in a $2.5 billion deal, reported it spent $11 million in the fourth quarter on two mergers it is undertaking, Susquehanna and the Bank of Kentucky. BB&T officials did not respond when asked for a breakdown on each merger’s cost.

BB&T has estimated the overall cost of the Susquehanna merger will be about $250 million.

S&T of Indiana, Pa., reported it had spent $700,000 on its acquisition of Integrity. It estimates the merger will cost about $9.7 million, and it will earn back that cost in about 4.8 years.

Jim Gibson, president and CEO of Integrity, said he couldn’t estimate how much his company will spend in the first quarter of the year, when the merger is expected to be completed. He said it will hit seven figures “easy.”

The money Integrity reported it spent in the fourth quarter so far has gone mostly to investment bankers — Integrity hired New York City-based Sandler O’Neill to advise the company on the merger — and lawyers, Gibson said.

“It’s the cost of doing business,” he said. “When you go into a merger, you know right away it’s going to cost a lot of money. There’s no way around it, really.”

Susquehanna officials declined comment, referring all inquiries to its proxy filing with the SEC.

Michael Sadowski

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