LUZERNE - Luzerne Bank, which for decades has prided itself on catering to local businesses and residents, has been acquired by Penns Woods Bancorp.
Penns Woods Bancorp, Inc. and Luzerne National Bank Corporation jointly announced today that they have entered into a definitive merger agreement under which Penns Woods will acquire Luzerne in a stock and cash transaction.
Based in Williamsport, Penns Woods is the parent company of Jersey Shore State Bank, which operates 13 branches in Lycoming, Clinton, Centre and Montour counties.
The merger, approved unanimously by the boards of directors of both companies, further broadens Penns Woods' footprint into contiguous markets in Luzerne and Lackawanna counties.
Penns Woods intends to continue to operate Luzerne Bank as a separate banking subsidiary of Penns Woods under the name "Luzerne Bank."
The combined company will have more than $1.1 billion in assets.
"The affiliation of Luzerne with Penns Woods will present significant opportunities for our customers, employees and shareholders," Luzerne President and CEO Robert C. Snyder said in a press release.
"Each organization is known for its commitments to customer service and community. Partnering with Penns Woods will bring increased financial service capabilities to our customers while allowing Luzerne to maintain its local identity as an independent community bank. We have known the team at Penns Woods for many years, admire their success, and look forward to adding to that success," Snyder said.
Reached by phone, Snyder declined further comment, other than to restate his comments that customers of both banks could expect to see increased financial services.
"The beauty of it is, they have some capavbilities that we admire and we have some capabilities that they admire. We expect to enhance the capabilities of both banks," Snyder said.
Snyder also stressed that the banks' holding companies are merging, not the banks themselves. Each bank is individually chartered and will retain their charters.
"We have always been proud of being one of the leading community banks in northeastern Pennsylvania and our partnership with Penns Woods will allow us to continue that tradition," Joseph E. Kluger, Chairman of the Board of Luzerne, said in a press release.
"In addition, the terms of the transaction provide a significant, on-going role for Luzerne in the combined company along with receipt of consideration for shareholders that is very attractive financially. We are excited by the opportunity to become part of this growing company," Kluger said.
Richard A. Grafmyre, president and chief executive officer of Penns Woods and Jersey Shore State Bank, said the acquisition creates tremendous opportunities to build on the successes that each organization has achieved individually in its own markets.
"The organizations fit together nicely, sharing a unified commitment to deliver the best banking experience," Grafmyre said.
Ronald A. Walko, Chairman of the Board of Penns Woods, said he looks forward to the increased opportunities. "I expect that together these two great banks will maximize Penns Woods shareholder value through expanded financial services," Walko said.
Under the terms of the merger agreement, Penns Woods will acquire all of the outstanding shares of Luzerne for a total purchase price of approximately $44.5 million.
Luzerne Bank stock was valued at $38.80 after the close of trading today, a 52-week high. It has traded between $32.10 and $38.80 per share in the past year.
Luzerne shareholders will have the opportunity to elect to receive for each outstanding share of Luzerne common stock either 1.5534 shares of Penns Woods common stock, $61.86 in cash or a combination of cash or stock.
All shareholder elections will be subject to allocation and proration procedures set forth in the merger agreement that are designed to ensure that no more than 10 percent of the outstanding Luzerne shares are exchanged for cash.
The transaction is expected to be a tax-free exchange to the extent that shareholders of Luzerne receive stock in exchange for their shares. The transaction is expected to close in the second quarter of 2013 subject to customary closing conditions, including receipt of regulatory approvals and approvals by both Penns Woods and Luzerne shareholders.
The existing members of the board of directors of Luzerne Bank will continue to serve as directors after closing, and Richard A. Grafmyre, Penns Woods' President and Chief Executive Officer, will join the Luzerne Bank board.
In addition, at closing, the Penns Woods board of directors will be expanded to include three current non-employee directors from the Luzerne board of directors.
Luzerne National Bank Corporation is the parent company of Luzerne Bank, which operates eight branch offices providing financial services in Luzerne and Lackawanna counties.