Orrstown Financial Services in Shippensburg, Pa., has agreed to buy Codorus Valley Bancorp in York, Pa.
The $3.1 billion-asset Orrstown said in a press release that it will pay $207 million in stock for the $2.2 billion-asset Codorus Valley. The deal is expected to close in the third quarter.
Orrstown shareholders will own 56% of the combined company, which will have 51 branches in Pennsylvania and Maryland. Orrstown will retain its name after the deal closes.
The administrative headquarters will be in Harrisburg, Pa., with an operations center in York.
The companies “share a similar culture, vision and deep commitment to our communities,” Thomas Quinn Jr., Orrstown’s president and CEO, said in the release.
“The partnership of our companies will significantly increase our size and scale, which we believe will not only drive profitability and shareholder value but also benefit our clients, employees and communities,” Quinn added.
Orrstown will have seven of the 13 board seats. Joel Zullinger, Orrstown’s chairman, will retain that role, while J. Rodney Messick, Codorus Valley’s chairman, will serve as vice chairman.
Quinn will retain his titles, and Craig Kauffman, Codorus Valley’s president and CEO, will serve as chief operating officer. Kauffman will become president and CEO in mid-2025 when Quinn retires.
The deal is expected to be 21% accretive to Orrstown’s 2024 earnings per share and 46% accretive the next year. It should take less than three years for Orrstown to earn back an estimated 20.9% dilution to its tangible book value.
Orrstown plans to cut 18% of the combined company’s annual noninterest expenses. It expects to incur about $27.5 million of merger-related charges.
The agreement comes just weeks after Codorus Valley ended a cooperation agreement with investor Driver Management.
Raymond James and Goodwin Procter advised Orrstown. Keefe, Bruyette & Woods and Holland & Knight advised Codorus Valley.