Juniata Valley Financial in Mifflintown, Pa., may be the nation’s most patient bank acquirer.

The $600 million-asset company agreed in late December to buy Liverpool Community Bank in Pennsylvania for about $13 million in cash and stock.

What most outsiders didn’t know was that Juniata had wanted to buy Liverpool ever since it bought a 39.2% stake in the $46 million-asset bank — in 2006. For the last dozen years, Juniata, which has two representatives on Liverpool’s board, had made it clear that it wanted to buy the bank outright.

Juniata’s minority stake was also large enough to prevent Liverpool from selling to anyone else, according to a recent regulatory filing associated with the planned acquisition. Still, both sides appeared to find a way to coexist over more than a decade.

Bank sellers and price tags in Pennsylvania last year

“It never got nasty,” JoAnn McMinn, Juniata’s chief financial officer and a Liverpool director, said in an interview. “We know these people very well. It’s a great relationship. We were always clear about our intentions, but they just were never in a position to sell until now.”

Juniata bought one other bank during the period that it waited on Liverpool, acquiring FNBPA Bancorp in late 2015.

The relationship stands in contrast to other instances where an acquisition-minded bank finds itself at odds with a target. Such is the case in North Carolina, where First Citizens BancShares in Raleigh recently filed a lawsuit against KS Bancorp in Kinston as part of an effort to take over the much smaller community bank.

Juniata’s connection with Liverpool began when Juniata bought a large block of stock from the Vartan family after the patriarch’s death, McMinn said. Members of the Holmes family, which hold two of Liverpool’s board seats, own about 36% of the bank’s stock.

“It was understood by the Liverpool board … at that time that Juniata acquired the shares with a view toward acquiring the remaining shares should the board later determine it to be in the best interest of Liverpool to sell the bank,” the filing said.

Juniata informally inquired about Liverpool’s interest in selling between 2006 and 2014. By late 2014, directors who were unaffiliated with Juniata invited the larger bank to make an offer, citing concerns over its aging board and shareholder base and “the continued future profitability … in light of continued customer migration toward technology-driven banking products.”

In late 2015, Juniata encouraged the Liverpool board to hire a lawyer and financial adviser before engaging in more in-depth discussions. Liverpool’s board also formed a strategic initiatives committee made up of all the directors who had no ties to Juniata.

“The committee was formed to ensure the independent, objective evaluation of any offers received from Juniata or other entities regarding a potential business combination,” the filing said.

In September 2016, Juniata offered to pay $10.4 million for the shares it didn’t already own, which priced Liverpool at 116% of its tangible book value. Liverpool’s special committee said the bid was too low. At one point, Juniata requested a meeting with the Liverpool board, though no meeting was held.

Another, unnamed institution submitted an offer to buy Liverpool last April that would have paid $13.2 million, or a price that valued the bank at 140% of its tangible book value. The suitor reiterated its interest four months later.

Liverpool’s committee, aware that Juniata would exercise its right to reject the other suitor’s offer, never negotiated with the unnamed bank, though it shared the offer’s details with Juniata’s board representatives, the filing said.

Juniata in mid-July raised its offer to $12.6 million, which priced Liverpool at 135% of its tangible book value. Liverpool’s committee decided by October that it would start negotiating with Juniata; it then hired legal counsel and an investment bank.

While the unnamed suitor offered more money, Liverpool’s investment bank backed Juniata’s offer due to a larger stock consideration, more liquidity and the “execution risk associated with pursuing a different merger partner in light of Juniata’s … ownership,” the filing said. Liverpool’s committee also had more familiarity with Juniata’s management team.

Juniata agreed to let Liverpool pay a special dividend to its shareholders before the deal’s closing. Liverpool’s board unanimously approved Juniata’s offer on Dec. 29, and an announcement was made.

The deal, which is expected to close by June 30, should be immediately accretive to Juniata’s earnings.

The filing also disclosed that the employment agreement of Jan Gibboney, Liverpool’s CEO, will be terminated immediately before the deal’s closing. Gibboney is entitled to receive a lump-sum payment equal to his base salary, and potential cash bonuses, for the remaining term of his employment agreement.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.