On July 17, First Bank completed its previously announced acquisition of Pennsylvania-based Malvern Bancorp Inc. along with its wholly owned subsidiary Malvern Bank, the Hamilton-based financial institution announced the same day.
According to First Bank, the combined stock and cash transaction was valued at approximately $129.7 million. When the merger plans were announced in December 2022, it was estimated at $149.5 million.
First Bank shares were trading at $12.13 at the opening of the Nasdaq Stock Market on July 17. First Bank’s Dec. 13, 2022, closing price stood at $15.31 per share.
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“We are pleased to welcome Malvern customers, employees and shareholders to First Bank as we grow our banking presence in New Jersey and Pennsylvania,” First Bank President and CEO Patrick Ryan said in a statement. “Malvern Bank has built a strong customer base by providing extraordinary customer service and we intend to continue this tradition.”
The move expands First Bank’s footprint in the “highly desirable New York City to Philadelphia corridor,” according to the announcement, which added that the combined company’s consolidated assets equal approximately $3.8 billion.
Malvern’s website currently announces to its customers that “Malvern Bank is now a division of First Bank.” Anthony Weagley, president and CEO of Malvern Bancorp Inc., said the merger “assures our customers and other stakeholders will transition to a company with similar organizational values and cultures.”
As part of the agreement, First Bank expanded its board of directors by three seats and appointed three Malvern directors to its board: Andrew Fish, Howard Kent and Cynthia Felzer Leitzell.
With the addition of Malvern’s nine banking locations, First Bank will now operate 27 branches across seven New Jersey counties, three in eastern Pennsylvania and one in Florida.
Hovde Group LLC acted as financial advisor to First Bank, and Piper Sandler & Co. acted as financial advisor to Malvern Bancorp. Luse Gorman PC provided legal counsel to First Bank, and Holland & Knight LLP provided legal counsel to Malvern Bancorp.
Hamilton-based First Bank and Malvern Bancorp Inc. of Paoli, Pa., have received regulatory approvals from multiple agencies to move forward with their previously announced merger, the institutions jointly announced July 6.
Under the terms of the agreement, which is expected to close by mid-July, First Bank would acquire Malvern Bancorp Inc. and its wholly owned subsidiary, Malvern Bank, for a combination of cash and stock.
The banks said they have received approvals from the Federal Deposit Insurance Corp., the New Jersey Department of Banking and Insurance, and the Pennsylvania Department of Banking and Securities, as well as non-objection from the board of governors of the Federal Reserve System.
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“This strategic merger enhances our market presence and deposit share in eastern Pennsylvania and adds to our robust growth strategy,” Patrick Ryan, president and CEO of First Bank, told NJBIZ. “The merger with Malvern Bank, known for its commercial lending, private banking and outstanding customer service, demonstrates our commitment to low-risk, high-quality transactions that broaden our service region. We’re excited to incorporate Malvern Bank’s staff into our First Bank team.”
If the deal closes, First Bank will have approximately $3.68 billion in assets with 27 branches across seven New Jersey counties, three in eastern Pennsylvania and one in Florida.
Editor’s note: NJBIZ reporter Matthew Fazelpoor contributed to this story.
First Bank will open its new North Jersey headquarters April 3. Ahead of the milestone, the Hamilton-based community bank is introducing the Fairfield location’s senior leader: First Senior Vice President and Market Executive Anthony DeSenzo.
A veteran of the Essex County business community, DeSenzo will lead a team of professionals at the Fairfield location to help increase First Bank’s market share and expand the brand in the region, the institution announced March 28.
Joining DeSenzo are: Vice President and Fairfield Branch Manager David Roskowsky and Vice President of Business Development Stephen Bohmert.
“At First Bank, we focus on our customers and make everything else revolve around them,” said First Bank President and CEO Patrick Ryan in a statement. “We’ve created a banking experience where our customers have access to decision-makers, a place where our team members have real authority to help. As a result, we listen carefully, ask smart questions and deliver solutions—not products. That’s the foundation for a true community bank.”
‘We do things differently’
Curious about community banking? First Bank President and CEO Patrick Ryan and NJ Bankers recently sat down with NJBIZ. Read more here.
That ethos was evident during the pandemic, when First Bank helped to provide nearly 2,000 small businesses with Paycheck Protection Program relief totaling approximately $300 million.
According to the bank, the North Jersey business community can expect a range of personalized services at the 330 Passaic Ave., Suite 100, Fairfield location. Recently, the bank introduced resources for private equity groups and their portfolio companies to cover the full business life cycle, in addition to a new specialty financing group offering asset-based lending – helping entrepreneurs and business owners turn illiquid assets into more capital.
First Bank has 18 full-service branches throughout New Jersey and Pennsylvania. As of Dec. 31, 2022, the most recent information available, the bank had $2.73 billion in assets.
First Bank is expanding its reach in two of its operating areas with the addition of branches in North Jersey and Pennsylvania.
The Hamilton-based community bank will open locations in Fairfield in Essex County and in West Chester, Pa., the institution announced Feb. 15, in a move to offer greater access for customers across its operating footprint.
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“We continue to bring relationship-based, personal banking to more towns,” First Bank President and CEO Patrick Ryan said in a statement. “We listen carefully, ask questions and deliver solutions—solving problems, not selling products. We give clients access to decision-makers, and a place where market executives have real authority to build meaningful relationships that last. That’s the foundation for a true community bank.”
Opening March 6, the West Chester location is a full-service branch offering services including a night drop, ATM and drive-thru.
Entrepreneurial instincts
Supporting entrepreneurs is part of First Bank’s history – President and CEO Patrick Ryan was part of an investment group that recapitalized First Bank with $20 million in late 2008 – and present.
The bank has added resources to cover the full life cycle for private equity groups and their portfolio companies. And recently, it said it introduced a new specialty financing group that offers asset-based lending to help business owners and entrepreneurs turn illiquid assets into more capital.
In Fairfield, First Bank will debut its new North Jersey headquarters April 3. According to the bank, the office will house a commercial-loan team. There, lending officers will strive to build long-term relationships “through prompt service, sage guidance and kept promises.”
At the end of 2022, First Bank made another move that stands to expand its reach when it announced it would acquire Pennsylvania-based Malvern Bank in a deal valued at approximately $149.5 million. The combined entity is expected to to have approximately $3.68 billion in assets with nearly 30 branches across New Jersey, Pennsylvania and Florida.
Last year, First Bank posted total net revenue of $25.2 million for the fourth quarter of 2022, up by 10.3% over the third quarter. Full year total net revenue, meanwhile, was up by 8.8% from 2021, to $97.5 million.
With assets of $2.73 billion as of Dec. 31, 2022, the bank currently operates 18 full-service branches. According to the bank, it has delivered a 41% compounded annual growth rate in total assets since year-end 2007, it’s first year of business.
With a wrap-up expected in the second quarter of 2023, First Bank and Malvern Bancorp Inc. entered into a definitive merger agreement under which the New Jersey institution will acquire the Pennsylvania-based parent company of Malvern Bank.
Announced Dec. 14, the deal is valued at approximately $149.5 million, according to the parties.
Following the closing of the transaction, First Bank will have approximately $3.68 billion in assets with 27 branches across seven Garden State counties, three eastern Pennsylvania counties, and one Florida county.
“This strategic transaction expands our market position and deposit share in eastern Pennsylvania, while complementing our strong organic growth strategy,” First Bank President and CEO Patrick Ryan said in a statement. “This merger is another example of what we believe are high-quality and low-risk transactions we are using to build size and scale, solidify our market position and expand our service area.”
In particular, Ryan highlighted Malvern’s commercial lending and private banking business in addition to its customer service.
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Based in Paoli, a suburb of Philadelphia, the target has nine banking locations in Pennsylvania, New Jersey and Palm Beach, Fla. As of Sept. 30, 2022, the most recent information available, the bank had assets of approximately $1.04 billion, loans of approximately $815.6 million, and deposits of approximately $785.3 million.
“In addition, this transaction further strengthens our balance sheet through loan portfolio diversification and provides expanded access to cost-effective deposits,” Ryan continued. “Importantly, we expect the transaction will be significantly and immediately accretive to First Bank earnings per share and that the earn back on tangible book dilution to be under two and a half years.
“First Bank’s regulatory capital levels will remain strong, enabling us to continue to evaluate all appropriate growth opportunities,” he added.
According to terms of the agreement …
Malvern Bancorp shareholders will receive 0.7733 shares of First Bank common stock and $7.80 in cash per each Malvern Bancorp common share outstanding. First Bank expects to issue approximately 5.9 million new shares of First Bank common stock and $59.4 million in cash consideration to consummate this transaction.
Based upon First Bank’s Dec. 13, 2022, closing price of $15.31 per share, the transaction is valued at approximately $149.5 million.
“We are excited to be combining with a financially strong and strategically well-positioned community bank,” said Anthony Weagley, president and chief executive officer of Malvern Bancorp, in a prepared statement. “First Bank has an excellent track record and is successfully executing upon its vision to be a premier community bank focused on high-touch customer service throughout the New York City to Philadelphia corridor.”
The merger was unanimously approved by the boards of directors of both institutions; its completion is subject to the approval of First Bank and Malvern Bancorp shareholders in addition to customary regulatory reviews.
First Bank is offering new options for commercial lending, the community bank announced Sept. 28, with the addition of servicing for private equity funds.
The Hamilton-based institution said it offers capital call lines of credit, working capital lines of credit and financing for private equity firms and their portfolio companies.
According to First Bank, its capital call line of credit provides working capital to buyout firms to facilitate speed and produce better equity returns. It’s typically used to create a bridge between acquisition timing and receipt of incoming capital from investor groups. The working capital line offers private equity groups funding for general purposes, like short-term needs and payment obligations. At the end of the cycle, acquisition financing can help with purchases of portfolio companies or for banking services for portfolio companies — as First Bank pointed out, those companies also have traditional commercial banking needs like deposits and cash management services.
The new Private Equity Banking division is led by Senior Vice President/Team Leader Ramzi Dagher and Vice President/Relationship Manager Adam Regnery.
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“As an entrepreneur myself, I understand the challenges that private equity groups encounter,” said First Bank President and CEO Patrick Ryan in a statement. Ryan received the EY Entrepreneur of the Year 2022 New Jersey Award earlier this year and is currently in consideration for the national award. “We’re relationship-focused community bankers who know entrepreneurs are an important part of our economy. That’s why First Bank continues to be nimble, creative and responsive to their needs.”
According to the bank, support for entrepreneurs is baked into its history.
Ryan was part of an investment group that recapitalized First Bank with $20 million in late 2008. Since its first year in business, just a year before that in 2007, the bank said it’s delivered a 41% compound annual growth rate in total assets. As of June 30, 2022, the most recent quarterly filing, that figure was $2.57 billion.
Editor’s note: This story was updated at 2:58 p.m. ET on Sept. 28, 2022, to include the names of the leaders for the new Private Equity Banking divison.
Patrick Ryan is the president and CEO at Hamilton-based First Bank. – FIRST BANK
Community banks have historically been at the forefront of providing much-needed funds to small businesses in times of economic stress. Once again, the economy hangs in the balance. The Federal Reserve has been hiking interest rates systematically to combat rising inflation, which is at its highest mark in 40-plus years. Recession concerns are mounting.
The pendulum of economic priorities has swung from sustaining growth to preventing unsustainable growth, impacting you and your community bank in numerous ways.
Main Street needs our help to move through another period of uncertainty. Like a dependable neighbor, community banks will answer the call.
During the COVID-19 lockdowns, for example, community banks had a greater share in approving Paycheck Protection Program loans to small businesses than their larger, more complex counterparts.
That’s not a surprise.
With our long-term relationships and specialized knowledge of local markets, businesses and customers, community banks made PPP funds quickly available to businesses needing an economic shot in the arm. That was not easy to do, but we made it happen.
And we’ll need to help our customers during economic turmoil once more.
Starting out ahead
Initially, rate hikes are advantageous to community banks. A portion of our assets include floating-rate loans which price daily, weekly or monthly off an index. So, as rates move higher, the index moves higher. So does the interest the borrower needs to pay to the bank.
Furthermore, the loans we’re making today carry higher interest rates than the loans we did last year or the year before. Therefore, we will earn more revenue and interest income on these new loans.
While our liability costs ultimately move higher, there’s a lag. Plus, community banks have non-interest earning deposits that don’t change. We also have some deposits set at low rates that are not automatically repriced.
Over time, as rates grow higher and the competition for the deposits intensifies, community banks move up the rate they pay for the deposits. Still, there’s a window where the bank does better financially as rates increase because the revenue pickup happens immediately. The higher cost of the deposits plays out over time.
Hamilton-based First Bank – FIRST BANK
That all happens during the early stages of a rate-increase cycle.
However, over time, as borrowers pay more for their debt, it can begin to put a strain on the cash flow of the business.
For instance, if a business borrowed a million dollars at 4% interest, they did that knowing how much revenue and income they were projected to take in and how much debt they could afford at that rate. Two years later, that interest rate could be 6% or more.
Suddenly, that puts more stress and pressure on their business. Is the company making the same amount of revenue as it did before? Maybe. Perhaps it’s even higher. But in some situations, revenue is down, and the interest-cost line item has increased.
And if the economy slows down enough, a segment of the borrowing population will not be able to repay their debts because expenses eventually exceed revenue, creating losses and cash flow short falls.
That hurts our customers and us. Community banks need their borrowers to pay them back. Otherwise, delinquencies and charge-offs in our loan portfolio drive our expenses higher.
Higher interest rates also have a dampening effect on economic activity and demand for new loans. This can also hurt community banks because if new loans are not made to replace loans that get paid off, revenue for the bank will decline.
These trends can hurt businesses and banks alike. We are in this struggle together.
What community banks can do
While this type of economic scenario does not provide easy answers, community bankers are here to help business find the right solution for them.
One option includes reducing levels of debt.
That means allocating the dollars that might have been used toward capital expenditures or growth and applying those dollars to pay down debt. That helps de-risk the business, which allows them to weather the storm during a slower economic period.
This is where community banks come in.
Our job as community bankers is to help our customers and local businesses figure out the optimal capital structure and debt levels given the current economic realities.
In other words, we need to be good advisors.
Businesses need guidance on how to strike the right balance. For example, how much debt is the right amount of debt? How do you de-risk your business during economic uncertainty?
Businesses have many questions, just as they did just two years ago. So do bankers. But community banks have the robust financial resources their customers need to steer them through yet another major economic turn and find the right answers together.
Patrick Ryan is the president and CEO at Hamilton-based First Bank.
First Bank said Aug. 4 it will acquire two New Jersey branches from OceanFirst Bank.
The terms of the agreement provide for First Bank to acquire the owned premises and equipment of locations in Flemington and Monroe; all deposits associated with the branches–which totaled approximately $124 million as of June 30, 2021; as well as selected performing loans totaling approximately $14 million as of June 30, 2021.
The assets will be acquired at book value except for the owned premises, which will be acquired at appraised value. Deposits will be acquired for a 2% premium or approximately $2.5 million, utilizing June 30, 2021 deposit balances.
It is expected that the current staff of the branches will become employees of First Bank.
The two locations will continue operating as OceanFirst Bank branches until the transaction is approved and completed. Subject to regulatory approval, that is anticipated during the fourth quarter of 2021.
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The acquisition will enhance First Bank’s existing New Jersey footprint and further strengthen its presence along the New York City to Philadelphia corridor.
“This transaction enables First Bank to realize additional scale in our targeted service area and acquire long-term low-cost core funding 35% below our current cost of funding, along with providing an opportunity for long-term value creation,” said President and Chief Executive Officer Patrick Ryan. “We believe that the integration experience we have gained in recent years, along with the excellent relationships we maintain with regulators, will enable a seamless transition with minimal disruption for all customers.”
Boenning & Scattergood Inc. acted as financial advisor to First Bank. Troutman Pepper provided legal counsel to First Bank and Luse Gorman PC provided legal counsel to OceanFirst Bank.
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