Griffin Financial Group Advises Penseco Financial Services Corp. in its Merger With Peoples Financial Services Corp.

Situation
Penseco Financial Services Corporation ($930 million in total assets), a Scranton-based community bank and trust holding company, and Peoples Financial Services Corp. ($678 million in assets), a Hallstead, PA-based community bank holding company, looked to the future and faced similar challenges in providing sustainably profitable community banking services in the Northeastern Pennsylvania marketplace. Knowing the many benefits of size and scale, the two companies sought to join forces and draw upon their shared market knowledge to build a stronger banking organization for the future.

Solution
Penseco and Peoples combined in a merger-of-equals transaction, with Peoples as the surviving legal entity. As of the closing of the merger, Penseco shareholders hold 59% of the Peoples common stock, and Peoples shareholders hold 41%. The 14-person board is made up of eight Penseco directors and six Peoples directors.

Griffin was retained by the Penseco Board to provide an opinion regarding the fairness of the exchange ratio used in the transaction and to provide other advisory services to Penseco.

Measures of Success
The transaction is expected to be accretive to earnings in the first year of combined operations. Both companies were strong performers on a stand-alone basis (LTM ROA of 1.13% and 1.38% for Penseco and Peoples, respectively), but anticipated cost savings should result in a combined company that is even stronger. In connection with the transaction, Peoples has re-registered with the SEC with the intention of listing on NASDAQ. The combined market capitalization should trigger inclusion in multiple stock indices and increase Peoples’ liquidity and daily trading volume.