Bank of McKenney (OTC Pink: BOMK) and CCB Bankshares, Inc. (OTC Pink: CZYB), parent company of Citizens Community Bank, jointly announce the signing of a definitive agreement to combine in a strategic merger. In the transaction, CCB and its subsidiary bank will merge into McKenney to create a combined entity with approximately $447 million in assets, $344 million in loans, and $390 million in deposits, based on reported financial information as of March 31, 2017.
The combined bank will be headquartered in Prince George County, Virginia, with 13 full-service offices and 1 loan production office across Chesterfield, Dinwiddie, Prince George, Brunswick and Mecklenburg counties in Virginia, and Franklin, Halifax and Vance counties in North Carolina. The combined management team will work together to rename the bank upon completion of the transaction and position the go-forward branding strategy.
The merger creates a larger and stronger institution with a significantly higher lending limit, expanded product offering and access to new markets. Both management teams anticipate that such enhanced scale and efficiency will create meaningful opportunities to drive further growth, profitability and long term value creation for employees, customers and shareholders.
Richard M. Liles, President and Chief Executive Officer of McKenney, said, "We are excited about our merger with CCB. The transaction will double the size of the bank and increase our legal lending limit. Our combined presence, coupled with our shared commitment to providing premier service, uniquely positions our franchise to grow as the community bank of choice in the markets we serve. We believe that the merger will also provide significant financial benefits for our shareholders."
James R. Black, President and Chief Executive Officer of CCB, remarked, "This is a tremendous opportunity to have our neighboring community banks with similar cultures and philosophies join together in this transformational merger. We have a strong team of experienced personnel throughout the organization and I am honored and proud to lead us in this new endeavor. Together, we will leverage our resources for the benefit of all stakeholders and are committed more than ever to our community bank strategy."
Under the terms of the merger agreement, which was unanimously approved by the Boards of Directors of both entities, CCB shareholders will receive a fixed exchange ratio of 0.935 of McKenney shares in exchange for each share of CCB common stock. Based on the closing price of McKenney common stock on June 27, 2017, the transaction represents a value of $12.52 per share of CCB common stock, or $19.0 million in aggregate. McKenney shareholders will own 57.6 percent of the combined entity and CCB shareholders will own 42.4 percent. The all-stock transaction is intended to qualify as a tax-free reorganization for CCB shareholders.
The transaction is expected to be immediately accretive to earnings per share, with a tangible book value dilution payback of approximately 3 years. Further, it is anticipated that the combined bank's pro forma capital ratios will exceed regulatory well-capitalized guidelines.
Following completion of the transaction, James R. Black will serve as President and Chief Executive Officer and a member of the Board of Directors while Mr. Liles will serve as Executive Chairman. The combined bank Board of Directors will reflect the pro forma ownership of the respective institutions with 8 members from McKenney, including Mr. Liles who will become Chairman, and 6 members from CCB, including Norman D. Wagstaff, Jr. who will become Vice Chairman. W.D. Allen, III, current Chairman of McKenney, will remain on the Board following the merger.
The transaction is expected to be completed in the fourth quarter of 2017, subject to approval of both entities' shareholders, regulatory approvals and other customary closing conditions.
Sandler O'Neill + Partners, L.P. served as McKenney's financial advisor and Williams Mullen served as McKenney's legal counsel. FIG Partners, LLC served as CCB's financial advisor and LeClairRyan served as CCB's legal counsel.
About Bank of McKenney
Bank of McKenney is a full-service community bank headquartered in McKenney, Virginia with seven branches serving southeastern Virginia. The bank has been dedicated to serving its communities for over 100 years and offers a full suite of banking services to individuals and businesses. For more information and additional financial data, please visit www.bankofmckenney.com.
About CCB Bankshares, Inc.
CCB Bankshares, Inc. is a Virginia state chartered bank holding company headquartered in South Hill, Virginia and parent company to Citizens Community Bank. It operates six branches, three in southcentral Virginia and three in northern North Carolina, as well as a loan production office in Clarksville, Virginia. For more information and additional financial data, please visit www.myccb.bank.
