Mifflinburg Bancorp in Pennsylvania said it struck a deal to acquire in-state peer Northumberland Bancorp in a bid for scale and efficiency.
The banks — both named after the cities in which they are based — billed the combination as a merger of equals, but Mifflinburg would buy Northumberland in an all-stock transaction valued at $34.2 million. Northumberland shareholders would own approximately 46% of the company.
In a joint press release, the similarly sized companies said the combined bank would have about $1.3 billion of assets, $1.1 billion of deposits and $850 million of loans focused on the Susquehanna Valley region of central Pennsylvania.
The merger would create a bank with "greater scale, operating leverage and resources to compete" with larger players, the companies said. Efficiencies would be gained "through early retirement and severance package offerings" as well as "the natural attrition of the workforce."
The merged company would be renamed Steele Bancorp at closing, while the bank unit would be "rebranded to a more suitable name, more reflective of the combined financial institution, and jointly determined by the parties," the companies said.
Jeffrey Kapsar, Mifflinburg's president and CEO, would lead the combined bank should the deal close as planned in the first half of 2025.
J. Todd Troxell, president and CEO of Northumberland and its Norry Bank unit, would become senior executive vice president and chief administrative officer of the post-merger bank and corporate secretary of Steele Bancorp.
"Our customers will benefit from the scale and varied talent of the combined organization, while they continue to enjoy the personal service this stronger community bank will provide with enhanced products and services," Troxell said in the release. "Shareholders will enjoy a sound investment in a larger bank with continued strong capital, earnings and dividends."
The boards of directors of the combined company and bank would consist of six members from Mifflinburg and six from Northumberland. Donald Steele Jr., currently chairman of Northumberland and Norry Bank, would become chairman of the merged company and bank.
Richard Drzewiecki, currently chairman of Mifflinburg and its bank, would become vice chairman of Steele and the merged bank.
The companies said the deal came together after "extensive discussions over the past five months."
The transaction adds to steadily mounting M&A momentum in 2024. At least 85 banks announced plans to sell through mid-September, according to S&P Global Market Intelligence. That put volume on pace to eclipse last year's total of 100 deals.
Earlier this week, TowneBank in Suffolk, Virginia, agreed to pay
More small banks are looking to sell in order to get out from under the weight of heavy regulatory burdens and escalating technology costs as the industry increasingly shifts to digital services and invests in cybersecurity.
"It's extraordinarily difficult to operate" without significant scale, Dan Goerlich, PwC's U.S. banking and capital markets leader, said in an interview. "It's just a difficult environment for small banks."
