Live Oak in N.C. hires First Horizon CFO

Live Oak Bancshares in Wilmington, N.C., has hired the former chief financial officer at First Horizon to fill the same role. 

The $8.4 billion-asset Live Oak said in a press release Wednesday that B.J. Losch will also become CFO of its bank on Sept. 1. Losch will be responsible for the overall financial management of the company and will oversee strategy and corporate development, including strategic oversight of Live Oak Ventures.

Losch, who will join Live Oak on Aug. 1, will succeed Brett Caines, who will remain at the company in a senior position to focus on strategic development goals. 

“We have had the privilege of creating an exceptional team here at Live Oak and having B.J. join us adds another layer of remarkable talent to our organization,” Chip Mahan, Live Oak's chairman and CEO, said in the release.

Losch has spent 12 years as CFO at First Horizon. Before that, he held senior roles at First Union and Wachovia.

First Horizon named Anthony Restel interim CFO, succeeding Losch. Restel was CFO at Iberiabank, which was sold to First Horizon last year.

Mid Penn to acquire Riverview Financial

Mid Penn Bancorp in Millersburg, Pa., has agreed to buy Riverview Financial in Harrisburg, Pa.

The $3 billion-asset Mid Penn said in a press release Wednesday that it will pay $124.7 million in stock for the $1.4 billion-asset Riverview. The deal, which is expected to close in the fourth quarter, priced Riverview at 128% of its tangible book value.

The acquisition will provide Mid Penn with its first branches in Pennsylvania’s Lehigh Valley and State College markets.

“These two great community bank organizations have been familiar with each other for years as competitors but now get to provide world class customer service to our markets throughout Pennsylvania together,” Rory Ritrievi, Mid Penn’s president and CEO, said in the release.

“This combination provides strong economic value to both shareholder groups and creates a financial institution with plenty of muscle at a time when it is most important,” Ritrievi added. “That muscle should allow us to continue to provide best in class return to both groups of shareholders.”

Two Riverview directors will join Mid Penn’s board.

Mid Penn said the deal should create 25% earnings per share accretion annually. The company should earn back any dilution to its tangible book value in just over two years.

Mid Penn said it expects to cut about half of Riverview’s annual noninterest expenses. The company plans to incur about $16 million of merger-related expenses.

Piper Sandler and Pillar+Aught advised Mid Penn. Janney Montgomery Scott and Luse Gorman advised Riverview.

Trustmark sells $354M of PPP loans

Trustmark in Jackson, Miss., is the latest bank to sell Paycheck Protection Program loans to The Loan Source.

The $16.9 billion-asset company disclosed in a regulatory filing Wednesday that it sold $354.2 million of PPP loans, or "substantially all" of its 2021 originations under the program.

The Loan Source will assume responsibility for the servicing and forgiveness process for the loans, Trustmark said. The sale will allow Trustmark "to focus on more-traditional lending efforts and increase its ability to provide customers with financial services in an improving economic environment."

Trustmark said that, on a pretax basis, it expects to accelerate the recognition of unamortized PPP loan origination fees, net of cost, of roughly $18.6 million, in the second quarter.

"This revenue is substantially the same as Trustmark would expect to recognize upon the maturity or forgiveness of the PPP loans being sold in this transaction," the filing said. "Thus this transaction serves to accelerate revenue anticipated in future periods into the second quarter."

Dime Community Bancshares in Hauppauge, N.Y., announced earlier in the week that it had sold more than $585 million of PPP loans to The Loan Source.

Midland States to record 2Q gain from settling tax issue

Midland States Bancorp in Effingham, Ill., will report an after-tax gain of $2.9 million in the second quarter after settling a tax issue tied to government-assisted acquisitions in the wake of the 2008 financial crisis.

The $6.9 billion-asset company said in a press release Tuesday that it will recognize a nearly $6.8 million tax benefit, partially offset by $3.6 million in legal and consulting expenses.

Midland States bought two failed banks: Strategic Capital Bank in May 2009 and WestBridge Bank and Trust in October 2010.

Midland States also announced that it prepaid an $85 million longer-term FHLB advance, which will result in a $3.7 million pretax charge in the second quarter. The move should reduce interest expense by $2.2 million annually, while adding 6 basis points to the company’s net interest margin.

The company also redeemed $31 million of fixed-to-floating rate subordinated notes that would have been due in June 2025. The redemption will reduce interest expense by about $1.4 million annually and add 4 basis points to the margin.

Valley bolstering NY footprint with Westchester deal

Valley National Bancorp in New York is expanding to the north with an agreement to buy Westchester Bank Holding in White Plains, N.Y. 

The $41 billion-asset Valley said in a press release Tuesday that it will pay $210 million in cash and stock for the $1.3 billion-asset parent of Westchester Bank. Another $10 million in cash will go to those who hold Westchester options.

The deal is expected to close in the fourth quarter.

Westchester has seven branches, $900 million of loans and $1.1 billion of deposits.

The deal is expected to be about 1% accretive to Valley’s earnings and neutral to its tangible book value ratio.

“Westchester has evolved into a high-performing and growth-oriented commercial bank in a desirable market,” Ira Robbins, Valley’s chairman, president and CEO, said in the release. “Westchester’s conservative credit culture and high-touch approach to commercial banking align extremely well with Valley’s own value proposition.”

John Tolomer, Westchester’s president and CEO, will join Valley as a market president after the deal closes.

Valley plans to cut about 30% of Westchester’s annual noninterest expenses. The company expects to incur $11 million in merger-related expenses. 

"We expect others had an interest in the attractive [Westchester] franchise, and this supports our thinking that Valley is a preferred acquirer in the metro New York market," Frank Schiraldi, an analyst at Piper Sandler, wrote in a note to clients.

"While we don't believe this necessarily creates a trend, this is probably an incremental positive for potential targets in a similar size range and geography as it floats the potential of another acquirer, and one with a strong relative currency," Schiraldi added.

Covington & Burling advised Valley. Raymond James and Goodwin Procter advised Westchester.

Dime in New York to close five branches

Dime Community Bancshares in Hauppauge, N.Y., plans to close five New York branches.

The $13 billion-asset company said in a press release Tuesday that it will close three branches in Brooklyn and one each in Southampton and Wading River. The closures will take place in October. 

“We regularly review our distribution channels and these combinations are part of our ongoing efforts to improve the efficiency of our branch network,” Kevin O’Connor, Dime’s CEO, said in the release. 

“Each location will be combined into a nearby branch, thereby minimizing customer disruption and allowing us to continue to serve our customers’ needs,” he added. 

The announcement comes a day after Dime said it had sold $585 million of Paycheck Protection Loans.

Chemung to pay $350k penalty as part of consent order

Chemung Financial in Elmira, N.Y., disclosed that its bank had entered into a consent order with the New York State Department of Financial Services to address alleged violations of the state’s fair lending law and federal Equal Credit Opportunity Act.

The order, signed last week, addressed issues the state regulator raised with Chemung Canal Trust’s indirect automobile lending program, the company said in a Tuesday regulatory filing. While it consented to the order, the bank did not consent to the agency’s findings.

The agency determined, after reviewing Chemung’s underwriting and pricing between Jan. 1, 2016, and Aug. 31, 2020, that dealer markups were higher for Hispanic borrowers compared to white borrowers. 

The $2.4 billion-asset Chemung said the agency found no evidence of “intentional discrimination. While the bank provides terms for auto loans, the dealerships have the discretion to increase interest rates above the bank’s buy rate. Chemung noted that it did not share in any of the dealer markups.

As part of the settlement, Chemung agreed to a $350,000 civil money penalty and to pay an estimated $53,000 in restitution to roughly 100 borrowers.

Chemung also agreed to move to a flat-fee business model and to notify participating dealerships each year to structure contracts in “a non-discriminatory manner.”

Community State in Indiana lines up next CEO

Community State Bank in Avilla, Ind., will soon have a new CEO.

The $347 million-asset bank said in a press release Tuesday that Will Thatcher will also become its president on July 1. He will succeed Stuart Hood, who is retiring after leading the bank for the last 12 years.

Thatcher previously served as president of the Fort Wayne region for First Merchants Bank.

“CSB has been a terrific experience,” Hood said in the release. “I will miss the customers deeply, but even more I will miss … the daily interactions with my fellow team members.”

FineMark in Fla. raises $83M through private placement

FineMark Holdings in Fort Myers, Fla., has raised $82.5 million from a private placement.

The $2.9 billion-asset parent of FineMark National Bank & Trust said in a press release Monday that it lined up buyers for 2.5 million shares of common stock.

Initial shares were sold on Friday to qualified institutional buyers and accredited investors, while roughly 818,000 shares will be sold on July 15 to a fund managed by Strategic Value Bank Partners.

"We are very excited to complete this significant capital raise, which includes several new investors," Joseph Catti, FineMark’s chairman and CEO, said in the release. "We believe this will benefit our existing shareholders, clients, associates and the communities we serve."

FineMark plans to use the net proceeds for a variety of purposes that will include refinancing existing debt and providing growth capital for its bank.

Apollo in Miami creates mortgage division

Apollo Bank in Miami, which tried unsuccessfully to sell itself to a credit union, has formed a residential lending division.

The $850 million-asset bank’s new mortgage operation will focus on high-net-worth individuals in Southern Florida, according to the South Florida Business Journal. The move creates a dedicated group to build on Apollo’s existing mortgage lending capabilities.

Apollo hired Agustin Goytisolo to lead the division. The bank plans to hire five to seven to fill out the operation.

The bank agreed in December 2019 to be sold to Southeast Credit Union in Tampa, Fla., in what would have been the biggest credit union-bank merger. But the pandemic scuttled those plans, and the financial institutions mutually terminated the deal in May 2020.

Fentura in Mich. heading west with Farmers State deal

Fentura Financial in Fenton, Mich., has agreed to buy Farmers State Bank in Munith, Mich.

The $1.3 billion-asset Fentura said in a press release last week that it will pay $15.5 million in cash for the $104 million-asset Farmers State. The deal, which is expected to close in the fourth quarter, priced Farmers State at 176% of its tangible book value.

Fentura said the deal should be 12% to 14% accretive to its earnings per share in each of the first two years after closing. It should take less than four years for the company to earn back a projected 6.1% dilution to its tangible book value.

Farmers State has three branches, $45 million of loans and $95 million of deposits. The deal allows Fentura to add locations southwest of its existing footprint.

“The combination brings together two organizations that believe in community banking and a shared commitment to serving our clients and local communities,” Ron Justice, Fentura’s president and CEO, said in the release.

“The resulting bank operations will further enhance our strong core deposit base, allowing us to enhance shareholder value by taking advantage of asset growth opportunities and expansion into new market areas,” Justice added.

Jeanne Richter, Farmers State’s president and chief financial officer, will join the senior management team of Fentura’s bank. Craig Goodlock, Farmers State’s chairman and CEO, will retire.

Fentura plans to cut about $1.2 million of annual noninterest expenses. The company will incur about $1.7 million of merger-related expenses.

Fentura was advised by ProBank Austin and Howard & Howard Attorneys. Farmers State was advised by Donnelly Penman & Partners and Bodman.

JPMorgan Chase to buy ESG-focused fintech

JPMorgan Chase has agreed to buy OpenInvest, a San Francisco fintech that helps financial professionals customize and report on values-based investments.

OpenInvest will retain its brand and be integrated into J.P. Morgan's Private Bank and Wealth Management client offerings. The $3.7 trillion-asset JPMorgan did not disclose the price it will pay.

The deal is expected to close in the third quarter.

OpenInvest was founded in 2015.

"Clients are increasingly focused on understanding the environmental, social, and governance impact of their portfolios and using that information to make investment decisions that better align with their goals," Mary Callahan Erdoes, CEO of J.P. Morgan Asset & Wealth Management, said in a Tuesday press release.

The announcement follows J.P. Morgan Asset Management's recent purchase of 55ip, a fintech focused on delivering tax-smart investment strategies through model portfolios. Over time, JPMorgan plans to leverage OpenInvest's ESG capabilities with 55ip's tax-smart investment strategies.

OpenInvest was advised by Moelis & Co. and Morrison & Foerster. JPMorgan was advised by Dechert.

Dime sells $585M of PPP loans to The Loan Source

Dime Community Bancshares in Hauppauge, N.Y., has sold a block of Paycheck Protection Program loans to The Loan Source.

The $13 billion-asset company said in a press release Monday that it sold more than $585 million of 2021 PPP originations, adding that it expects to report a pretax gain of roughly $20.5 million in the second quarter.

Dime said its tangible common equity ratio should increase by about 45 basis points. Its tangible book value per share is expected to increase by about 34 cents.

“Now it is time to continue helping our clients by partnering with a well-respected firm, with deep expertise in the PPP space, to take over the ongoing servicing and forgiveness process,” Kevin O’Connor, Dime’s CEO, said in the release.

“We expect the sale to free up our staff to focus on more traditional lending efforts and continue our track record of providing exemplary service," O'Connor added.

Amerant in Fla. invests $2.5 million in robo adviser

Amerant Bancorp in Coral Gables, Fla., has invested $2.5 million in a robo adviser.

Marstone in New York said it raised $5 million in the latest phase of Series A financing. The company has now raised a total of $20 million, with the first close taking place in May 2020. 

The $7.8 billion-asset Amerant accounted for half of the funds invested in the latest phase, Marstone said in a Monday press release. Peter Kraus and John Thain were among the other investors. 

“The financial industry is in the midst of incredible transformation,” Margaret Hartigan, Marstone’s CEO, said in the release.

“Consumers are hungry for highly personalized, digital-first wealth and banking experiences that grow their financial understanding and empower them to make smarter, forward-looking decisions,” Hartigan added. “Financial institutions that can’t or won’t meet these needs will be surpassed by those that do.”

Amerant in May entered into a multi-year agreement with Marstone designed to boost the bank’s assets under management. Amerant, as an investor, will get to appoint a representative to Marstone’s board.

“We are excited to make this investment in Marstone and support its mission to make financial planning more attainable for everyone,” Jerry Plush, Amerant’s vice chairman and CEO, said in the release. 

“Marstone’s platform allows us to offer our customers a highly personalized, thoughtful, and specialized experience,” Plush added. “We look forward to further developing our relationship as Marstone continues to create an industry-leading financial ecosystem.”

Exec at bank selling to credit union gives up ABA post

Rita Lowman, whose bank is being sold to a credit union, has resigned from the board of the American Bankers Association.

Lowman is president of Pilot Bank in Tampa, Fla., which announced plans earlier this month to sell to Lake Michigan Credit Union in Grand Rapids, Mich. Her resignation was first reported by the Tampa Bay Business Journal.

Lowman, who had joined the ABA's board this year, was set to chair the association's government relations council in 2022.

The $10.4 billion-asset Lake Michigan plans to buy the $544 million-asset Pilot for $96.6 million in cash.

TS Banking to buy State Bank of Arcadia in Wisconsin

TS Banking Group in Treynor, Iowa, has agreed to buy State Bank of Arcadia in Wisconsin.

The $1.5 billion-asset TS Banking said in a press release Wednesday that the $210 million-asset State Bank will be merged into its First National Bank and Trust. The deal is expected to close in the third quarter.

TS Banking did not disclose how much it will pay B&E Investments for the bank.

Kevin Manley, State Bank's president and CEO, will join TS Banking as market president for the Arcadia, Independence and Whitehall markets.

State Bank is "a great fit,” Joshua Guttau, TS Banking's CEO, said in the release. “The bank has been well-run with good credit quality, supportive of the community and has a team of experienced local employees."

Reinhart Boerner Van Deuren and Oakridge Financial advised B&E Investments.

AI-focused firm in Chicago applies to form a bank

A Chicago company that provides AI solutions for lenders is looking to form a digital-only bank.

Organizers of the proposed Beta Bank submitted an application on Monday with the Federal Deposit Insurance Corp. for deposit insurance. 

The bank would operate as a subsidiary of Beta Financial Services, according to the application. Beta Financial plans to apply with the Federal Reserve to become a bank holding company.

Beta Bank would focus on small and midsize businesses, the application said. The bank, which will have no physical branches, will offer deposits and commercial products such as working capital lines of credit and Small Business Administration loans.

Many of the proposed bank’s founders have ties to Beta Financial. The organizers are Kelly Emery, Seke Ballard, Chad Thompson, Alan Harder, Alina Cowden and Justus Pugh, according to the application.

Emery would serve as the bank's CEO. Emery is the chief operating officer of the Financial Health Network, according to her LinkedIn profile. She also worked at the Chicago Fed for 16 years.

Ballard is Beta Financial’s CEO, according to his LinkedIn profile. Harder is Beta Financial’s business development director. Cowden is the company’s chief marketing officer, while Pugh is its sales and marketing manager. 

Beta Financial filed to trademark Beta Bank in May. The plan is to inject $20 million of initial capital into the bank.

Efforts to reach Emery and Ballard were not immediately successful.

Popular adds fintech consultant to its board

Popular in San Juan, Puerto Rico, has added a fintech expert to its board.

The $67 billion-asset company said in a press release Friday that Betty DiVita had become a director. 

DeVita is chief business officer and a director at FinConecta, a technology firm focused on the digitalization of finance and open banking. She is also the founder and CEO of BetdevSolutions, a fintech advisory firm, according to her LinkedIn profile.

DeVita previously served as chief commercial officer of digital payments and labs at Mastercard Worldwide, where she oversaw the company’s research, development and deployment of payment innovations. She also worked at Citigroup, eventually becoming chairman and CEO of Citibank Canada.

“Betty’s deep track record of delivering strong growth and innovation in diverse financial services contexts will be invaluable as we navigate our constantly changing industry,” Ignacio Alvarez, Popular’s president and CEO, said in the release.

The company also added José Rodríguez, a certified public accountant, to its board. He retired as an audit partner at KPMG in April.

First Internet taps insider as next president

First Internet Bancorp in Fishers, Ind., will soon have a new president.

The $4.2 billion-asset company said in a press release Thursday that Nicole Lorch will remain chief operating officer when she adds the new title on June 30. 

Lorch will succeed David Becker, who will remain chairman and CEO. She will also serve as president and COO of First Internet Bank.

Lorch "has been an important member of the leadership team, contributing significantly over the years to our growth and success,” Becker said in the release. 

“She possesses the ideal combination of talent and strategic vision," Becker added. "Her unique ability to create innovative solutions, analyze complex issues and communicate effectively has been apparent throughout her career."

Lorch. who has been with First Internet Bank since its creation in February 1999, became COO in 2017.

Columbia Banking entering California with $266M deal

Columbia Banking System in Tacoma, Wash., will enter California with its pending purchase of Bank of Commerce Holdings in Sacramento. 

The $17.3 billion-asset Columbia said in a press release Wednesday that it will pay $265.6 million in stock for the $1.8 billion-asset parent of Merchants Bank of Commerce. The deal is expected to close in the fourth quarter. 

Bank of Commerce has 12 branches, $1.1 billion of loans and $1.6 billion of deposits.

Columbia, which was an aggressive acquirer in the wake of the 2008 financial crisis, had not announced a bank acquisition since it agreed to buy Pacific Continental in January 2017 for $649 million. That deal closed in late 2017.

"We have tremendous respect for the Merchants Bank of Commerce franchise and view this as an opportunity to expand with an organization that aligns with our long-standing commitment to clients and community," Clint Stein Columbia's president and CEO, said in the release.

"Northern California shares many similarities with the [Pacific] Northwest in both metropolitan and rural markets, making expansion into this region a natural extension of our existing footprint," Stein added.

Columbia expects the transaction to be 3% accretive to its 2022 earnings with 4% accretive the next year. The deal should be 0.3% accretive to Columbia's tangible book value. 

Merchants Bank of Commerce will retain its brand as a division of Columbia Bank. Randy Eslick, Bank of Commerce's CEO, will lead the division. 

Columbia plans to cut 30% of Bank of Commerce's annual noninterest expenses, or $10.6 million. The company expects to incur $19.1 million of merger-related charges.

Columbia said it plans to pay $500,000 to small businesses throughout northern California as part of its Pass It On Project, an effort launched last year to support companies looking to recover from stay-at-home orders tied to the coronavirus pandemic.

Columbia "has been telegraphing a willingness to enter northern California for the last few years, and this deal looks like a logical route at a very reasonable price," Matthew Clark, an analyst at Piper Sander, wrote in a note to clients.

"The deal looks digestible to us from a size perspective," Clark added. "We also view Bank of Commerce as being complementary from a geographic ... and business model perspective."

Columbia was advised by Keefe, Bruyette & Woods and Sullivan & Cromwell. Bank of Commerce was advised by Raymond James and Miller Nash.

Cross River in N.J. buys data analytics firm

The parent company of Cross River Bank in Fort Lee, N.J., has acquired a data and risk analytics firm.

CRB Group said in a press release Wednesday that it bought Synthetic P2P Holdings, which operates as PeerIQ. The company helps fintechs and banks analyze, assess and manage risk in the lending sector.

CRB, which did not disclose the price it paid, said the acquisition will build on the $13.5 billion-asset Cross River’s existing product offerings.

“Cross River is constantly adapting to the evolving landscape of financial services with an insatiable thirst to innovate,” Gilles Gade, the bank's president and CEO, said in the release. “PeerIQ has established itself as a leader in capital markets innovation and our newly expanded offerings will make us even more compelling.”

PeerIQ was formed in 2014 with backing from investors that included Bloomberg CEO Dan Doctoroff, former Morgan Stanley CEO John Mack and former Citigroup CEO Vikram Pandit. Cross River has worked with PeerIQ since 2018. 

CRB bought Seed, a small-business banking fintech, in 2019.

Farmers National expanding in NE Ohio with latest deal

Farmers National Banc in Canfield, Ohio, has agreed to buy Cortland Bancorp in Cortland, Ohio.

The $3.3 billion-asset Farmers National said in a press release Wednesday that it will pay $124 million in cash and stock for the $792 million-asset Cortland. The deal, which is expected to close in the fourth quarter, priced Cortland at 153% of its tangible book value. 

Cortland has 13 branches, $519 million of loans and $680 million of deposits.

James Gasior, Cortland's president and CEO, will join Farmers National as a senior executive vice president and corporate development officer. Two Cortland directors will join Farmers National's board. 

"We have known and competed with Cortland for a long time," Kevin Helmick, Farmers National's president and CEO, said in the release.

"This acquisition will further solidify our market share in Trumbull and Mahoning counties as well as expand our presence in the greater Cleveland area furthering our strategy of building local scale throughout northeast Ohio,” Helmick added.

Farmers National said the deal should be 13.5% accretive to earnings per share when fully phased in. The company said it should take a little more than three years to earn back any dilution to its tangible book value.

Farmers National plans to cut about 39% of Cortland's annual noninterest expenses. It expects to incur $11.1 million of merger-related charges.

"The financials look solid, and while we have some questions as to how Cortland will contribute to Farmers National's long-term growth rate, it solidifies the bank's top-quartile profitability profile at a time when most peers are seeing compression," Michael Perito, an analyst at Keefe, Bruyette & Woods, wrote in a note to clients.

Raymond James and Vorys, Sater, Seymour & Pease advised Farmers National. Piper Sandler and Grady & Associates advised Cortland.

Fifth Third to acquire health care focused fintech

Fifth Third Bancorp in Cincinnati has agreed to buy Provide, a digital platform for health care practices.

The $207 billion-asset Fifth Third said the acquisition will add capabilities to address complex lending and banking needs for retail health care providers. Fifth Third did not disclose the price it will pay.

“Over the last decade, Fifth Third’s health care team has expanded its presence and expertise to become one of the top health care banking platforms for middle-market and corporate clients,” Greg Carmichael, Fifth Third’s chairman and CEO, said in a Tuesday press release.

“Together, we can deliver a client experience that enables health care providers to focus on what they do best — providing the care their patients need while we make their banking experience convenient and efficient,” Carmichael added.

Fifth Third said the acquisition will add $6 million in revenue this year, along with $14 million in expenses as it invests in the platform.

Fifth Third invested in Provide in 2018, and it started funding loans through the fintech’s platform last year. Provide will keep its brand and operate as an independent business line.

Provide, founded in 2013, has originated more than $1 billion of loans. 

Fifth Third said it holds about $400 million of Provide loans and that it will hold all of the company's future originations.

Nicolet to buy ag lender County Bancorp

Nicolet Bankshares in Green Bay, Wis., has agreed to buy County Bancorp in Manitowoc, Wis.

The $4.5 billion-asset Nicolet said in a press release Tuesday that it will pay $219 million in cash and stock for the $1.5 billion-asset parent of Investors Community Bank. The deal, which is expected to close in the fourth quarter, priced County at 138% of its tangible book value.

Nicolet has been acquisitive lately, agreeing in April to buy Mackinac Financial. “We are excited about the potential of combining Nicolet and Investors to serve our customers and communities,” Mike Daniels, Nicolet’s president and CEO, said in the release.

"Our collective founder-entrepreneurial mindset makes for a distinctive culture that resonates with our employees and customers,” Daniels added. “This partnership is an intentional, strategic move to become the premier agriculture lender throughout Wisconsin.”

Nicolet said it expects the deal to be accretive to its 2022 earnings per share. It should take less than two years for Nicolet to earn back an expected 1.2% dilution to its tangible book value.

Nicolet said that, over time, it will bring a portion of County’s $842 million ag servicing book onto its own balance sheet.

Nicolet plans to cut about a third of County’s annual noninterest expenses. It expects to incur $19 million of merger-related expenses.

Tim Schneider, County’s president, will join Nicolet at a senior vice president and agriculture lending manager. A County director will join Nicolet’s board.

County on Monday disclosed improved credit metrics, reflecting a recovery in the agriculture sector. 

Total nonperforming assets at County fell by $19 million, or 33%, since March 31, to $39 million. Classified assets have declined by 35% since the end of the first quarter.

The deal was "a surprise," Brendan Nosal, an analyst at Piper Sandler, wrote in a note to clients.

"We did not view County as sellers," Nosal added. "We viewed the company's unique business mix [with ag loans making up 60% of the portfolio] as an unusual consideration for a buyer."

Nosal said there are "ample opportunities" for Nicolet to use its excess liquidity to remix County's funding and to "keep more of County's loan production on-sheet over time."

Keefe, Bruyette & Woods and Bryan Cave Leighton Paisner advised Nicolet. Stephens and Barack Ferrazzano Kirschbaum & Nagelberg advised County.

First Commonwealth forms equipment-finance business

First Commonwealth Financial in Indiana, Pa., has created an equipment finance division.

The $9.4 billion-asset company said in a recent press release that it had hired Rob Boyer to serve as president of First Commonwealth Equipment Finance Group. 

Boyer recently served as a senior director at TCF Bank, according to his LinkedIn profile. He was also president of Susquehanna Commercial Finance from October 1998 to February 2021.

Boyer “brings vast experience in running an autonomous, multi-faceted equipment finance business seamlessly within a banking environment,” T. Michael Price, First Commonwealth's CEO, said in the release. 

“The ‘people and customer first’ culture of First Commonwealth, along with its scale and aggressive growth goals, are what attracted me to starting an entirely new business line," Boyer said. “The executive team truly walk the talk from a culture perspective and were great to work with in developing the strategy into action.” 

First Commonwealth has added several businesses in recent years, forming a mortgage operation in 2014 while expanding its dealings in SBA and indirect auto loans. 

The company said it expects the equipment finance business, which will be based in the Philadelphia area, to break even late next year.

Middlefield Banc CEO to retire in 2022

Middlefield Banc Corp. in Middlefield, Ohio, is looking for a new leader. 

The company said in a press release Friday that Thomas Caldwell plans to retire as president and CEO in March 2022. Middlefield said it has begun looking at internal and external candidates to succeed Caldwell.

Caldwell has been Middlefield's president and CEO for 26 years, helping take the company public in 2001. 

"Under Tom’s leadership, Middlefield has grown significantly, achieved strong financial performance and built a robust platform for long-term success," William Skidmore, the company's chairman, said in the release. 

"I look forward to working with the board to identify and hire a new CEO that embodies our core community banking values and commitment to creating shareholder value," Skidmore added.

Middlefield grew from three branches and $135 million of assets when Caldwell took the helm in 1995 to 16 locations and $1.4 billion of assets on March 31 of this year.

RCB in Oklahoma to buy family-owned bank

RCB Holding in Claremore, Okla., has agreed to buy Oklahoma State Bancshares in Vinita.

The $3.7 billion-asset RCB said in a press release that it expects to buy the $306 million-asset parent company of Oklahoma State Bank and Lakeside Bank in the third quarter.

RCB did not disclose the price it will pay. 

“What attracted us ... was the bank’s reputation and their employees within each of their communities,” Roger Mosier, RCB's president and CEO, said in the release. “Oklahoma State Bank and Lakeside State Bank are both integral partners in their communities.” 

“While one chapter of Hartley family ownership of [Oklahoma State] closes, another one opens,” Monty Hartley, the company's chairman, said in the release. 

“We have known the Robson family for a long time and are thrilled to partner with RCB,” Hartley added. “Our discussions with [RCB’s] team confirmed for us that this partnership will be a win-win for all of our constituents including employees, customers and the communities we serve.” 

D.A. Davidson and McAfee & Taft, advised Oklahoma State. Hunton & Williams advised RCB.

Columbia in N.J. lines up mutual merger with Freehold

Columbia Financial in Fair Lawn, N.J., has agreed to buy Freehold Bancorp in Freehold, N.J.

The $9 billion-asset Columbia said in a press release Thursday that the $300 million-asset Freehold will convert to a federal savings bank and operate as a wholly-owned subsidiary. Freehold Bank will be merged into Columbia Bank two years after the holding companies have merged. 

The deal is expected to close in the fourth quarter. 

Freehold has two branches, $156 million of loans and $197 million of deposits.

One Freehold director will join Columbia’s board.

“The transaction will broaden our footprint into Monmouth County,” Thomas Kemly, Columbia’s president and CEO, said in the release. “As two community-minded banks, we are proud to strengthen our local impact and support new markets.”

The transaction is expected to be accretive to Columbia’s 2022 net income, but 2% dilutive to earnings per share because of shares to be issued to Columbia’s mutual holding company. The transaction is projected to be about 3% accretive to fully converted tangible book value.

Columbia expects to incur $6.3 million of merger-related expenses. It plans to cut 40% of Freehold’s annual noninterest expenses beginning in 2024. 

"We think this is exactly the kind of deal that the company should be doing, and [we] continue to believe that management is focused on smartly building the franchise, further leveraging capital and bringing Columbia closer to an eventual second-step," Mark Fitzgibbon, an analyst at Piper Sandler, wrote in a client note.

Columbia was advised by Boenning & Scattergood and Kilpatrick Townsend & Stockton. Freehold was advised by FinPro Capital Advisors and Stevens & Lee.

Cross River Bank forms VC division to invest in startups

Cross River Bank in Fort Lee, N.J., has formed a venture capital division to invest in fintechs and other startups.

The $13.5 billion-asset company said that Cross River Digital Ventures will also evaluate companies involved with lending, payments and investing. The bank already serves as the regulated financial institution for several fintechs. 

“Cross River already powers some of the largest companies in fintech and this new endeavor will help us identify and make additional strategic investments,” Gilles Gade, the bank’s chairman and CEO, said in a Thursday press release. 

“Similar to Cross River, we are looking for special companies that are trying to change the world through innovation,” Gade added.

The division has already invested in Innovative Assessments, a fintech that uses psychometrics to personalize financial services and promote financial inclusion; Lev, a technology-focused commercial real estate financing advisory firm; and Finix Payments, a payments infrastructure provider.

Sunnyside in N.Y. opts for unsolicited takeout offer

Sunnyside Bancorp in Irvington, N.Y., has terminated an agreement to be sold to a Florida real estate firm to instead sell to group tied to a New York real estate investor.

The $98 million-asset Sunnyside agreed in March to a deal with DLP Real Estate Capital in Saint Augustine, Fla., valued at $12.3 million. Shortly after that deal was announced, Rhodium BA Holdings went public with an unsolicited offer that valued Sunnyside at $14.9 million. 

Rhodium BA Holdings, which had acquired a 9.8% stake in Sunnyside, is managed by Mark Silber, who is also managing partner of Rhodium Capital Advisors.

Rhodium BA Holdings said it expects to close the deal by the first quarter of 2022. 

"We are delighted to move forward with this strategic acquisition, which represents a significant premium for Sunnyside shareholders," Silber said in a press release. "We see a significant opportunity to grow and enhance Sunnyside by leveraging our team's extensive banking experience to strengthen Sunnyside's customer, financial and employee relationships."

Rhodium BA Holdings said it paid a termination fee to DLP. While the investment group did not disclose the amount it paid, Sunnyside noted a termination fee of $615,000 in its most-recent quarterly filing with the Securities and Exchange Commission.

How Equity in Kan. learned American State was in play

Equity Banchshares in Wichita, Kan., didn’t waste time getting the S-4 out for its pending acquisition of American State Bancshares in Wichita.

The $73.6 million deal, announced last month, would bolster the $4.2 billion-asset Equity’s operations in its home state.

First, a review of the acquisition’s terms:

The deal, which is expected to close in early October, priced the $779 million-asset American State at 111% of its tangible book value. The deal is expected to be 15.9% accretive to Equity’s 2022 earnings per share, excluding merger-related expenses.

It should take less than three years for Equity to earn back an anticipated 3.7% dilution to its tangible book value.

Equity plans to cut about 34% of American State’s annual operating expenses, or roughly $5.8 million. The company expects to incur $11.2 million of merger-related expenses.

Here’s what we learned from Equity’s recent regulatory filing:

• American State’s investment bank contacted Equity and another, unnamed bank in February to gauge interest in a transaction.
• Equity's initial offer, submitted on March 25, included an all-stock option that valued American State at $84.1 million and an option with 20% cash valued at $85.6 million. Equity adjusted its offer after conducting more due diligence.
• The other company, which was publicly traded, pitched an all-stock deal, along with a one-time cash dividend, but it "had a lower value than Equity's initial proposal" and American State's board thought "it offered less upside potential."
• Equity sent the first draft of the merger agreement to American State on May 5.
• American State's board unanimously approved the merger on May 14. It was announced three days later.

Arizona group planning bank focused on small business

Organizers in Arizona have applied to form a Integro Bancorp in Phoenix.

The group submitted an application with the Federal Deposit Insurance Corp. on Tuesday for deposit insurance.

The application did not disclose how much initial capital organizers plan to raise.

In an April announcement posted on LinkedIn, they said the proposed bank would be primarily focused on small businesses. It plans to introduce a consultative product called Integro360. 

Thomas Inserra would serve as Integro’s chairman, president and CEO. He previously served as chief credit officer as chief risk officer at Pacific Mercantile Bank, according to his LinkedIn profile.

"The glue that binds us together is the common commitment we share to transforming lives by helping small businesses grow and maximize employment," Inserra said in April's announcement. "Make an impact by joining our effort to help small businesses."

A number of groups have proposed banks in Arizona, which allows organizers to apply for preliminary state approval before having a management team or location lined up.

Scottsdale Community Bank received conditional approval from the FDIC in October. Organizers must raise $16 million before it can open.

Other proposed banks for Arizona include Discovery Business Bank and Ocotillo Bank, which would be in Chandler, and Grayhawk Bank in Scottsdale. Another group is planning Verdigris Bank, an online-only bank that would operate out of Scottsdale.

 

Lake Michigan Credit Union to buy another Fla. bank

Lake Michigan Credit Union in Grand Rapids, Mich., is doubling down in Florida with an agreement to buy Pilot Bank and National Aircraft Finance.

The $10.4 billion-asset credit union said in a press release Wednesday that it will pay about $96.6 million in cash for the $656 million-asset Pilot. The deal is expected to close in the fourth quarter.

Lake Michigan Credit Union, which bought Encore Bank in Florida in 2018, will have 19 branches in Florida and more than $1.7 billion of assets in the Sunshine State when the deal is completed. 

The acquisition "is another step in our plan to enhance our member value and experience for our many wonderful members that live in or vacation in Florida, including those in this new thriving market, as well as future new members,” Sandy Jelinksi, the credit union’s president and CEO, said in the release.

Roy Hellwege, Pilot’s chairman and CEO, will join the credit union as president of central Florida, while Kevin Buckland will become president of aircraft finance.

Lake Michigan Credit Union was advised by Donnelly Penman & Partners and Honigman. Pilot was advised by Hovde Group and Smith Mackinnon.

Eggemeyer joins board of Primis Financial in Virginia

Primis Financial in Charlottesville, Va., has added a prominent bank investor to its board.

The $3.3 billion-asset company said in a press release Tuesday that John Eggemeyer had agreed to become a director.

Eggemeyer is the founder and chairman of Castle Creek Capital, which has invested in banks for three decades. He has been the chairman of PacWest Bancorp since its creation in 2000 and is a director at The Bancorp and Northpointe Bancshares.

Eggemeyer has been an observer of the Primis board since 2019.

Primis also appointed Allen Jones Jr., a physical therapist based in Virginia’s Hampton Roads area, to its board. Jones has been chairman of the bank’s Hampton advisory board since 2018. 

“Both individuals are valued contributors and well-known to our company,” W. Rand Cook, Primis’ chairman, said in the release, "We are thrilled to have the benefit of their experience and counsel as full members of our corporate and bank boards."

Primis has undergone a series of changes in recent years. It hired Dennis Zember, the retired CEO of Ameris Bancorp, as its leader in 2020.

The company was known as Southern National Bancorp of Virginia until it rebranded in March. And it announced plans in May to launch a digital bank by the end of this year.

SunTrust freed from Fed order predating BB&T merger

The Federal Reserve has freed SunTrust Bank from a November 2019 consent order it handed down before approving the bank's sale to BB&T in the deal that created Truist Financial.

SunTrust was hit with the order due to unfair and deceptive practices tied to "misleading or inaccurate statements" it made between 2013 and 2017 about the operation and billing for certain add-on products. The Fed noted that SunTrust had already ended those practices and has repaid about $8.8 million in fees to customers.

BB&T committed at the time to comply with the enforcement action, including implementing procedures to verify the refunds and providing additional refunds, if required.

BB&T completed the $28 billion SunTrust acquisition in December 2019.

A look at the Bank of Marin-American River merger

Let's take a look at some of the behind-the-scenes action for Bank of Marin Bancorp's pending purchase of American River Bankshares in Sacramento, Calif.

First, a review of the deal's terms:

Bank of Marin, a $3.1 billion-asset company in Novato, Calif., agreed to buy the $916 million-asset American River on April 19 for $134.5 million in stock. The deal, which is expected to close in the third quarter, priced American River at 175% of its tangible book value.

The transaction is expected to be 14.2% accretive to Bank of Marin's 2022 earnings, and it should take less than four years for the company to earn back a projected 3.9% dilution to its tangible book value.

Bank of Marin plans to cut 35% of American River's annual noninterest expenses, or roughly $6.1 million. The company expects to incur $9.5 million of merger-related expenses. Two American River directors will join Bank of Marin's board.

Now a look at how the deal came to be:

• Russ Columbo, Bank of Marin's CEO, called David Ritchie Jr., his counterpart at American River, on Dec. 18 to express an interest in a deal. American River's M&A committee agreed that the executives should meet.
• The companies agreed to a mutual confidentiality agreement on Jan. 22.
• Bank of Marin submitted an indication of interest on Feb. 11 that valued American River at $121.1 million.
• Bank of Marin revised its letter of intent on Feb. 26, increasing its offer to $129.9 million, while removing a requirement that certain American River shareholders, other than directors, agreed to vote for the deal. The LOI includes a 45-day exclusivity period.
• The initial draft of the merger agreement was sent to American River on March 26.
• Each board unanimously approved the deal on April 16. It was announced three days later.

HomeTrust closing nine branches under efficiency push

HomeTrust Bancshares in Asheville, N.C., plans to close nine branches in three states as part of a broader efficiency effort.

The $3.6 billion-asset company said in a press release Tuesday that it will also restructure its balance sheet and bring Small Business Administration loan servicing in-house. The moves are expected to increase annual pretax income by $10.1 million.

HomeTrust said the initiative should also increase return on assets by 20 basis points, return on equity by 200 basis points and diluted earnings per share by about 47 cents.

“We believe these strategic initiatives, along with the continued maturity of our diversified lines of business, will move us forward in achieving higher profitability and creating additional shareholder value in the near term,” Dana Stonestreet, HomeTrust’s chairman, president and CEO, said in the release.

HomeTrust plans to close branches in North Carolina, Tennessee and Virginia, or roughly 22% of its footprint, in September. The company said it plans to incur a $1.5 million pretax charge for costs tied to the closures in the fourth quarter.

The branch closures should save HomeTrust $3.2 million annually.

The company also said it will bring its SBA servicing in-house on July 1, which should bring in $1.2 million in annual income in the form of servicing fees and gains on sale.

HomeTrust also said it will pay off the remaining $275 million of long-term borrowings of Federal Home Loan Bank advances, incurring $19 million in pretax prepayment penalties. But the company said that, including $475 million in long-term debt it had already retired, paying off the advances will reduce interest expense by $5.7 million annually.

"We view today's announcements favorably and believe HomeTrust has growing scarcity value in its attractive, and now more profitable, mostly North Carolina-based franchise," Keefe, Bruyette & Woods wrote in a note to clients.

Pinnacle hires nine BBVA bankers to enter Ala. market

Pinnacle Financial Partners in Nashville, Tenn., will enter Huntsville, Ala., after hiring nine former bankers from BBVA USA.

The $35 billion-asset Pinnacle said in a press release Monday that it brought on four financial advisers, a credit adviser, an office leader and three support and processing associates. The group is led by Jason Baldwin, a former market CEO for North Alabama at BBVA. 

Baldwin will serve as Pinnacle’s Huntsville regional president.

Baldwin “is one of the top banking leaders in the state, and Pinnacle has assembled a group that can support nearly everything clients need right out of the gate,” Terry Turner, Pinnacle’s president and CEO, said in the release.

“Pinnacle’s client service focus and recruiting strength allowed us to attract a complete team in Huntsville, which is among the fastest growing MSAs in the Southeast,” Turner added. “This is the perfect way to set up shop quickly and capitalize on the opportunities to take market share in a growing city dominated by large, impersonal banks.”

BBVA, which was sold earlier this month to PNC Financial Services Group in Pittsburgh, is the second-biggest bank in Huntsville, with 11.8% of the market’s deposits, according to June 2020 data from the Federal Deposit Insurance Corp.

Mortgage lender agrees to buy Texas community bank

Cornerstone Home Lending in Houston has agreed to buy Roscoe State Bank in Texas.

Cornerstone did not disclose the price it will pay for the $213 million-asset Roscoe State or when it expects to complete the acquisition. 

The acquisition "will allow Cornerstone to significantly expand product and service offerings to our hundreds of thousands of customers and referral sources throughout the country, will provide a vast array of additional home lending products and services to the customers and communities served by [Roscoe State] ... and will produce additional growth opportunities for team members at both Cornerstone and Roscoe," Marc Laird, Cornerstone's chairman and CEO, said in the release.

John Jay, Roscoe State's chairman and CEO, is expected to join Cornerstone's board and will remain active with the company.

Otteson Shapiro and Scott Almy advised Cornerstone. Piper Sandler and Thompson Knight advised Roscoe State.

How New York Community-Flagstar materialized

We're trying a new format to make content about a merger's background easier to digest. Rather than provide a lengthy article based of the regulatory filing, we' re going to include bullet points highlighting key aspects of a deal.

First, the proposed deal's financials:

New York Community in Westbury agreed on April 26 to buy Flagstar Bancorp in Troy, Mich., for $2.6 billion in a deal that is expected to close by the end of this year. The deal valued the $29.5 billion-asset Flagstar at 115% of its tangible book value.

The $58 billion-asset New York Community plans to cut about 8% of the combined company's annual noninterest expenses. It expects to incur $220 million of merger-related expenses. The deal should be 16% accretive to New York Community's earnings per share and 3.5% accretive to tangible book value per share. 

Thomas Cangemi is set to serve as president and CEO, while Alessandro DiNello, Flagstar’s president and CEO, would become nonexecutive chairman. Eight of the company’s 12 directors will come from New York Community.

And interesting observations from the S-4 filing: 

• The companies held preliminary merger talks from late April to early June 2019 but they “did not develop into any more formal discussions or negotiations.” 
• Discussions resumed in January 2021 after Cangemi called DiNello. They had an in-person meeting on March 8.
• New York Community’s initial offer included an all-stock merger with a fixed exchange ratio and keeping the Flagstar brand for Flagstar mortgage business. 
• Flagstar had a transactions committee in place to monitor negotiations. 
• New York Community updated its offer on March 26 to include a 10% premium to Flagstar’s stock price, as long as the deal was “meaningfully” accretive to tangible book value, and a plan to have Cangemi remain chairman, president and CEO after closing. 
• Flagstar in early April pushed to have its directors “proportionately represented” on New York Community’s board with “key positions” in areas such as risk and oversight. 
• Cangemi and DiNello reached an agreement in early April where DiNello would serve as chairman for two years and David Treadwell, a Flagstar director, would chair the risk assessment committee. Four Flagstar directors would to join New York Community’s board. 
• New York Community pledged to maintain and continue Flagstar’s mortgage and banking businesses, and it committed to employment agreements for senior management. 
• The boards approved the merger on April 24. It was announced two days later.
• DiNello is set to receive $6 million for agreeing to three-year non-compete and non-solicitation agreements.

Brookline taps insiders to serve as co-presidents

Brookline Bancorp in Boston is shaking up several top executive posts.

The $8.6 billion-asset company said in a press release Monday that Paul Perrault, its CEO, has also become its chairman. He succeeded Joseph Slotnik, who will serve as Brookline’s lead director. 

Brookline also promoted two executives to serve as co-presidents, succeeding Perrault. 

Michael McCurdy had been the company’s general counsel and chief risk officer, while Carl Carlson had been chief financial and strategy officer. McCurdy will also become Brookline’s chief operating officer, overseeing units Brookline Bank and Bank Rhode Island. Carlson will remain CFO. 

“I’m delighted that the board … has voted to make these changes, the most significant of which is clearly Mike McCurdy’s and Carl Carlson’s elevation to company co-presidents,” Perrault said in the release.

“This will recognize them for their experience and dedicated service to the company and will also ensure that our customers and stockholders get the full benefit of their experience and counsel well into the future,” Perrault added. 

McCurdy joined Brookline in 2011, while Carlson has been at the company since 2014.

CrossFirst entering Phoenix after hiring banker from CIT

CrossFirst Bankshares in Leawood, Kan., will enter Phoenix after hiring a former CIT Group banker.

The $6 billion-asset company said in a press release Monday that it Kevin Halloran will become its Phoenix market president.

“We believe Phoenix is a great opportunity given the region’s favorable demographics, strong population, and business growth,” Mike Maddox, CrossFirst’s president and CEO, said in the release.

“As an entrepreneurial bank, we are excited about the opportunity to work with businesses and professionals in Phoenix and Maricopa County and to support the region’s rapid growth,” Maddox added. “We are fortunate to have identified a local leader … who brings decades of banking and financial services experience as well as deep Arizona connections to the role.”

Halloran will be responsible for opening CrossFirst’s bank location in Phoenix and recruiting a team of bankers. He recently served as Arizona market president for CIT. Before that, Halloran was state president for Mutual of Omaha Bank, which CIT bought in January.

Halloran is on the advisory board for Arizona Multi-Bank, a division of Clearinghouse CDFI.

Proposed N.C. bank secures conditional FDIC approval

Organizers in western North Carolina have received conditional approval to open a bank. 

The Federal Deposit Insurance Corp. on June 1 approved an application for deposit insurance submitted by Highlands Banking Co. The proposed bank would be based in Highlands, a town near North Carolina’s borders with Georgia and South Carolina.

The group must raise roughly $13.8 million before opening, according to the FDIC’s order.

The proposed bank’s organizers said in an October application with the FDIC that there was a need for a new bank in the market, noting that Wells Fargo had closed two  area branches and that Bank of America, PNC Financial had completely exited. 

Robby Roberts, former president and CEO of First Newton Bank in Covington, Ga., was set to serve as CEO, according to the FDIC application.

The proposed bank's president would be Tony Potts, a former branch manager at Entegra Bank in Franklin, N.C., which was sold in 2019 to First Citizens BancShares. First Citizens sold Potts' branch to Select Bank, the application said.