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When considering a deal, sellers should assess the long-term staying power of the combined institution.
Like many of its peers, FNCB Bancorp of Dunmore, Pennsylvania, was flush with cheap deposits in the years immediately following the Covid-19 pandemic and facing the prospect of another prolonged low-interest rate environment. That’s when leadership began to entertain the idea of M&A. 
Management and the board were confident in the company’s growth strategy, but knew the bank, then around $1.7 billion in assets, needed scale if it was going to survive in the long term. “We weren’t looking to just liquidate the franchise,” says Jerry Champi, who was CEO of FNCB.
He cites a number of reasons that FNCB ultimately merged with Peoples Financial Services Corp., which is based in nearby Scranton and had about $3.7 billion in assets at the time. Complementary geographies would vault the combined institution to a larger share of the greater Scranton market and also provide for some easy cost savings post-closing.
The all-stock transaction was valued around $129 million, and FNCB shareholders received 0.12460 of common stock in the combined organization for each share they owned. Peoples Financial Services was the surviving institution, but the two organizations viewed the deal as a merger of equals.
“Because we treated it as an MOE, there wasn’t a negotiation of premium,” says Champi, now the CEO of Peoples Financial, with about $5.5 billion of assets.
To learn more about evaluating a transaction, download the report, sponsored by Janney Montgomery Scott, here.
