2009-12-31 / Local & State

Tower Bancorp To Buy First Chester For $65M

HARRISBURG, Pa. (AP) – Tower Bancorp Inc., the parent of Graystone Tower Bank, said Monday it agreed to acquire First Chester Bancorp, a Pennsylvania bank, for $65 million in stock.

The former First National Bank of McConnellsburg is a wholly-owned subsidiary of Tower Bancorp operating as Tower Bank.

The move will allow Tower, which operates in Pennsyvalnia and Maryland, to expand into Pennsylvania’s Chester and Delaware counties. Tower said it does not expect to close any branches. It plans to save about $12 million through reducing administrative and operational expenses after the acquisition. It expects the deal will immediately be helpful to earnings.

First Chester shareholders will receive 0.453 shares of Tower common stock for each share they hold, worth about $10.22. The price is an 86 percent premium to First Chester’s closing price on Friday.

The exchange ratio is subject to upward or downward adjustment if loan delinquencies at First Chester increase or decrease beyond specified amounts.

First Chester shares rose $3.65, or 66 percent, to $9.15, during late-day trading on Monday. Tower Bancorp shares fell 5 cents for $22.50.

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