Orrstown Financial Services and Codorus Valley Bancorp Successfully Complete Merger of Equals
Orrstown Financial Services and Codorus Valley Bancorp have completed their merger of equals, creating a leading community bank in Pennsylvania and Maryland. The combined entity will operate under the name Orrstown Financial Services, trading on NASDAQ under the ticker ORRF. Clients will continue to use their respective banks' services until a full system integration expected in November 2024. The merged company will have administrative headquarters in Harrisburg, PA, and an operations center in York, PA. The Board of Directors will include members from both companies, reflecting a balance in leadership. Codorus Valley shareholders received 0.875 shares of Orrstown common stock per Codorus Valley share, making up approximately 44% of the new entity. The merger aims to enhance value for clients, shareholders, community partners, and employees.
- Successful completion of the merger enhances market presence in Pennsylvania and Maryland.
- Combined entity trades under the Orrstown ticker (ORRF) on NASDAQ.
- Integration promises operational synergies, potentially leading to cost savings and increased profitability.
- Clients benefit from expanded ATM access with no withdrawal fees.
- Integration challenges may arise as systems and services are combined by November 2024.
- Former Codorus Valley shareholders' ownership is diluted, receiving 0.875 shares of Orrstown per Codorus Valley share.
Insights
The merger of Orrstown Financial Services and Codorus Valley Bancorp is a notable development in the financial sector, particularly for stakeholders in community banks. The merger of equals model is significant as it implies a mutual agreement of shared benefits and responsibilities, rather than one company dominating the other. This type of merger generally aims to pool resources and streamline operations, potentially leading to cost synergies and enhanced competitive positioning. The combined entity now has a more extensive branch network and customer base across Pennsylvania and Maryland, which could translate into improved market reach and financial performance.
The conversion ratio of 0.875 shares of Orrstown common stock for each Codorus Valley share results in Codorus Valley shareholders holding about
In the short term, there may be integration risks, including potential disruptions during the merging of systems and services, which is slated for completion by November 2024. However, if managed well, the combined bank could benefit from a larger asset base and a diversified product portfolio, enhancing its capacity to withstand economic fluctuations.
The transition to a single brand, Orrstown Bank and the consolidation of operations is a strategic move to streamline branding and operational efficiencies. The decision to phase out the PeoplesBank brand by November 2024 indicates a clear timeline for integration, which is important for managing customer expectations and retaining brand loyalty. The initial dual-brand operation could mitigate customer attrition by providing a sense of continuity during the transition period.
The merger will also expand the ATM network for customers, offering immediate benefits such as fee-free withdrawals. This could enhance customer satisfaction and retention, as convenience is a significant factor for bank customers.
Long-term, the combined entity's headquarters in Harrisburg, PA and operations center in York, PA, position it well geographically to leverage economic growth in these regions. The expansion of the customer base across two states could provide diversified revenue streams and reduce reliance on a single market.
Investors should be mindful of potential challenges, such as aligning corporate cultures and ensuring consistent service quality during the transition. Overall, the merger aims to create a more competitive and financially robust institution, which bodes well for future growth prospects.
HARRISBURG, Pa., July 01, 2024 (GLOBE NEWSWIRE) -- Orrstown Financial Services, Inc. (NASDAQ: ORRF), the holding company for Orrstown Bank (“Orrstown”), and Codorus Valley Bancorp, Inc. (NASDAQ: CVLY), the holding company for PeoplesBank, A Codorus Valley Company (“Codorus Valley”), today announced the successful completion of their previously announced merger of equals creating a premier Pennsylvania and Maryland community bank.
"We are excited to move forward as one unified organization, leveraging our combined strengths to deliver even greater value to our clients, shareholders, community partners, and employees," said Thomas R. Quinn, Jr., Orrstown's President and Chief Executive Officer.
"This merger represents a significant milestone in our shared journey towards building a stronger, more resilient bank that is well-positioned for sustainable growth and success," added Craig L. Kauffman, Orrstown's Executive Vice President and Chief Operating Officer. Mr. Kauffman formerly served as President and Chief Executive Officer of PeoplesBank.
Clients Should Continue to Bank as They Normally Do
The combined organization will initially operate under both the Orrstown Bank and PeoplesBank brands, and clients will continue to conduct business through their respective Orrstown Bank and PeoplesBank branches, websites and mobile apps. As an immediate benefit, Orrstown Bank and PeoplesBank clients can make withdrawals free of charge throughout the ATM network of the combined bank. Full ATM functionality, including deposits, will be available once the systems and services of Orrstown Bank and PeoplesBank are combined, which is expected in November 2024. Orrstown Bank clients can find additional information at www.orrstown.com, and PeoplesBank clients can find additional information at www.peoplesbanknet.com.
Name, Branding, Headquarters and Markets
The combined company will trade on the Nasdaq Global Select Market under the Orrstown ticker symbol "ORRF" and operate under the "Orrstown Financial Services, Inc." name. The combined bank will operate under the "Orrstown Bank" name once the systems and services of Orrstown Bank and PeoplesBank are combined, which is expected in November 2024. Until then, PeoplesBank will continue to serve its clients and conduct its business under the PeoplesBank brand name, while operating as a division of Orrstown Bank.
The administrative headquarters of the combined company will be located in Harrisburg, PA, and the operations center of the combined company will be located in York, PA.
Board of Directors
The combined company's Board of Directors will consist of thirteen members, with seven directors from Orrstown and six directors from Codorus Valley:
- Sarah M. Brown
- Brian D. Brunner
- Scott V. Fainor
- Cindy J. Joiner
- John W. Giambalvo
- Craig L. Kauffman
- Mark K. Keller
- J. Rodney Messick
- Thomas R. Quinn, Jr.
- Michael J. Rice
- Eric A. Segal
- Glenn W. Snoke
- Joel R. Zullinger
Closing Details
At the effective time of the merger on July 1, 2024, each outstanding share of Codorus Valley common stock was converted into the right to receive 0.875 shares of Orrstown common stock. Former Codorus Valley shareholders collectively represent approximately
Advisors
Raymond James & Associates, Inc. acted as financial advisor to Orrstown and delivered a fairness opinion to the Board of Directors of Orrstown. Goodwin Procter LLP served as legal counsel to Orrstown.
Keefe, Bruyette & Woods, A Stifel Company, acted as financial advisor to Codorus Valley in the transaction and delivered a fairness opinion to the Board of Directors. Holland & Knight LLP served as legal counsel to Codorus Valley.
About Orrstown
Orrstown Financial Services, Inc. and its wholly owned subsidiary, Orrstown Bank, provide a wide range of consumer and business financial services in Adams, Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry, and York Counties, Pennsylvania and Anne Arundel, Baltimore, Howard, and Washington Counties, Maryland, as well as Baltimore City, Maryland. The Company's lending area also includes adjacent counties in Pennsylvania and Maryland, as well as Loudon County, Virginia and Berkeley, Jefferson and Morgan Counties, West Virginia. Orrstown Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the FDIC. Orrstown Financial Services, Inc.'s common stock is traded on the NASDAQ Global Select Market under the symbol "ORRF."
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans and the future performance of Orrstown.
Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "could," "may," "should," "will" or other similar words and expressions are intended to identify these forward-looking statements. These forward-looking statements are based on Orrstown's current expectations and assumptions regarding Orrstown's and Codorus Valley's businesses, the economy, and other future conditions. Because forward-looking statements relate to future results and occurrences, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Any number of risks, uncertainties, or other factors could affect Orrstown's future financial results and performance and could cause actual results or performance to differ materially from anticipated results or performance. Such risks and uncertainties include, among others: the outcome of any legal proceedings that may be instituted against Orrstown; the possibility that the anticipated benefits of the proposed transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Orrstown does business; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; the possibility that revenues following the transaction may be lower than expected; the impact of certain restrictions during the pendency of the transaction on Orrstown's ability to pursue certain business opportunities and strategic transactions; diversion of management's attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; the ability to complete the integration of Orrstown and Codorus Valley successfully; the dilution caused by Orrstown's issuance of additional shares of its capital stock in connection with the transaction; and the potential impact of general economic, political or market factors on the companies or the transaction and other factors that may affect future results of Orrstown. The foregoing list of factors is not exhaustive. Except to the extent required by applicable law or regulation, Orrstown disclaims any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. Further information regarding Orrstown and factors which could affect the forward-looking statements contained herein can be found in Orrstown's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, its Quarterly Report on Form 10-Q for the period ended March 31, 2024, and its other filings with the SEC. SEC filings are available free of charge on the SEC's website at www.sec.gov.
For media inquiries or further information, please contact:
John Moss
SVP, Director of Marketing and Client Experience, Orrstown Bank
717-747-1520
jmoss@orrstown.com
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