Two older Pennsylvania banking companies are becoming one, with the holding company for northeast Pennsylvania’s Fidelity Deposit and Discount Bank moving to buy Bangor-based Merchants Bank in the second quarter of 2020 in an all-stock transaction.
The deal should benefit Merchants’ customers as well as its investors, local bank President and CEO Rocco Del Vecchio told lehighvalleylive.com Tuesday morning after the $78.5 million deal was announced.
Both boards have unanimously approved, but Merchants and Fidelity shareholders still need to vote and regulatory approvals are needed, according to a news release.
The Merchants name will disappear in 2020 as the independent bank is absorbed into a banking company that “is very similar to us,” Del Vecchio said. The Slate Belt bank has been doing business since 1890, while Fidelity was founded in 1902.
Merchants’ holding company MNB Corp.’s over-the-counter stock had been trading between $31 and $35.24 over the last 52 weeks but on Tuesday rose as high as $66 following the news. MNB shareholders will receive 1.039 shares of Fidelity common stock for each share they own of MNB, based on a Fidelity D&D Bancorp Inc. share price of $69.30, according to a news release. That’s “two-times book,” Del Vecchio said. MNB closed on Monday at $35.24.
FDBC shares closed Monday at $66.84 on the NASDAQ but were down 5% at midday Tuesday.
MNB had a “fiduciary responsibility” to its shareholders to deal as the sale is on the higher end of what banking companies are getting, Del Vecchio said.
Customers should have access to enhanced services the now-larger bank can offer, said Del Vecchio, a 30-year Lafayette-Ambassador Bank employee before taking over the reins in 2016 at Merchants.
Merchants Bank employs about 90 people, and the process is not far along enough to say if they all will be retained, Del Vecchio said. But all nine branches — from the Slate Belt to Easton, Forks Township and Bethlehem — will remain open, he added. And it’s possible Fidelity will expand further in the Lehigh Valley, Del Vecchio said. While the Scranton/Wilkes-Barre region isn’t a great growth area, the Lehigh Valley is gaining both in population and economy, Del Vecchio said.
Courtesy photo | For lehighvalleylive.com
Rocco Del Vecchio
Fidelity President and CEO Daniel J. Santaniello said adding Merchants will allow the parent company “to better serve” Merchants’ communities.
“We look forward to expanding our market area as we enter Northampton County, Pennsylvania, a county with demographics that provide enhanced growth opportunities,” Santaniello said in the news release.
By working with the “seasoned bankers” at Merchants, Fidelity, which is based in Dunmore, Lackawanna County, will “enhance the product and service offerings to our combined customers,” Santaniello said.
As of Sept. 30, Merchants had total assets of $412.8 million, total deposits of $358.3 million and total loans of $241.1 million. The combined company would have, based on Sept. 30 figures, $1.46 billion in total assets, $1.8 billion in total deposits and $1 billion in loans, the news release said.
Merchants Bank didn’t need a merger from a financial standpoint, Del Vecchio said.
“Not at all,” he said. “We think it’s a great opportunity we have with Fidelity.”
Tony Rhodin may be reached at arhodin@lehighvalleylive.com. Follow him on Twitter @TonyRhodin. Find lehighvalleylive.com on Facebook.