First National Bank to acquire American Home Bank
Strategic addition extends reach into central Pennsylvania, creates opportunities in residential prime mortgage banking, officials say.
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Article RatingFirst Chester County Corp., the parent of First National Bank of Chester County and American Home Bank jointly announced Friday the signing of a definitive merger agreement for First Chester to acquire American Home Bank in a cash and stock transaction valued at approximately $18.2 million, based on First Chester’s closing price of $15.25 per share on Sept. 18.
The combined bank will have approximately $1.2 billion in assets.
American Home Bank is a national bank with assets of approximately $268 million as of June 30, offering consumer and commercial banking services through two branch offices in Mountville and Carlisle. It has a significant mortgage banking operation and originated approximately $1 billion in high-quality residential mortgage loans in the 12 months ended Aug. 31.
The consumer and commercial banking services of American Home Bank and its branch offices will be merged into the banking operations of First National. American Home Bank mortgage banking operations will be run as a separate division of First National under the American Home Bank name.
“The acquisition of American Home Bank is consistent with our strategy to expand our geographic footprint and enhance our fee-based income,” said John A. Featherman III, chairman and chief executive officer of First National. “The merger strengthens the combined mortgage banking platform of both banks and positions First National to take advantage of the recent exit from the mortgage market of many non-bank mortgage originators and to benefit from both the recovery and future growth of the residential housing market.”
The merger further extends First National’s consumer and commercial banking reach into the central Pennsylvania market, where recent bank consolidations have eliminated many mid-sized local banks.
Subject to the terms of the definitive merger agreement, American Home Bank shareholders may elect to receive either 0.7000 shares of common stock of First Chester or cash equal to $11 per share of American Home Bank common stock.
Shareholder elections are subject to allocation procedures, which are intended to ensure that approximately 90 percent of the consideration to be paid by First Chester will be in the form of common stock and approximately 10 percent will be in cash.
“Quality mortgages remain the key to realization of the American dream – home ownership,” said Kevin C. Quinn, president of First National. “Both First National and American Home Bank provide mortgages to qualified borrowers with good credit histories and complete documentation. American Home Bank funds conventional conforming, jumbo, FHA and VA loans as well as construction to permanent loans to homeowners. Both First National and American Home Bank avoid funding subprime mortgages.”
James M. Deitch, chairman and CEO of American Home Bank, said, “Joining First National allows us to expand our ability to serve our customers. First National has an excellent reputation and a commitment to outstanding customer service. Our team at American Home Bank welcomes the opportunity to contribute to First National’s success.”
Upon completion of the transaction, . Deitch will join both the First Chester and First National boards of directors and will be managing director of the American Home Bank division of First National.
A.R. Miller Smith, current president and CEO of American Home Bank, will serve as president of American Home Bank’s division of First National.
The transaction is subject to American Home Bank shareholder approval, customary regulatory approvals and other conditions provided for in the definitive merger agreement and is expected to be completed by the end of the year.
Additional information is available at www.1nbank.com and www.bankahb.com.
