Tower Bancorp, Inc. (“Tower”) (NASDAQ: TOBC) and First Chester
County Corporation (“First Chester”) (NASDAQ: FCEC) today jointly
announced the signing of a definitive merger agreement pursuant to
which Tower will acquire First Chester in an all-stock transaction
valued at approximately $65 million or $10.22 per share.
The transaction, approved by the boards of directors of both
companies, further broadens the geographic markets of Tower Bancorp
into demographically attractive and contiguous markets
predominantly located in the Pennsylvania counties of Chester and
Delaware. This transaction will provide Tower with the addition of
$1.3 billion in assets including, $958 million in gross loans held
for investment, $986 million in deposits as well as 23 branches
situated across four counties in southeastern Pennsylvania.
“This acquisition is a continuation of our strategy to expand
selectively our geographic footprint in contiguous markets with
long-term growth potential,” said Tower Chairman and Chief
Executive Officer Andrew S. Samuel. “Upon closing we will be one of
central and southeastern Pennsylvania’s largest independent
community banks. Moreover, First Chester customers and the local
community will benefit from the continued presence and engagement
of a locally managed bank.”
Under the terms of the agreement, each First Chester shareholder
will receive 0.453 shares of Tower common stock for each First
Chester share. The market value as of December 24, 2009 of $10.22
per First Chester share represents 90% of the company’s tangible
book value. As described in the definitive merger agreement, the
exchange ratio is subject to upward or downward adjustment if loan
delinquencies at First Chester increase or decrease beyond
specified amounts.
“We believe this transaction will create significant value for
First Chester shareholders, both immediately and longer term,” said
John A. Featherman III, current Chairman, President and Chief
Executive Officer of First Chester. “In addition, both institutions
share a similar culture and have a strong commitment to their
respective communities.”
Management anticipates that there will be no branch closures.
Tower expects to achieve 15% cost savings, or approximately $12
million, through the reduction of administrative and operational
redundancies. Additionally, Tower expects that this acquisition
will immediately be significantly accretive to earnings per
share.
As part of the definitive agreement, Tower’s subsidiary bank,
Graystone Tower Bank, has agreed to increase its lending facility
with First Chester to up to $26 million as well as to purchase up
to $100 million of residential mortgage and commercial loans from
First National Bank of Chester County in order for the bank to
satisfy the regulatory capital requirements of the Office of the
Comptroller of the Currency (the “OCC”).
Upon closing of the First Chester acquisition, on a pro forma
basis, Tower will continue to maintain regulatory capital ratios in
excess of the “well-capitalized” level. Neither Tower nor First
Chester elected to receive funds under the US Treasury’s Capital
Purchase Program. In order to maintain Tower’s well-capitalized
position, the merger agreement provides specific protections in the
event of an increase in First Chester’s loan delinquencies prior to
closing.
It is anticipated that the transaction will be completed during
the second quarter of 2010, pending regulatory approvals, the
approval of the shareholders of both Tower and First Chester, and
the satisfaction of other closing conditions.
Tower was advised by the investment banking firm of Keefe
Bruyette and Woods, as well as the law firm of Rhoads & Sinon
LLP. First Chester was advised by the investment banking firm of
Sandler O’Neill and Partners and the law firm of Hogan &
Hartson LLP.
The proposed transaction will be submitted to the shareholders
of First Chester and Tower for their consideration and approval. In
connection with the proposed transaction, Tower will be filing with
the Securities and Exchange Commission (the “SEC”) a registration
statement on Form S-4 which will include a joint proxy
statement/prospectus and other relevant documents to be distributed
to the shareholders of Tower and First Chester. Investors are urged
to read the registration statement and the joint proxy
statement/prospectus regarding the proposed transaction when it
becomes available and any other relevant documents filed with the
SEC, as well as any amendments or supplements to those documents,
because they will contain important information. Investors will be
able to obtain a free copy of the joint proxy statement/prospectus,
as well as other flings containing information about Tower and
First Chester, free of charge from the SEC’s Internet site
(www.sec.gov), by contacting Tower Bancorp, Inc., 112 Market
Street, Harrisburg, Pennsylvania 17101, Attention: Brent Smith,
Investor Relations, telephone 717-724-4666 or by contacting First
Chester Financial Corporation, 9 North High Street, West Chester,
Pennsylvania 19381, Attention: John Stoddart, Investor Relations,
telephone 484-881-4141. INVESTORS SHOULD READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER DOCUMENTS TO BE FILED WITH THE SEC
CAREFULLY BEFORE MAKING A DECISION CONCERNING THE TRANSACTION.
Tower, First Chester and their respective directors, executive
officers, and certain other members of management and employees may
be soliciting proxies from Tower and First Chester shareholders in
favor of the transaction. Information regarding the persons who
may, under the rules of the SEC, be considered participants in
the solicitation of the Tower and First Chester shareholders in
connection with the proposed transaction will be set forth in the
joint proxy statement/prospectus when it is filed with the SEC. You
can find information about Tower’s executive officers and directors
in its most recent proxy statement filed with the SEC, which is
available at the SEC’s Internet site (www.sec.gov). Information
about First Chester’s executive officers and directors is set forth
in its most recent proxy statement filed with the SEC, which is
available at the SEC’s Internet site. You can also obtain free
copies of these documents from Tower or First Chester, as
appropriate, using the contact information above.
This document is not an offer to sell shares of Tower’s
securities which may be issued in the proposed transaction. Such
securities are offered only by means of the joint proxy
statement/prospectus referred to above.
Investor Conference Call — Executives from Tower will
host a conference call with investors and the financial community
at 10 a.m. Eastern Time today to discuss this transaction. Those
wishing to participate in the call may dial toll-free
1-888-300-2323. The call will also be broadcast live over the
internet and an online archive of the webcast will be available
after the conclusion of the call. To access the call please visit
the investor relations section of Tower’s website at
www.towerbancorp.com.
About Tower Bancorp, Inc.
Tower Bancorp, Inc. is the parent company of Graystone Tower
Bank, a full-service community bank operating 27 branch offices in
central Pennsylvania and Maryland through two divisions, Graystone
Bank and Tower Bank. With total assets of approximately $1.4
billion, the company's unparalleled competitive advantage is its
300 employees and a strong corporate culture paired with a clear
vision that has provided customers with uncompromising services and
individualized solutions to every financial need. Tower Bancorp
Inc.'s Common Stock is listed on the NASDAQ Global Market under the
symbol "TOBC." More information about Tower Bancorp, Inc. and its
divisions can be found on the internet at www.yourtowerbank.com,
www.graystonebank.com and www.towerbancorp.com.
About First Chester County Corporation
First Chester County Corporation and its wholly owned
subsidiary, First National Bank of Chester County, is a financial
institution with $1.3 billion in assets and with 23 branch offices
located in Chester, Delaware, Lancaster and Cumberland counties.
Founded in 1863, First National Bank of Chester County is the
eighth oldest national bank in the country. First National provides
quality financial services to individuals, businesses, government
entities, non profit organizations, and community service groups.
Wealth Management and Trust Services are provided through First
National Wealth Management, a division of First National Bank of
Chester County. For more information, visit www.1nbank.com.
Mortgage services are provided through American Home Bank, a
division of First National Bank of Chester County. American Home
Bank (AHB) has multiple national delivery channels in the retail
and wholesale mortgage arena as well as joint venture mortgage
partnerships with builders and systems-built manufacturers. For
more information visit www.bankahb.com.
Safe Harbor for Forward-Looking Statements
This document may contain forward-looking statements as defined
in the Private Securities Litigation Reform Act of 1995. Actual
results and trends could differ materially from those set forth in
such statements due to various risks, uncertainties and other
factors. Such risks, uncertainties and other factors that could
cause actual results and experience to differ from those projected
include, but are not limited to, the following: ineffectiveness of
the company's business strategy due to changes in current or future
market conditions; the effects of competition, and of changes in
laws and regulations, including industry consolidation and
development of competing financial products and services; interest
rate movements; changes in credit quality; inability to achieve
merger-related synergies; difficulties in integrating distinct
business operations, including information technology difficulties;
volatilities in the securities markets; and deteriorating economic
conditions, and other risks and uncertainties, including those
detailed in Tower Bancorp, Inc.'s and First Chester County
Corporation’s filings with the Securities and Exchange Commission
(SEC).
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