Citizens Financial Services, Inc. (OTCPink: CZFS), the Mansfield-headquartered holding company for First Citizens Community Bank, and MidCoast Community Bancorp, Inc. (OTCPink: MDCT), the Wilmington-headquartered holding company for MidCoast Community Bank, jointly announced today the signing of a definitive merger agreement under which Citizens and MidCoast will merge and FCCB and MCB will merge, resulting in Citizens and FCCB as the surviving institutions.
Under the terms of the merger agreement, which has been unanimously approved by the boards of directors of Citizens and MidCoast, each holder of MidCoast Class A common stock and MidCoast Class B common stock will be entitled to elect to receive (i) $6.50 in cash, without interest, (ii) shares of Citizens common stock based on a fixed exchange ratio of 0.1065 shares of Citizens common stock for each share of MidCoast Class A common stock and MidCoast Class B common stock, or (iii) a combination of cash and stock, in exchange for each share of MidCoast Class A common stock and Class B common stock owned at the closing of the transaction. Elections are subject to proration and allocation to ensure that 75% of the outstanding shares of MidCoast Class A common stock and MidCoast Class B common stock are exchanged for shares of Citizens common stock and the remaining 25% are exchanged for cash. For federal income tax purposes, the transaction is expected to qualify as a tax-free reorganization and provide a tax-free exchange for MidCoast stockholders who receive shares of Citizens common stock in exchange for their shares of MidCoast common stock.
The merger agreement also provides that, effective upon the closing of the transaction, Citizens will create a Corporate Advisory Board to serve the markets in which MCB operates and will invite a majority of MidCoast's directors to serve on it.
Randall E. Black, Citizens' and First Citizens' President and Chief Executive Officer, said, "We are excited to expand our franchise into Delaware's affluent New Castle and Kent County markets through our partnership with MidCoast Community Bank. These markets are robust and healthy with economic growth, and are attractive markets with favorable demographics. Furthermore, just 45 miles from our Fivepointville, Lancaster County, PA branch, this expansion will bolster our Southeastern, PA presence and position the combined company for continued growth. The employees and board of directors of MidCoast Community Bank have built a great community banking model. This acquisition allows us to leverage our existing products, services and expertise in an attractive market while adding a very talented banking team. Additionally, we see Kent County and the surrounding secondary markets rich in agricultural lending opportunity, which will help us to diversify our growing expertise in agricultural lending, along with CRE and residential growth opportunities. We take great pride in understanding the needs of our customers throughout all of our markets and look forward to providing this new region with the support and assistance it needs to continue to grow and thrive."
Eric G. Hoerner, MidCoast's and MCB's Chief Executive Officer, added, "We are pleased to be partnering with First Citizens Community Bank, a high-performing institution that shares MidCoast's focus on safety and soundness, profitability, and growth. Our customers will benefit from First Citizens' broad range of banking products and services, as well as First Citizens' significantly higher legal lending limit."
The transaction is expected to close in the first half of 2020, subject to the satisfaction of customary closing conditions, including the receipt of regulatory approvals and the approval of MidCoast's shareholders.
Janney Montgomery Scott LLC is acting as financial advisor to Citizens and has rendered a fairness opinion to its board of directors. Luse Gorman, PC is serving as legal counsel to Citizens. Boenning & Scattergood, Inc. is acting as financial advisor to MidCoast and has rendered a fairness opinion to its board of directors. Barley Snyder LLP is serving as legal counsel to MidCoast.
About Citizens Financial Services, Inc.
Citizens Financial Services, Inc. is the bank holding company for First Citizens Community Bank, a Pennsylvania-chartered commercial bank. First Citizens operates 28 full-service offices in Pennsylvania and New York. For more information about Citizens Financial Services, Inc. and First Citizens Community Bank, visit its website at www.firstcitizensbank.com.
About MidCoast Community Bancorp, Inc.
MidCoast Community Bancorp, Inc. is the holding company of MidCoast Community Bank, a Delaware-chartered commercial bank, which operates three community banking offices in New Castle and Kent Counties, Delaware. In addition to lending in these Delaware markets, the Bank is also an active lender in Chester County, PA.
