Beneficial Bancorp to Buy Conestoga Bancorp in Pa.
Beneficial Bancorp in Philadelphia has agreed to buy Conestoga Bancorp in Chester Springs, Pa.
The $4.7 billion-asset Beneficial said in a press release Thursday that it will pay $105 million for the $712 million-asset Conestoga. The deal, expected to close in the first or second quarter, values Conestoga at 160% of its tangible book value.
Conestoga has 14 branches, $506 million in loans and $530 million in deposits. It also provides equipment financing through Conestoga Equipment Finance.
The deal "strengthens our position in the Philadelphia marketplace and provides an opportunity to meaningfully improve our earnings profile as we begin to deploy our capital from the second-step conversion,” Gerard Cuddy, Beneficial’s president and chief executive, said in the release.
Beneficial said it expects to incur pretax merger costs of about $10.1 million, though it should be able to cut about 45% of Conestoga's noninterest expenses. The acquisition should be 45% accretive to Beneficial's earnings per share in the first year of combined operations, excluding merger-related costs. Tangible book value dilution of 5% should be earned back in less than five years.
Beneficial was advised by Griffin Financial Group and Kilpatrick Townsend & Stockton. Conestoga was advised by Sandler O'Neill and Drinker Biddle & Reath.