DNB Financial in Downington, Pa., has agreed to buy East River Bank of Philadelphia.
The $749 million-asset DNB said in a press release Monday that it will pay $49 million in cash and stock for the $311 million-asset East River. The deal, which is expected to close in the second half of this year, values East River at 155% of its tangible book value.
DNB said it expects the acquisition to be 23% accretive to its earnings per share in the first full year, excluding $5.4 million in one-time costs. It should take less than four years for DNB to earn back any dilution to its tangible book value. DNB said it plans to cut annual costs by $3.1 million, or about 40% of East River’s noninterest expenses.
“This transaction will establish a much stronger institution and create efficiencies to generate greater earnings for our combined shareholder base,” William Hieb, DNB’s president and chief executive, said in the release. “It will also allow us to deliver a comprehensive set of financial products and services to consumers and businesses throughout our region, with logical expansion into the attractive Philadelphia market, positioning us for continued growth.”
Christopher McGill, East River’s president and chief executive, will become DNB’s chief business development officer. John McGill Jr., East River’s chairman, will become DNB’s vice chairman.
Ambassador Financial Group and Stradley Ronon Stevens & Young advised DNB. Griffin Financial Group and Silver, Freedman Taff & Tiernan advised East River.