United Financial Bancorp, Inc. and CNB Financial Corp. have signed an agreement and plan of merger, pursuant to which CNB Financial will merge with and into United Financial and Commonwealth National Bank will merge with and into United Bank. CNB Financial and Berkshire Hills Bancorp will terminate their previously announced merger agreement.
CNB Financial, a publicly traded bank holding company, operates six branches in Worcester County and had $297 million in total assets and $202 million in deposits as of March 31, 2009. Upon completion of the merger, the pro forma company will have approximately $1.5 billion in total assets, approximately $1.0 billion in deposits, more than $220 million of tangible common equity and will be well capitalized and positioned for future growth.
“The strategic combination of our two companies marks United Financial’s initial expansion into Worcester County,” says Richard B. Collins, president and chief executive officer of United Financial. “We have wanted to be in Worcester County for some time and we believe that our brand of banking will fit well with CNB Financial’s culture, staff and customers. We look forward to serving the greater Worcester community.” Collins added that his 18 years working as a banker in Worcester and the Bank’s interest in expanding its charitable giving programs to include Worcester County will further assist United Bank in becoming a partner with local businesses and community organizations.
United Financial will acquire the outstanding shares of CNB Financial for an aggregate purchase price of approximately $25 million, which includes outstanding stock options and warrants. Under the terms of the agreement, CNB Financial shareholders will have the opportunity to elect to receive either: (1) $10.75 per share in cash for each CNB Financial share; (2) 0.8257 United Financial shares for each CNB Financial share; or (3) a combination of United Financial common stock and cash, provided that the total cash consideration paid by United Financial to shareholders of CNB Financial equals 50% of the total merger consideration. All CNB Financial shareholder elections will be subject to the allocation and proration procedures set forth in the merger agreement. The transaction value represents 125.6% of CNB Financial’s tangible book value and a 3.8% premium to core deposits.
In connection with CNB Financial’s execution of a definitive merger agreement with United Financial, CNB Financial and Berkshire Hills Bancorp, Inc. have mutually agreed to terminate their previously executed merger agreement, dated as of April 29, 2009 and as amended as of May 21, 2009, and will no longer pursue their proposed business combination. In accordance with the terms of the prior merger agreement between CNB Financial and Berkshire Hills Bancorp, Berkshire Hills Bancorp will receive a termination fee of $970,000 in connection with the parties’ mutual termination of the agreement.
United Financial expects that its close proximity to CNB Financial and its familiarity with the CNB management and lending teams will provide for manageable integration risk, achievable synergies, and improved operational efficiency for the combined institution. Excluding one-time merger costs and assuming cost savings of approximately 15% of CNB Financial’s operating expenses, it is anticipated that this transaction will result in 9% accretion to 2010 operating earnings per share. United Financial expects to record a pre-tax restructuring charge of approximately $4.0 million, including a one-time termination fee payable to Berkshire Hills Bancorp, Inc., which may be reimbursed under certain circumstances as set forth in the merger agreement.
Richard B. Collins will continue as President and Chief Executive Office for the combined company and Charles R. Valade will become an Executive Vice President of United Bank. The Boards of Directors of United Financial and United Bank will be expanded by one member each to include one current member of CNB Financial’s Board.
The companies expect to consummate the transaction in the fourth quarter of 2009, subject to customary closing conditions, including regulatory approvals and approval of CNB Financial shareholders. The holding company will remain headquartered in West Springfield, Massachusetts.
Stifel, Nicolaus & Company, Incorporated, with lead banker Mark B. Cohen acted as financial advisor for United Financial and Locke Lord Bissell & Liddell LLP, with lead lawyer Douglas P. Faucette, acted as its legal advisor in the transaction. Keefe, Bruyette & Woods, Inc., with lead banker Patricia McJoynt, acted as financial advisor to CNB Financial, and Kilpatrick Stockton LLP, with lead lawyer Scott A. Brown, acted as its legal advisor.
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