DNB Financial Corporation ("DNB") (NASDAQ:DNBF) and East River Bank
of Philadelphia, announced today that they have executed a
definitive agreement under which DNB will acquire East River in a
stock and cash transaction for total consideration valued at $49.0
million. DNB is the parent company of DNB First, National
Association, a community bank headquartered in Downingtown,
Pennsylvania. As of December 31, 2015, East River reported $311
million in assets, total loans of $282 million, and total deposits
of $234 million; it operates three full-service offices in
Philadelphia.
Under the terms of the agreement, East River shareholders will
be entitled to elect to receive either 0.6562 shares of DNB common
stock or $18.65 in cash for each outstanding share of East River
common stock, subject to pro-ration such that the aggregate cash
consideration payable to East River shareholders will be $6.7
million (subject to increase in the event that outstanding options
are exercised prior to closing).
The acquisition is expected to be immediately accretive to DNB
earnings per share, excluding one-time costs. The transaction
value to East River common shareholders equates to 155% of East
River’s tangible book value as of December 31, 2015 and 21.2 times
East River’s 2015 full year earnings. Tangible book value dilution
is acceptable with an earn-back period from the transaction of 3.9
years. The transaction has an anticipated internal rate of
return of 18%, which is well in excess of DNB’s cost of
capital.
When the acquisition is completed, DNB will have approximately
$1.1 billion in assets, $764 million in loans, and $841 million in
deposits, with 15 branch offices in Chester, Delaware and
Philadelphia counties. It will become one of only six institutions
with total assets of more than $1 billion, headquartered in
Southeastern Pennsylvania.
“DNB and East River is a powerful combination that will benefit
our respective customers, investors, employees and communities,”
said William J. Hieb, president and chief executive officer of DNB.
“This transaction will establish a much stronger institution and
create efficiencies to generate greater earnings for our combined
shareholder base. 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.”
“This transaction provides our shareholders with greater
liquidity and the opportunity to build upon the success of the DNB
franchise," said Christopher P. McGill, president and chief
executive officer of East River. “In addition to a shared legacy of
strong financial performance and community engagement, the
strategic synergy and cultural fit between our two banks present
exciting opportunities to all of our stakeholders. As East River's
lending team joins DNB, an enhanced product set and higher lending
limits will enable us to better serve our clients in Philadelphia.
We look forward to being part of the DNB team.”
Mr. McGill will join DNB as executive vice president and chief
business development officer. Jerry L. Cotlov, executive vice
president and chief lending officer of East River, will also join
DNB as senior vice president and assistant chief commercial lending
officer.
John F. McGill, Jr., chairman of East River, will join the DNB
board of directors as vice chairman; two other members of the East
River board of directors, Charles A. Murray and Daniel O’Donnell,
will also join the DNB board as independent directors. James H.
Thornton will continue to serve as chairman of the DNB board.
The acquisition, which is subject to regulatory approval, the
approval of shareholders of DNB and East River and other customary
closing conditions, is expected to close during the second half of
2016.
Ambassador Financial Group, Inc. served as financial advisor to
DNB Financial Corporation; Stradley Ronon Stevens & Young, LLP
served as legal counsel.
Griffin Financial Group LLC served as financial advisor to East
River Bank; Silver, Freedman Taff & Tiernan LLP served as legal
counsel.
About DNB Financial CorporationDNB Financial
Corporation is a bank holding company whose bank subsidiary, DNB
First, National Association, is a community bank headquartered in
Downingtown, Pennsylvania with 12 locations. Founded in 1860, DNB
First, in addition to providing a broad array of consumer and
business banking products, offers brokerage and insurance services
through DNB Investments & Insurance and investment management
services through DNB Investment Management & Trust. DNB
Financial Corporation’s shares are traded on NASDAQ’s Capital
Market under the symbol: DNBF. We invite our customers and
shareholders to visit our website at http://www.dnbfirst.com. DNB's
Investor Relations site can be found at
http://investors.dnbfirst.com.
About East River BankEast River Bank is a
Pennsylvania-chartered savings bank headquartered in the East Falls
neighborhood of Philadelphia, Pennsylvania. Founded in 2006, East
River Bank provides personal and business lending and deposit
services through three locations in Philadelphia, Pennsylvania. We
invite our customers and shareholders to visit our website at
http://www.eastriverbank.net.
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements include, but are not limited to,
expectations or predictions of future financial or business
performance, conditions relating to DNB and East River, or other
effects of the proposed merger of DNB and East River. These
forward-looking statements include statements with respect to DNB’s
beliefs, plans, objectives, goals, expectations, anticipations,
estimates and intentions, that are subject to significant risks and
uncertainties, and are subject to change based on various factors
(some of which are beyond DNB’s control). The words "may," "could,"
"should," "would," "will," "believe," "anticipate," "estimate,"
"expect," "intend," "plan" and similar expressions are intended to
identify forward-looking statements.
In addition to factors previously disclosed in the reports filed
by DNB with the Securities and Exchange Commission (the “SEC”) and
those identified elsewhere in this document, the following factors,
among others, could cause actual results to differ materially from
forward looking statements or historical performance: the ability
to obtain regulatory approvals and satisfy other closing conditions
to the merger, including approval by shareholders of DNB and East
River; delay in closing the merger; difficulties and delays in
integrating the East River business or fully realizing anticipated
cost savings and other benefits of the merger; business disruptions
following the merger; the strength of the United States economy in
general and the strength of the local economies in which DNB and
East River conduct their operations; the effects of, and changes
in, trade, monetary and fiscal policies and laws, including
interest rate policies of the Board of Governors of the Federal
Reserve System; the downgrade, and any future downgrades, in the
credit rating of the U.S. Government and federal agencies;
inflation, interest rate, market and monetary fluctuations; the
timely development of and acceptance of new products and services
and the perceived overall value of these products and services by
users, including the features, pricing and quality compared to
competitors' products and services; the willingness of users to
substitute competitors’ products and services for DNB’s products
and services; the success of DNB in gaining regulatory approval of
its products and services, when required; the impact of changes in
laws and regulations applicable to financial institutions
(including laws concerning taxes, banking, securities and
insurance); technological changes; additional acquisitions; changes
in consumer spending and saving habits; the nature, extent, and
timing of governmental actions and reforms; and the success of DNB
at managing the risks involved in the foregoing. Annualized,
pro forma, projected and estimated numbers presented herein are
presented for illustrative purpose only, are not forecasts and may
not reflect actual results.
DNB cautions that the foregoing list of important factors is not
exclusive. Readers are also cautioned not to place undue reliance
on these forward-looking statements, which reflect management's
analysis only as of the date of this press release, even if
subsequently made available by DNB on its website or otherwise. DNB
does not undertake to update any forward-looking statement, whether
written or oral, that may be made from time to time by or on behalf
of DNB to reflect events or circumstances occurring after the date
of this press release.
For a complete discussion of the assumptions, risks and
uncertainties related to our business, you are encouraged to review
our filings with the SEC, including our most recent annual report
on Form 10-K, as supplemented by our quarterly or other reports
subsequently filed with the SEC.
Important Additional Information and Where to Find
It
DNB intends to file with the SEC a Registration Statement on
Form S-4 relating to the proposed merger, which will include a
prospectus for the offer and sale of DNB common stock as well as
the joint proxy statement of DNB and East River for the
solicitation of proxies from their shareholders for use at the
meetings at which the merger will be considered. This
communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. SHAREHOLDERS OF DNB AND EAST RIVER ARE URGED
TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY
STATEMENT-PROSPECTUS REGARDING THE MERGER WHEN IT BECOMES AVAILABLE
AND ANY OTHER RELEVANT DOCUMENTS FILED BY DNB WITH THE SEC, AS WELL
AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION.
A free copy of the joint proxy statement-prospectus, as well as
other filings containing information about DNB, may be obtained at
the SEC’s website at http://www.sec.gov, when they are filed by
DNB. You will also be able to obtain these documents, when
they are filed, free of charge, from DNB at
http://investors.dnbfirst.com. In addition, copies of the joint
proxy statement-prospectus can also be obtained, when it becomes
available, free of charge by directing a request to DNB at 4
Brandywine Avenue, Downingtown, PA 19335-0904 or by contacting
Gerald F. Sopp at 484.359.3138 or gsopp@dnbfirst.com or to East
River at 4341 Ridge Avenue, Philadelphia, PA 19129 or by contacting
Christopher P. McGill at 267.295.6420 or
cmcgill@eastriverbank.com.
DNB, East River and certain of their directors, executive
officers and employees may be deemed to be “participants” in the
solicitation of proxies in connection with the proposed
merger. Information concerning the interests of the DNB and
East River persons who may be considered “participants” in the
solicitation will be set forth in the joint proxy
statement-prospectus relating to the merger, when it becomes
available. Information concerning DNB’s directors and
executive officers, including their ownership of DNB common stock,
is set forth in DNB’s proxy statement previously filed with the SEC
on March 23, 2016.
For further information, please contact:
For DNB Financial Corporation
Investors – Gerald F. Sopp, Executive Vice President, Chief Financial Officer
484.359.3138
gsopp@dnbfirst.com
Media – Jonathan T. McGrain, Senior Vice President, Marketing
484.359.3221
jmcgrain@dnbfirst.com
For East River Bank
Investors and Media – Christopher P. McGill, President and Chief Executive Officer
267.295.6420
cmcgill@eastriverbank.com
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