On December 30, 2015, CNB Financial Corporation (Nasdaq: CCNE), announced that it entered into a definitive agreement to acquire Lake National Bank of Mentor, Ohio, for $22.50 per share in cash, or $24.75 million in the aggregate. Lake National Bank, which was founded in 2005 by the late Lake County businessman and philanthropist Jerome T. Osborne, Sr., had $152.2 million in total assets and $14.1 million in shareholders’ equity as of September 30, 2015, and a return on assets of 0.61% and return on equity of 6.43% for the year-to-date 2015.
Lake National Bank will operate as part of the ERIEBANK division of CNB, which has a presence throughout Erie, Warren and Crawford counties in Pennsylvania and Ashtabula County in Ohio. ERIEBANK was established in 2005 and has grown successfully from a de novo operation to 9 locations and over $652 million in total assets in approximately 10 years.
The purchase price represents approximately 176% of the tangible book value of Lake National, 25 times the last 12 months’ earnings of Lake National, and a premium to core deposits of approximately 11%. The transaction is accretive to earnings per share in the first full year of operations, and tangible book value dilution of approximately 8% will be earned back within five years. The transaction closed on July 15, 2016.
Much like its acquisition of FC Bank in 2013, which allowed CNB enter Columbus, Ohio, with a relatively small acquisition, but gave the bank the opportunity to grow organically in a strong metropolitan market, the acquisition of Lake National puts CNB in the greater Cleveland market, with attractive organic growth opportunity following closing. Lake National is one of few community banks in Mentor, a market otherwise dominated by larger institutions. Mentor is a significant commercial and small business hub located on the shores of Lake Erie, and is the seventh ranked community in the state for total retail sales.
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 Co-Head of the Financial Institutions Group, at 646.254.6387, or Stacey Weikel, Senior Vice President, at 610.478.2015.
