Orrstown Financial Services, Inc. (“Orrstown”) (NASDAQ: ORRF), the
parent company of Orrstown Bank, and Codorus Valley Bancorp,
Inc. (“Codorus Valley”) (NASDAQ: CVLY), the parent company of
PeoplesBank, A Codorus Valley Company (“PeoplesBank”), today
announced they have entered into a definitive agreement pursuant to
which Codorus Valley will merge with and into Orrstown in an
all-stock transaction valued at approximately $207.0 million, or
$21.31 per share of Codorus Valley common stock, based on the
$24.35 closing price of Orrstown common stock on December 11, 2023.
Transaction
Highlights:
- Merger of Equals transaction creating a premier Pennsylvania
and Maryland community bank with approximately $5.2 billion in
assets and a market capitalization of approximately $460
million
- The combined company will have 51 branches serving attractive
markets throughout a contiguous footprint in Central and Eastern
Pennsylvania and the Greater Baltimore, Maryland area
- Closely aligned corporate cultures and operating philosophies
with a continued focus on, and presence in, our combined
communities
- Deep commitment to the community banking business model
- Administrative headquarters located in Harrisburg, PA
- Operations center located in York, PA
- Charitable foundations will continue to maintain positive
impact on the communities served by each bank for over 100
years
- Strong pro forma profitability and enhanced trading liquidity
create significant value for shareholders
- Closing expected to occur in the third quarter of 2024
Thomas R. Quinn, Jr., Orrstown’s President and Chief Executive
Officer, commented “Orrstown and Codorus Valley share a similar
culture, vision and deep commitment to our communities. The
partnership of our companies will significantly increase our size
and scale, which we believe will not only drive profitability and
shareholder value but also benefit our clients, employees and
communities through broader product offerings, higher lending
limits, an improved customer experience, and increased career
opportunities. I am excited by the opportunity to work with
Craig and his impressive team to build the premier community
banking franchise in our Pennsylvania and Maryland markets.”
Craig L. Kauffman, President and Chief Executive Officer of
Codorus Valley, commented “This union marks a significant milestone
in our commitment to providing enhanced financial services to our
valued clients. Together, we are poised to create a stronger, more
resilient institution that will harness the synergies of our
combined expertise and resources. This merger is a testament to our
dedication to innovation, client satisfaction, community engagement
and long-term growth in the dynamic landscape of the financial
industry. I am excited at the opportunity to work with Tom and his
team as we merge our organizations, both of which share similar
cultures and dedication to our vision, mission and core
values.”
Transaction Details
Under the terms of the definitive agreement, which was
unanimously approved by the Boards of Directors of both companies,
each outstanding share of Codorus Valley common stock will be
exchanged for the right to receive 0.875 shares of Orrstown common
stock. As a result of the transaction, Orrstown shareholders will
own approximately 56% of the outstanding shares of the combined
company and Codorus Valley shareholders will own approximately 44%
of the outstanding shares of the combined company.
Name, Branding, Headquarters and Markets
The combined company will trade on the Nasdaq Global Select
Market under the Orrstown ticker symbol "ORRF". The combined
company will operate under the "Orrstown Financial Services, Inc."
name, and the combined bank will operate under the "Orrstown Bank"
name.
The administrative headquarters of the combined company will be
located in Harrisburg, PA while the operations center will be
located in York, PA.
The combined company will serve an attractive, contiguous
footprint throughout Central and Eastern Pennsylvania and the
Greater Baltimore, Maryland region and will remain committed to
serving the communities that each bank has served for over a
century.
Governance and Leadership
The combined company's Board of Directors will consist of seven
directors from Orrstown and six directors from Codorus Valley. Joel
R. Zullinger, Chairman of Orrstown’s Board of Directors, will serve
as Chairman of the Board of the combined company and the combined
bank. J. Rodney Messick, Chairman of Codorus Valley’s Board of
Directors, will serve as Vice-Chairman of the Board of the combined
company and the combined bank.
Thomas R. Quinn, Jr., the current President and Chief Executive
Officer of Orrstown, will serve as President and Chief Executive
Officer of the combined company and the combined bank at
closing.
Craig L. Kauffman, the current President and Chief Executive
Officer of Codorus Valley, will serve as Executive Vice President
and Chief Operating Officer of the combined company and the
combined bank at closing.
Mr. Kauffman will be appointed President and Chief Executive
Officer of the combined company and combined bank on or about June
1, 2025 upon Mr. Quinn’s retirement.
Neil Kalani, the current Chief Financial Officer (CFO) of
Orrstown Financial Services, Inc. will continue to serve as CFO of
the combined company and bank. The remainder of the executive team
will be drawn from both Orrstown and Codorus Valley.
Timing and Approvals
The transaction is expected to close in the third quarter of
2024, subject to satisfaction of customary closing conditions,
including receipt of required regulatory approvals and approvals
from Orrstown and Codorus Valley shareholders.
Codorus Valley directors and executive officers have entered
into agreements with Orrstown pursuant to which they have committed
to vote their shares of Codorus Valley common stock in favor of the
merger of Codorus Valley with and into Orrstown. Orrstown directors
and executive officers have entered into agreements with Codorus
Valley pursuant to which they have committed to vote their shares
of Orrstown common stock in favor of the issuance of Orrstown
shares to Codorus Valley shareholders in the merger.
For additional information about the proposed merger of Codorus
Valley with and into Orrstown, shareholders are encouraged to
carefully read the definitive agreement that will be filed with the
Securities and Exchange Commission ("SEC").
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.
Investor Presentation Details
A presentation regarding the merger announcement will be filed
with the SEC and made available at the SEC's website, www.sec.gov,
or by accessing Orrstown’s website at www.orrstown.com under the
"Investor Relations" link and then under the heading "Documents,"
or by accessing Codorus Valley's Investor Relations website at
ir.peoplesbanknet.com.
For media inquiries or further information, please contact:John
MossVP, Director of Marketing and Client Experience,
PeoplesBank717-747-1520jmoss@peoplesbanknet.com
Matthew DyckmanEVP, General Counsel, Orrstown
Bank717-510-7262mdyckman@orrstown.com
About Orrstown
Orrstown Financial Services, Inc. and its wholly-owned
subsidiary, Orrstown Bank, provide a wide range of consumer and
business financial services in 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”.
About Codorus Valley
Codorus Valley Bancorp, Inc. is the largest independent
financial services holding company headquartered in York,
Pennsylvania. Codorus Valley primarily operates through its
financial services subsidiary, PeoplesBank, A Codorus Valley
Company. PeoplesBank offers a full range of consumer, business,
wealth management, and mortgage services at financial centers
located in communities throughout South Central Pennsylvania and
Central Maryland. Codorus Valley Bancorp, Inc.’s Common Stock is
listed on the NASDAQ Global Market under the symbol “CVLY”.
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 and Codorus
Valley.
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 and Codorus
Valley'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 or Codorus Valley'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 occurrence of any event, change or other circumstances that
could give rise to the right of one or both of the parties to
terminate the definitive agreement and plan of merger between
Orrstown and Codorus Valley; the outcome of any legal proceedings
that may be instituted against Orrstown or Codorus Valley; delays
in completing the proposed transaction; the failure to obtain
necessary regulatory approvals (and the risk that such approvals
may result in the imposition of conditions that could adversely
affect the combined company or the expected benefits of the
proposed transaction) or shareholder approvals, or to satisfy any
of the other conditions to the proposed transaction on a timely
basis or at all, including the ability of Orrstown and Codorus
Valley to meet expectations regarding the timing, completion and
accounting and tax treatments of the proposed transaction; 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 and
Codorus Valley do business; the possibility that the proposed
transaction may be more expensive to complete than anticipated,
including as a result of unexpected factors or events; the
possibility that revenues following the proposed transaction may be
lower than expected; the impact of certain restrictions during the
pendency of the proposed transaction on the parties' 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 proposed
transaction; the ability to complete the proposed transaction and
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 proposed transaction; and the
potential impact of general economic, political or market factors
on the companies or the proposed transaction and other factors that
may affect future results of Orrstown or Codorus Valley. The
foregoing list of factors is not exhaustive. Except to the extent
required by applicable law or regulation, each of Orrstown and
Codorus Valley 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, Codorus
Valley 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, 2022,
its Quarterly Reports on Form 10-Q for the periods ended March 31,
2023, June 30, 2023 and September 30, 2023, and its other filings
with the SEC, and in Codorus Valley’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2022, its Quarterly Reports
on Form 10-Q for the periods ended March 31, 2023, June 30, 2023
and September 30, 2023, and its other filings with the SEC. SEC
filings are available free of charge on the SEC's website at
www.sec.gov. Annualized, pro forma, projected, and estimated
numbers in this document are used for illustrative purposes only,
are not forecasts and may not reflect actual results.
No Offer or Solicitation
This document is not a proxy statement or solicitation or a
proxy, consent or authorization with respect to any securities or
in respect of the proposed transaction and shall not constitute an
offer to sell or a solicitation of an offer to buy the securities
of Orrstown, Codorus Valley or the combined company, nor shall
there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be deemed to be made
except by means of a prospectus meeting the requirements of Section
10 of the Securities Act, and otherwise in accordance with
applicable law.
Additional Information About the Merger and Where to
Find It
In connection with the proposed transaction, Orrstown intends to
file a registration statement on Form S-4 with the SEC that will
include a joint proxy statement of Codorus Valley and Orrstown and
a prospectus of Orrstown, which will be distributed to the
shareholders of Codorus Valley and Orrstown in connection with
their votes on the merger of Codorus Valley with and into Orrstown
and the issuance of Orrstown common stock in the proposed
transaction. INVESTORS AND SECURITY HOLDERS ARE ENCOURAGED TO READ
THE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS
WHEN THEY BECOME AVAILABLE (AND ANY OTHER DOCUMENTS FILED WITH THE
SEC IN CONNECTION WITH THE PROPOSED TRANSACTION OR INCORPORATED BY
REFERENCE INTO THE JOINT PROXY STATEMENT/PROSPECTUS) BECAUSE SUCH
DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION REGARDING THE PROPOSED
MERGER AND RELATED MATTERS. Investors and security holders will be
able to obtain these documents, and any other documents Orrstown
and Codorus Valley have filed with the SEC, free of charge at the
SEC's website, www.sec.gov, or by accessing Orrstown's website at
www.Orrstown.com under the "Investor Relations" link and then under
the heading "Documents," or by accessing Codorus Valley's website
at ir.peoplesbanknet.com. In addition, documents filed with the SEC
by Orrstown or Codorus Valley will be available free of charge by
(1) writing Orrstown at 4750 Lindle Road, Harrisburg, PA 17111,
Attention: Neil Kalani or (2) writing Codorus Valley at 105 Leader
Heights Road, York, PA 17403, Attention: Daniel R. Stolzer.
Participants in the Solicitation
The directors, executive officers and certain other members of
management and employees of Orrstown may be deemed to be
participants in the solicitation of proxies from the shareholders
of Orrstown in connection with the proposed transaction.
Information about Orrstown's directors and executive officers is
included in the proxy statement for its 2023 annual meeting of
Orrstown's shareholders, which was filed with the SEC on March 31,
2023.
The directors, executive officers and certain other members of
management and employees of Codorus Valley may also be deemed to be
participants in the solicitation of proxies in connection with the
proposed transaction from the shareholders of Codorus Valley.
Information about the directors and executive officers of Codorus
Valley is included in the proxy statement for its 2023 annual
meeting of Codorus Valley shareholders, which was filed with the
SEC on March 31, 2023.
Additional information regarding the interests of those
participants and other persons who may be deemed participants in
the transaction may be obtained by reading the joint proxy
statement/prospectus regarding the proposed transaction when it
becomes available. Free copies of this document may be obtained as
described above.
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