Teachers Credit Union ("TCU") and New Bancorp, Inc. (OTC PINK: NWBB) (“New Bancorp”), the holding company of New Buffalo Savings Bank (“New Buffalo”), announced today that they have signed a definitive purchase and assumption agreement whereby TCU will acquire the assets and assume the liabilities of New Bancorp and New Buffalo in an all-cash transaction. Following the completion of this transaction, New Bancorp will settle its remaining obligations and distribute the remaining transaction proceeds to its shareholders. New Buffalo operates three bank branches in New Buffalo, Sawyer and Three Oaks, Michigan and had $119.5 million in assets as of December 31, 2018. This strategic acquisition will increase TCU’s total number of branches to 57 and total assets to approximately $3.2 billion.
Under the terms of the purchase and assumption agreement, New Bancorp shareholders will receive $28.42 per share in cash (which is subject to adjustment based on a minimum equity target) for each outstanding common share of New Bancorp; provided, however, that if TCU is permitted by regulators to assume a liquidation account that is currently maintained by New Buffalo for the benefit of certain depositors, the per share price is expected to increase to $31.23 per share (also subject to adjustment based on a minimum equity target). For all outstanding options of New Bancorp, TCU will pay in cash the difference between the exercise price of each option and the per share merger consideration. New Bancorp has 718,031 shares outstanding, as well as 59,080 options with a weighted average exercise price of $14.09. The transaction is valued at $21.3 million ($23.4 million if the liquidation account is not required to be distributed to depositors), or approximately 128.5% of New Bancorp’s tangible book value as of December 31, 2018 (141.2% if the liquidation account is not required to be distributed to depositors).
This transaction involves the first federal thrift that converted to stock following the implementation of the Dodd-Frank Act to have its assets and liabilities sold to a credit union. As a result, we cannot predict at this time whether the liquidation account maintained by New Buffalo will be required to be distributed to certain depositors of New Buffalo.
The transaction has been unanimously approved by the board of directors of both institutions and is expected to close in the second half of this year, subject to customary closing conditions, the approval of New Bancorp’s shareholders and regulatory approvals. Following the completion of the sale of its assets and liabilities, it is expected that the corporate existence of New Buffalo will be terminated and that New Bancorp will be dissolved. It is expected that this process may take up to 45 days following the sale to be completed.
New Buffalo Savings Bank has served members of its community since 1921. All three banking locations will continue to operate as branches of TCU after the sale is finalized later this year. New Buffalo Savings Bank’s customers will become members of TCU with full access to the credit union’s wide array of products and services as well as its larger lending limit.
“We are excited to announce the acquisition of New Buffalo Savings Bank and look forward to welcoming their customers and employees into the TCU family,” said Paul Marsh, President and CEO. “This acquisition will allow us to expand our footprint and better serve our members in southwestern Michigan and it will result in better banking access for New Buffalo Savings Bank’s customers as well. I look forward to a positive transition as the cultures of both organizations are strong, and we share a commitment to the community and the members and customers we serve.”
In addition to growing TCU’s footprint in southwestern Michigan, the acquisition is expected to enhance the credit union’s business lending efforts by adding New Buffalo’s expertise in Small Business Administration (SBA) lending.
“We are enthusiastic about our new partnership with TCU because of the expanded opportunities it brings to our customers, our employees and our community,” said Richard Sauerman, President and CEO of New Bancorp Inc. and New Buffalo Savings Bank. “TCU is a solid homegrown financial institution and this deal ensures that local banking will remain in our community.” Sauerman continued, “We are also appreciative of the support from our shareholders, and we believe that this transaction will be beneficial for them.”
New Bancorp is being represented in this transaction by Keefe, Bruyette, & Woods as well as Luse Gorman, PC. TCU is being represented by Boenning & Scattergood and Krieg DeVault LLP.