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On July 17, 2020, CNB Financial Corporation of Clearfield, PA (Nasdaq: CCNE) closed its previously announced acquisition of Bank of Akron, a $389 million asset community bank headquartered in Akron, New York, a suburb of Buffalo. At announcement, the purchase price was $215 per share, or approximately $64.5 million, with 75% of the consideration in CNB stock and 25% in cash. At the time, the purchase price equated to approximately 168% of tangible book value, 13.6 times last twelve months’ earnings and a premium to core deposits of 8.7%. At closing, the purchase price was approximately $40.8 million, reduced due to the impact of the COVID-19 pandemic on CNB stock. On a pro forma basis, Bank of Akron shareholders will own approximately 8.9% of the combined institution.
The transaction is expected to be approximately 4% accretive to the earnings per share of CNB in the first full year of operations. Exclusive of the one-time CECL impact related to Bank of Akron, tangible book value dilution of approximately 2.6% is expected to be earned back in 3.4 years. Cost savings are expected to be approximately 35% of the non-interest expense base of Bank of Akron. The combination is accretive to the return on equity of CNB by approximately 17 basis points and will also improve the Company’s return on assets, net interest margin and efficiency ratio.
The Bank of Akron locations and business will operate under the BankonBuffalo division, and Tony Delmonte, Bank of Akron CEO, will remain with CNB as a Market Executive. BankonBuffalo was formed as a division of CNB in 2016 in part to respond to the lack of service provided to mid-sized commercial customers as larger area banks consolidated in western New York. The division has grown to $430 million in loans and $540 million in deposits organically since its inception, and to service its rapidly increasing customer base, needed additional support personnel in addition to looking for contiguous market expansion. Bank of Akron provides CNB with an attractive, high earning business, talented leadership and staff, and a contiguous, but not overlapping, footprint.
Growth at BankonBuffalo has created the need to retain a large percentage of the Bank of Akron support personnel than would otherwise be the case. The BankonBuffalo division of CNB will nearly double to approximately $1 billion in assets and be well positioned to gain further depth and traction in the greater Buffalo market. BankonBuffalo will be one of the largest locally managed community banks in the Buffalo MSA, and on a pro forma basis, CNB will have approximately $4.9 billion in assets and 45 offices in central and western Pennsylvania, northeast and central Ohio and western New York.
The press release and investor presentation for the transaction can be seen here by clicking on the respective links.
Griffin Financial Group, LLC served as exclusive financial advisor to CNB Financial Corporation in this transaction.
For more information on this transaction, please contact Richard Quad, Senior Managing Director and Head of the Financial Institutions Group, at 646.254.6387, or Jordan Winick, Vice President, at 610.205.6355.
