Mifflinburg Bancorp, Inc. (OTCPK:MIFF), the parent company of Mifflinburg Bank and Trust Company, has announced a significant strategic move that will reshape the financial landscape of Central Pennsylvania. In a merger of equals, Mifflinburg Bancorp will combine with Northumberland Bancorp (OTCPK:NUBC), creating a powerhouse community bank with enhanced resources and market presence.
The definitive merger agreement, signed on September 25, 2024, will see Northumberland Bancorp merge into Mifflinburg Bancorp, Inc. Following the merger, the combined entity will be renamed Steele Bancorp, Inc., and Mifflinburg Bank will adopt a new brand name, yet to be determined, that reflects the expanded scope and vision of the merged institution. This all-stock transaction, valued at $34.2 million, signifies a pivotal moment for both Mifflinburg Bank and Northumberland Bancorp as they join forces to create a premier financial institution in the Susquehanna Valley, PA market.
Creating a Stronger Financial Institution
This strategic alliance brings together two high-performing community banks deeply rooted in Central Pennsylvania. The combined company will boast impressive financials, including approximately $1.3 billion in total assets, $1.1 billion in total deposits, and $850 million in loans, based on year-end 2023 figures. With $93 million in combined shareholders’ equity, Steele Bancorp, Inc., stemming from Mifflinburg Bank and Northumberland Bancorp, is positioned for robust growth and increased competitiveness.
The merger is expected to generate operational efficiencies through strategic staff restructuring, including early retirement and severance packages, and natural attrition. This consolidation aims to optimize resource allocation and enhance the overall strength of the new entity. For Northumberland Bancorp shareholders, each share will be exchanged for 1.1850 shares of Mifflinburg, resulting in approximately 46% ownership of the combined company at closing. The deal is structured as a tax-free reorganization, ensuring a smooth transition for shareholders.
Leadership and Vision for Steele Bancorp
The leadership structure of the merged entity reflects a balanced integration of both Mifflinburg Bank and Northumberland Bancorp. The Boards of Directors for both Steele Bancorp, Inc. and the post-merger Mifflinburg Bank will each comprise twelve members, with equal representation from both legacy institutions – six from Mifflinburg and six from Northumberland.
Donald J. Steele, Jr., the current Chairman of Northumberland Bancorp and Norry Bank, will assume the chairmanship of both Steele Bancorp, Inc. and the rebranded Mifflinburg Bank. Richard J. Drzewiecki, the current Chairman of Mifflinburg and Mifflinburg Bank, will become Vice Chairman of both entities.
Jeffrey J. Kapsar, the current President and CEO of Mifflinburg and Mifflinburg Bank, will lead Steele Bancorp, Inc. and the post-merger Mifflinburg Bank as President and CEO. J. Todd Troxell, currently President and CEO of Northumberland Bancorp and Norry Bank, will take on the role of Senior Executive Vice President and Chief Administrative Officer of the post-merger Mifflinburg Bank and Corporate Secretary of Steele Bancorp, Inc. Both Mr. Kapsar and Mr. Troxell will also serve as directors, ensuring continuity and shared leadership. The continued involvement of senior management from both banks underscores a commitment to a seamless integration and leveraging the expertise from both organizations within the new Mifflinburg Bank structure.
Strategic Benefits and Customer Focus
According to Jeffrey J. Kapsar, this merger unites two community-focused organizations with shared values and a forward-looking approach to banking. He emphasized that the similar cultures of Mifflinburg Bank and Northumberland Bancorp create a strong foundation for growth and relationship building, ensuring the combined entity remains a respected and robust community bank.
J. Todd Troxell echoed this sentiment, highlighting the historical significance of both banks, each with over a century of service. He noted that the merger expands their footprint in a competitive market, benefiting customers through the scale and talent of the combined organization. Customers of Mifflinburg Bank and Northumberland Bancorp can expect enhanced products and services while retaining the personalized service they value. Shareholders are also poised to benefit from a stronger investment in a larger bank with solid capital, earnings, and dividends. Employees will find expanded career opportunities within the newly formed Steele Bancorp and the rebranded Mifflinburg Bank.
The merger is the culmination of a long-standing relationship and extensive discussions over the past five months between the management teams of Mifflinburg Bank and Northumberland Bancorp, reflecting a carefully considered and strategic partnership.
Path to Completion
The merger agreement has received unanimous approval from the boards of directors of both Mifflinburg Bancorp, Inc. and Northumberland Bancorp. The transaction is anticipated to be finalized in the first or second quarter of 2025, pending Northumberland shareholder approval, regulatory clearances, and standard closing conditions. Until then, customers of both Mifflinburg Bank and Norry Bank will continue to receive the same high-quality service they have come to expect.
Mifflinburg Bancorp, Inc. received financial advisory services and a fairness opinion from The Kafafian Group, Inc., with legal counsel provided by Stevens & Lee. Northumberland Bancorp was advised by Alden Investment Group, with a fairness opinion and legal counsel from Mette, Evans & Woodside.
This merger marks an exciting new chapter for Mifflinburg Bank, Northumberland Bancorp, and the communities they serve, creating a stronger, more resilient financial institution for the future under the Steele Bancorp banner.
