Annapolis Bancorp Inc., parent of BankAnnapolis, has been purchased for $51 million in stock by Pennsylvania-based F.N.B. Corp.
The sale of Anne Arundel County's second-largest locally owned bank could have implications for the county's financial job base as jobs could be eliminated because of redundancy with the new corporate owner.
F.N.B. will pay approximately $12.09 per share, or $51 million, for Annapolis Bancorp, which has $437 million in assets. The boards of directors of both firms have approved the deal.
Under the terms of the merger agreement, shareholders of Annapolis Bancorp are entitled to 1.143 shares of F.N.B. common stock for each share of Annapolis Bancorp Inc. stock.
The exchange ratio is fixed and the transaction is expected to qualify as a tax-free exchange for shareholders of Annapolis Bancorp, Inc.
"This transaction is an attractive market-entry opportunity and is consistent with our expansion strategy," said F.N.B. CEO Vincent J. Delie Jr.
BankAnnapoli's profitability made it an attractive target for F.N.B., said Annapolis & Anne Arundel County Chamber of Commerce CEO Bob Burdon. He said it's unlikely F.N.B. will immediately attract new customers to boost earnings, so it is likely to seek cost-cutting measures that could mean the loss of local jobs.
"When you have a merger like this, people are going to look for economies of scale," Burdon said. "The question is: What employment losses will occur?"
Annapolis Bancorp's stock value has more than doubled in the past year. Its stock opened strong Tuesday morning, jumping 46 percent in price to $11.33 after closing at $7.75 on Monday. The bank's acquisition by F.N.B. was announced after the stock market's close on Monday.
F.N.B. already operates in Ohio, Pennsylvania and West Virginia.
Annapolis Bancorp has $343 million in total deposits, $297 million in loans and eight banking offices in Anne Arundel and Queen Anne's counties.
It is Anne Arundel's second-largest bank in terms of deposits, behind Severn Savings Bank, which has about $610 million in deposits. Bank of Glen Burnie has more than $320 million in deposits.
BankAnnapolis has about 100 employees. Attempts to reach BankAnnapolis CEO Richard Lerner were not successful. It is unclear if any local jobs would be lost through elimination of redundant back office or leadership positions.
The acquisition, expected to be completed in April, will create a four-state banking presence for F.N.B., which will have $12.2 billion in assets. The deal is subject to approval by regulators and Annapolis Bancorp shareholders.
Delie said Annapolis Bancorp's core market and its proximity to Baltimore and Washington, D.C., give the Pennsylvania bank a foothold in new territory. He said F.N.B. will benefit from tapping into Annapolis Bancorp's "strong local relationships and an excellent customer service culture."
Lerner said F.N.B. has "a proven commitment to local communities and an outstanding record of shareholder value creation."
F.N.B. Corp. expects the merger to add considerably to its earnings per share on a marginal basis and add slightly to earnings per share in the first full year (excluding one-time costs). Additionally, the transaction is expected to not affect F.N.B. Corp.'s tangible book value per share.
BankAnnapolis posted net income of $921,000 for the quarter ending on June 30.
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