Linkbancorp in Harrisburg, Pa., completed a $5 million stock offering in mid-October and a month earlier closed a $20 million subordinated debt offering.
Now, the $367.4 million-asset company is putting that capital to work.
The company announced last week it plans to enter what it termed a strategic combination with the $437 million-asset GNB Financial Service in Gratz, Pa. Though GNB, the holding company for Gratz Bank, is larger, Linkbancorp shareholders would own 52% of the combined company, while its chairman and CEO, Andrew Samuel, is slated to serve as CEO.
The deal is valued at $62.7 million. GNB shareholders can elect to receive $87.68 in cash or about 7.3 shares of Linkbancorp for each of their GNB shares.
The deal, which is expected to close in the second quarter of 2021, “creates a pretty strong $800 million bank in central Pennsylvania with an opportunity to grow,” Samuel said Friday in an interview. “It’s a situation where two plus two equals more than four.”
Samuel said Linkbancorp, the parent of Linkbank, has been bolstering its governance and enterprise risk management capabilities over the past two years to support a major growth spurt. The merged institution would have more than $800 million of assets and nine branches.
“This partnership is an exciting opportunity to combine two very complementary institutions and achieve the scale and talent needed to compete and thrive in a rapidly evolving environment,” GNB Chief Executive Wesley Weymers said in a press release.
The companies’ footprints are adjacent, so no branches are expected to close, Samuel said. The surviving bank will retain the Gratz Bank name and charter but the three Linkbank branches in Bucks, Cumberland and Lancaster counties would continue to do business under the Linkbank brand, he said.
Gratz has six branches in Dauphin, Northumberland and Schuylkill counties.
“Gratz is an 86-year-old charter with a rich tradition in its community,” Samuel said. “It makes sense to keep the name.”
The two banks control about 1% of the region’s $58 billion deposit market, according to the Federal Deposit Insurance Corp.
Samuel has agreed to step aside as chairman so Joseph Michetti, GNB’s chairman, can chair the merged company.
Weymers would serve as the chairman of Gratz Bank.
Samuel, who has presided over four other acquisitions in his career as a bank CEO, said he emphasizes negotiated transactions. His previous deals followed a template similar to the arrangement with GNB, with the buyer retaining most of the seller’s management team, branch network, even its brand identity.
“We really pride ourselves on working with people and building relationships,” Samuel said. “That applies to our customers and to our bank deals.”
Samuel was CEO at Sunshine Bancorp in Plant City, Fla., from October 2014 until its $177 million
Samuel was CEO at the $2.6 billion-asset Tower Bancorp in Harrisburg before its $343 million
Samuel said he met the Gratz management team about two years ago, but serious negotiations between the companies began six months ago, shortly after the coronavirus pandemic hit.
“There’s been a lot of phone calls and Zoom meetings, with some sporadic face-to-face discussions,” Samuel said. “Certainly, it’s been different.”
Samuel founded Linkbancorp in 2018, after raising more than $40 million and buying Stonebridge Bank, a troubled one-branch institution in New Hope, Pa., in October 2018. It was renamed Linkbank and has since added two branches and more than $300 million of assets.
