NMB Financial Corporation/New Millennium Bank Announces Proposal to Acquire Noah Bank and Potential US Treasury ECIP Investment Into NMB Financial Corporation

Rhea-AI Summary

NMB Financial Corporation (OTC Pink: NMBF) announced a Letter of Intent to acquire Noah Bank for cash at 100% of Noah's tangible common equity as of March 31, 2022. The acquisition is valued at approximately $6.95 per share, pending due diligence and transaction expenses. NMB is also set to receive $75.1 million through the US Department of Treasury's Emergency Capital Investment Program to support its growth, especially in lending to minority-owned businesses. This acquisition aims to enhance NMB's assets to around $1 billion, expanding its banking presence into Pennsylvania.

Positive

• NMB's acquisition of Noah Bank valued at approximately $6.95 per share enhances liquidity for Noah shareholders.
• Anticipated investment of $75.1 million from the US Department of Treasury supports NMB’s growth and lending initiatives.
• Post-acquisition, NMB's total assets expected to approach $1 billion, allowing expansion of services and products.

Negative

• Noah shareholders may face significant dilution if a competing investment by private investors proceeds.
• Transaction requires regulatory approval and the support of two-thirds of Noah's shareholders, which introduces uncertainty.

FORT LEE, N.J.--(BUSINESS WIRE)-- NMB Financial Corporation (“NMB” or “Company”) (OTC Pink: NMBF) a bank holding company and parent of New Millennium Bank (“Bank”), announced that a Letter of Intent has been sent to the Board of Directors of Noah Bank, Elkins Park, Pennsylvania (“Noah”) related to a cash acquisition of Noah. The Letter of Intent provides for the cash acquisition of all outstanding shares of Noah at 100% of Noah’s tangible common equity as of March 31, 2022, less any transaction expenses over $2 million. Based upon publicly available information on Noah as of December 31, 2021, and assuming the transaction expenses are at or below $2 million, and there are no issues identified in normal due diligence, the value that would be delivered to Noah shareholders, using December 31, 2021 financial information, would be approximately $6.95 per share, based upon Noah having 4.235 million shares outstanding.

US Department of Treasury Emergency Capital Investment Program Investment into NMB

NMB is on its way to receive $75.1 million investment through the US Department of Treasury’s Emergency Capital Investment Program (“ECIP”). NMB is one of 186 community development financial institutions (“CDFI”) and minority depository institutions (“MDI”) that are eligible to receive $8.7 billion in capital through the ECIP. It is anticipated that the Department of Treasury will be investing $75.1 million in preferred stock of NMB Financial Corporation, with the investment expected to close at the end of May 2022.

The investment by the US Department of Treasury is part of the Federal Government’s response to the COVID-19 pandemic. The ECIP was designed to provide direct funding to CDFIs and MDIs, as these types of financial institutions focus their efforts on increasing access to capital in traditionally underserved markets such as minority communities and other targeted populations.

Hong Sik Hur, Chief Executive Officer of NMB, stated, “I am delighted at the prospect of receiving this historic investment into NMB by the Department of Treasury, and it is a transformational, and a significant game changer for NMB.” NMB plans to put the capital to work by increasing its lending to minority owned small businesses and low- to moderate-income customers as well as the targeted populations and communities that NMB serves. With this increase in capital, NMB will be able to grow its assets well in excess of $1 billion and provide additional products and services to customers within its footprint.

NMB Proposal to Acquire Noah

NMB plans to utilize a portion of the capital received to undertake the acquisition of Noah, which will increase the total assets of the surviving entity into the $1 billion range and provide the capital necessary to support future growth. NMB is only one of two Korean-American, MDI financial institutions in the United States that will be receiving the ECIP funds, and it is a testament to the work that has been done by NMB in building its banking franchise in New Jersey, New York, and Georgia. With the acquisition of Noah, if completed, NMB would also expand into Pennsylvania, and total assets of the combined entity would approach $1 billion.

James S. Ryu, Chief Corporate Officer of NMB, stated, “I am confident in accomplishing a seamless acquisition of Noah, a neighboring community bank, which is also a MDI and a CDFI. As one, we will be able to far more effectively serve the targeted populations, underserved communities, and low- to moderate-income individuals, families, and communities throughout the Eastern United States and beyond, which is our core mission.”

NMB is aware that Noah is under an agreement with a group of private investors concerning a common stock investment to acquire control of Noah, which would increase the capital account, but would not result in any liquidity to Noah shareholders. If the acquisition of control of Noah is completed by the private investors, which is expected to be at a significant discount to Noah’s existing book value per share, Noah’s existing shareholders could realize a significant dilution to their book value per share at the same time that majority control is transferred to the private investor group.

Alternatively, the combination of NMB and Noah would create a significant Korean-American banking franchise on the East Coast and is anticipated to provide significant cash value to Noah’s existing shareholders.

Noah shareholders have not had the opportunity to vote on the sale of control to the private investors and may not be aware of the dilution that could take place. NMB believes its offer to acquire Noah based upon the tangible common equity as of March 31, 2022 is a superior proposal, providing much needed liquidity for Noah shareholders. Also, the anticipated blending of the two organizations will allow the combined institution to provide additional products and services available to customers and provide continued employment opportunities for Noah employees.

As part of the Letter of Intent, NMB has notified the Board of Directors of Noah that it has communicated with the regulatory agencies of its desire to move forward with the acquisition and deliver a definitive agreement, as well as complete due diligence, in 30 days or less upon the execution of the Letter of Intent. The transaction does not require the approval of the NMB shareholders but would require the approval of two-thirds of the outstanding shares of Noah. The transaction is also subject to regulatory approval and normal and customary closing conditions. The Boards of Directors of NMB have unanimously approved moving forward with the Letter of Intent and it is hopeful that the acquisition can be completed in third quarter of 2022.

About NMB

Established in 1999, New Millennium Bank is a Minority Depository Institution designated by the FDIC, serving minority communities in New Jersey, New York and Georgia through 9 full-service branch locations. NMB also operates loan production offices in Dallas Texas and Seattle Washington.

Forward-Looking Statements

Statements in this press release regarding the proposed transaction between NMB and Noah, future financial and operating results, benefits and synergies of the transaction, financing for the transaction, future opportunities for the combined company and any other statements about NMB’s future expectations, beliefs, goals, plans or prospects constitute forward-looking statements. Any statements that are not statements of historical fact (including statements containing the words “will,” “projects,” “intends,” “believes,” “plans,” “anticipates,” “expects,” “estimates,” “forecasts,” “continues” and similar expressions) should also be considered to be forward-looking statements. These statements are only predictions based on current assumptions and expectations. Actual events or results may differ materially from those in the forward-looking statements set forth herein. Among the important factors that could cause actual events to differ materially from those in the forward-looking statements are: the ultimate outcome of discussions between NMB and Noah, including the possibilities that NMB will not pursue a transaction with Noah or that Noah will reject a transaction with NMB; the ability of the parties to complete a transaction; the risk that the conditions to the closing of any transaction, including receipt of required regulatory approvals and approval of Noah’s stockholders, are not satisfied in a timely manner or at all; litigation relating to the transaction; unexpected costs, charges or expenses resulting from the transaction; the risk that disruption from the proposed transaction materially and adversely affects the respective businesses and operations of NMB and Noah; the ability of NMB to realize the anticipated synergies, cost savings and other anticipated benefits of the proposed transaction, including the risk that the anticipated benefits from the proposed transaction may not be realized within the expected time period or at all; potential adverse reactions or changes to business relationships resulting from the announcement, pendency or completion of the transaction; the ability of NMB to retain and hire key employees; the recent and continuing coronavirus (COVID-19) pandemic which poses risks and may harm the Company's business and results of operations in future quarters, credit risk, changes in market interest rates, inability to achieve merger-related synergies, competition, economic downturn or recession, and government regulation and supervision, The forward-looking statements included in this press release speak only as of the date hereof, and NMB does not undertake any obligation to update these forward-looking statements to reflect subsequent events or circumstances, except as otherwise required by securities and other applicable laws.

This communication does not constitute an offer to buy or solicitation of an offer to sell any securities. This communication relates to a proposal which NMB has made for a business combination transaction with Noah. This communication is not a substitute for any registration statement, prospectus, proxy statement or other document NMB and/or Noah may prepare in connection with the proposed transaction. Any definitive proxy statement (if and when available) will be mailed to stockholders of Noah. SECURITY HOLDERS OF NOAH ARE URGED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS CAREFULLY IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220413006066/en/

Jane Lee

Administrator

201.676.4844

jlee@nmbonline.com

Source: NMB Financial Corporation

FAQ

What is the acquisition value of Noah Bank by NMB Financial Corporation?

NMB Financial Corporation plans to acquire Noah Bank at approximately $6.95 per share, based on its tangible common equity as of March 31, 2022.

How much funding will NMB Financial Corporation receive from the US Department of Treasury?

NMB Financial Corporation is set to receive $75.1 million through the US Department of Treasury's Emergency Capital Investment Program.

What impact will the acquisition of Noah Bank have on NMB Financial Corporation's assets?

The acquisition is expected to increase NMB's total assets to around $1 billion, enhancing its banking service capabilities.

What does the Letter of Intent signify for NMB Financial Corporation's future?

The Letter of Intent marks the beginning of the acquisition process, allowing NMB to pursue a definitive agreement and regulatory approvals for the acquisition of Noah Bank.

What risks are associated with the acquisition of Noah Bank by NMB Financial Corporation?

There is a risk of significant dilution for Noah shareholders if a competing investment by private investors goes forward, in addition to the need for regulatory and shareholder approvals.