Northeast Ohio-based Middlefield Banc Corp., is expanding into the northwestern part of the state by acquiring Ada-based Liberty Bancshares, Inc., in an approximately $64.4 million stock deal.
The deal is expected to close in the fourth quarter of this year. James Heslop II, president and CEO of the $1.3 billion Middlefield, said the purchase of the $437.7 million Liberty National “compliments our growth in the central Ohio market,” and will allow for “strong earnings accretion, and a robust footprint around two of Ohio’s largest and fastest growing markets.”
The combined bank will have approximately $1.8 billion in assets and $1.5 billion in deposits, with 22 full-service offices. Middlefield will add six Liberty branches in Ada, Bellefontaine, Kenton, Marysville and Westerville.
“We believe this is a compelling transaction that generates meaningful earnings per share accretion, has a minimal tangible book value dilution and manageable earn-back period,” Heslop added.
Liberty President and CEO Ronald Zimmerly Jr. is expected to be Middlefield’s president, if Middlefield shareholders approve separating the president and CEO roles. Middlefield will add three new members to its board, including Zimmerly, current Liberty chair Mark Watkins, and Spencer Cohn, a representative of Castle Creek Capital, which is Liberty’s largest shareholder.
“We are thrilled to join The Middlefield Banking Co., an organization that shares a common philosophy focused on supporting customers, employees, and communities,” Zimmerly said. “I am excited by the future we are creating together.”
Under the agreement, each Liberty shareholder will receive 2.752 shares of Middlefield common stock. The merger will qualify as a tax-free reorganization for Liberty’s shareholders, who will own approximately 31 percent of the combined company. According to the press release, Middlefield anticipates the transaction will be accretive to earnings in the first year and earn back the tangible book value dilution created from the buy in approximately three years.
The New York City-based investment banking firm Keefe, Bruyette & Woods is serving as financial adviser to Middlefield Banc Corp. on the transaction, and the Cleveland-based law firm Grady & Associates is serving as legal counsel.
The St. Petersburg, Fla.-based financial services firm Raymond James & Associates, Inc., is serving as financial adviser to Liberty Bancshares, Inc. Columbus, Ohio-based Vorys, Sater, Seymour and Pease LLP is serving as legal counsel.