EASTON, Md. and ANNAPOLIS, Md., March
3, 2021 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ:
SHBI) ( "Shore"), the holding company of Shore United Bank, and
Severn Bancorp, Inc. (NASDAQ: SVBI) ("Severn"), the holding company of Severn
Savings Bank, FSB, today announced they have entered into a
definitive agreement under which Severn will merge with and into Shore in a
stock and cash transaction valued at approximately $146 million (including common stock and stock
options), or $11.30 per share of
Severn common stock, based on a
closing price for Shore's common stock of $15.64 as of March 2,
2021 and $1.59 per share in
cash. Shore expects the transaction to be over 30% accretive to EPS
in 2022, based on anticipated cost savings of approximately
35%.
Severn is headquartered in
Annapolis, Maryland with
$952.6 million in total assets,
$679.2 million in gross loans and
$806.5 million in total deposits as
of December 31, 2020. Severn operates seven banking offices located
in Anne Arundel County, Maryland.
The transaction will increase Shore's total assets to approximately
$2.9 billion on a pro forma basis as
of December 31, 2020.
Lloyd L. "Scott" Beatty, President and Chief Executive Officer
of Shore, commented, "The addition of Severn to our organization is very exciting.
We will now have a presence in Anne
Arundel County which is a wonderful market and fills in a
gap in our footprint. The merger also brings new products and
talent to our organization."
"It is an opportunity for Severn to join forces with a larger
organization and remain committed to community banking," said
Alan Hyatt, President and Chief
Executive Officer of Severn. "We
look forward to the opportunities and benefits this combination
will bring to our shareholders, in terms of prospects for future
earnings growth, immediate dividend pick-up and diversification, as
well as to clients, employees and the many communities we
serve."
Transaction Details
Under the terms of the definitive agreement, which was
unanimously approved by the Board of Directors of both companies,
holders of Severn common
stock will have the right to receive 0.6207 shares of Shore
common stock and $1.59 in cash for
each share of Severn common stock
they own. Since the exchange ratio will be fixed at 0.6207, the
common stock value of the consideration will float with Shore's
stock price. The cash portion of the consideration will be fixed at
$1.59 per share.
Existing Shore shareholders will own approximately 59.6% of the
outstanding shares of the combined company and Severn shareholders are expected to own
approximately 40.4%. Shore will appoint four Severn directors to the Shore Board, including
Mr. Hyatt. Mr. Beatty will continue as Chief Executive
Officer of the combined company and Mr. Hyatt will serve as
Chairman of the Board of Directors.
The transaction is expected to close in the third quarter of
2021, subject to satisfaction of customary closing conditions,
including regulatory approvals and shareholder approval from Shore
and Severn shareholders.
Severn directors, executive
officers and certain shareholders have entered into agreements with
Shore pursuant to which they have committed to vote their shares of
Severn common stock in favor of the merger of Severn with and into Shore. Shore directors
and executive officers have entered into agreements with
Severn pursuant to which they have
committed to vote their shares of Shore common stock in favor of
the issuance of shares of Shore to Severn shareholders in the merger. For
additional information about the proposed merger of Severn with and into Shore, shareholders are
encouraged to carefully read the definitive agreement that will be
filed with the Securities and Exchange Commission ("SEC")
today.
Janney Montgomery Scott LLC acted as financial advisor to Shore
in the transaction and delivered a fairness opinion to the Board of
Directors of Shore. Holland &
Knight LLP served as legal counsel to Shore. Piper Sandler & Co. acted as financial
advisor to Severn and delivered a
fairness opinion to the Board of Directors of Severn. Luse Gorman,
PC served as legal counsel to Severn.
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 Shore's website at www.shorebancshares.com under
the "Investor Relations" link and then under the heading
"Documents."
About Shore Bancshares, Inc.
Shore Bancshares, Inc. is the largest independent financial
holding company headquartered on the Eastern Shore of Maryland. It is the parent company of Shore
United Bank. The Bank operates 22 full-service branches in
Baltimore County, Howard County, Kent
County, Queen Anne's
County, Talbot County,
Caroline County, Dorchester County and Wicomico County in Maryland, Kent
County, Delaware and Accomack
County, Virginia. The Company engages in trust and wealth
management services through Wye Financial Partners, a division
of Shore United Bank.
About Severn Bancorp, Inc.
Severn Bancorp, Inc. is a savings and loan holding company
chartered as a corporation in the state of Maryland in 1990. It conducts business
primarily through three subsidiaries, Severn Savings Bank, FSB,
Mid-Maryland Title Company, Inc. and SBI Mortgage Company.
Founded in 1946, Severn Savings Bank is a full-service community
bank offering a wide array of personal and commercial banking
products as well as residential and commercial mortgage lending. It
has seven branches located in Annapolis, Crofton, Edgewater, Glen
Burnie, Lothian/Wayson's
Corner, and Severna Park.
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 Shore and Severn. 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 Shore's and Severn's
current expectations and assumptions regarding Shore's and
Severn'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 such as the COVID 19 pandemic could affect Shore's or
Severn'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 Shore and Severn; the outcome of any legal proceedings
that may be instituted against Shore or Severn; delays in completing the 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 transaction) or shareholder approvals, or to
satisfy any of the other conditions to the transaction on a timely
basis or at all; the possibility that the anticipated benefits of
the 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 Shore and
Severn do business; the
possibility that the transaction may be more expensive to complete
than anticipated, including as a result of unexpected factors or
events; 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 transaction;
the ability to complete the transaction and integration of Shore
and Severn successfully; and the
dilution caused by Shore's issuance of additional shares of its
capital stock in connection with the transaction. Except to the
extent required by applicable law or regulation, each of Shore and
Severn 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 Shore, Severn and
factors which could affect the forward-looking statements contained
herein can be found in Shore's Annual Report on Form 10-K for the
fiscal year ended December 31, 2019,
its Quarterly Reports on Form 10-Q for the periods ended
March 31, 2020, June 30, 2020 and September 30, 2020, and its other filings with
the SEC, and in Severn's Annual
Report on Form 10-K for the fiscal year ended December 31, 2019, its Quarterly Reports on Form
10-Q for the periods ended March 31,
2020, June 30, 2020 and
September 30, 2020, 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.
Additional Information About the Merger and Where to Find
It
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval with respect to the proposed transaction.
In connection with the proposed merger transaction, a
registration statement on Form S-4 will be filed with the SEC that
will include a joint proxy statement of Severn and Shore and a prospectus of Shore,
which will be distributed to the shareholders of Severn and Shore in connection with their
votes on the merger of Severn with
and into Shore and the issuance of Shore common stock in the
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 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 Shore and Severn have filed with the SEC, free of charge
at the SEC's website, www.sec.gov, or by accessing Shore's
website at www.shorebancshares.com under the "Investor Relations"
link and then under the heading "Documents," or by accessing
Severn's website at
www.severnbank.com under the "Severn Bank Investors Relation"
link and then under the heading "SEC Filings" and
"Documents." In addition, documents filed with the SEC by
Shore or Severn will be available
free of charge by (1) writing Shore at 18 East Dover Street,
Easton, MD 21601, Attention:
Edward C. Allen, or (2) writing
Severn at 200 Westgate Circle,
Suite 200, Annapolis, MD 21404,
Attention: Vance Adkins.
Participants in the Solicitation
The directors, executive officers and certain other members of
management and employees of Shore may be deemed to be participants
in the solicitation of proxies from the shareholders of Shore in
connection with the proposed transaction. Information about Shore's
directors and executive officers is included in the proxy statement
for its 2020 annual meeting of Shore's shareholders, which was
filed with the SEC on March 13,
2020.
The directors, executive officers and certain other members of
management and employees of Severn
may also be deemed to be participants in the solicitation of
proxies in connection with the proposed transaction from the
shareholders of Severn.
Information about the directors and executive officers of
Severn is included in the proxy
statement for its 2020 annual meeting of Severn shareholders, which was filed with the
SEC on April 10, 2020.
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 merger when it becomes
available. Free copies of this document may be obtained as
described above.
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SOURCE Shore Bancshares, Inc.; Severn Bancorp, Inc.