First National, Graystone Banks Merge
Less than three years after The First National Bank of McConnellsburg became the McConnellsburg branch of The First National Bank of Greencastle, what was once a locally owned bank will now become "Tower Bank, a division of Graystone Tower Bank." The name change will come as a result of a recently announced merger between The First National Bank of Greencastle, and Graystone Financial Corp., a rapidly growing Harrisburgbased bank.
Like so many other things throughout the years, the word "McConnellsburg" will no longer appear in the bank's name, a bank that was founded more than 100 years ago and was independently and locally owned until 2006 when it merged with the Greencastle bank.
The merger was announced jointly last week by Jeffrey Shank, president and CEO of Tower Bancorp Inc., which is the holding company of First National Bank of Greencastle, and by Andrew Samuel, chairman and CEO of Graystone Financial Corp., the holding company of Graystone Bank.
The partnership of the two institutions will create a financial institution with combined assets of over $1.2 billion with more than 300 employees.
In making the announcement, Shank said the "alliance is a proactive, revenue-driven strategy, not a cost-saving response to the current financial climate." Shank also said that "because there are no overlapping branches and markets, no branch closings of either banking institution are planned." However, both bank presidents concede that "after an initial evaluation period, some duplicating positions may require streamlining."
Graystone Bank was founded in 2005 and is headquartered in Harrisburg with nine branch locations in six counties, including Centre, Cumberland, Dauphin, Lancaster, Lebanon and York. It is the fastest growing bank in Pennsylvania, while The First National Bank of Greencastle, founded in 1864, is the oldest independent bank in Pennsylvania. The merger will result in a banking institution with a total of 25 branch locations in nine counties in Pennsylvania and one in Washington County, Md.
In a press release, Shank and Samuel promised that "both institutions will continue operating under their established brands and their respective customers will receive the same high-level of services and products from the familiar faces at their existing locations." They said the only visible transition will be the name changes of both banks and their branches. First National Bank of Greencastle will be known as Tower Bank, a division of Graystone Tower Bank, while cur- rent Graystone Bank branches will be known as Graystone Bank, a division of Graystone Tower Bank.
The 2006 merger agreement between The First National Bank of McConnellsburg and The First National Bank of Greencastle called for three of FNB's directors to sit on the board of Tower Bancorp. Local FNB directors Dr. H.D. Johnston, Terry Randall and Patricia Carbaugh were designated to serve in that capacity. According to Shank, the three directors will continue to serve on the newly combined Tower Bancorp board of directors.
Under the terms of the deal, the two holding companies, Tower Bancorp Inc. and Graystone Financial Corp. will merge and still be called Tower Bancorp Inc. with a 20-member board of directors, 10 each designated by Tower and Graystone, respectively. The agreement also provides that Kermit G. Hicks shall serve as chairman of the board of the new holding company. Hicks had served as chairman of the board of Tower Bancorp Inc. prior to the merger. Andrew Samuel will serve as president and CEO of Tower Bancorp Inc., and Jeffrey Shank will serve as executive vice president of Tower Bancorp Inc., president and CEO of Tower Bank, a division of Graystone Tower Bank.
As part of the transaction, Tower will exchange .42 shares of common stock for each outstanding share of Graystone Financial Corp. common stock. In addition, Tower will assume 199,750 outstanding stock options of Graystone to acquire shares of Graystone common stock. In addition, the agreement provides that the Tower shareholders will receive a special cash dividend of $1.12 per share prior to the effective date of the transaction.
Despite the recent economic downturn affecting many of the country's banking institutions, the press release states that "both institutions have produced steady and progressive quarters of financial performance and growth. The combination will produce a dominant institution in central Pennsylvania and northern Maryland."
The merger will likely take place sometime in the first quarter of 2009 after a shareholder's meeting is held to vote on the proposed merger