CNB Financial in Clearfield, Pa., has agreed to buy ESSA Bancorp in Stroudsburg, Pa.
The $6.3 billion-asset CNB said in a press release that it will pay $214 million in stock for the $2.2 billion-asset ESSA. The deal, which is expected to close in the third quarter, priced ESSA at 99% of its tangible book value.
ESSA, which has 20 branches, will operate as a division of CNB Bank.
CNB plans to sell or reposition about $200 million of loans and $100 million of deposits after the deal closes.
Three ESSA directors, including President and CEO Gary Olson and Chairman Robert Selig Jr., will join CNB’s board. Olson will have a role as strategic adviser to Michael Peduzzi, CNB’s president and CEO.
The acquisition “aligns two high-performing banks with an exceptional commitment to client-focused services for its customers and financial support to sustain the economic vitality of the communities in which they operate,” Peduzzi said in the release.
“There are many similarities between the markets of ESSA and our existing CNB locations, as well as with our personal approach to banking,” Peduzzi added. “We understand the needs of the commercial, retail, and wealth management customers in these markets and look forward to providing the ESSA division with the support and assistance they need to continue to grow and thrive.”
The merger is expected to be 35% accretive to CNB’s 2026 diluted earnings per share, including cost savings. It should take a little more than three years to earn back a projected 15% dilution to CNB’s tangible book value.
CNB plans to cut about 40% of ESSA’s annual noninterest expenses. It expects to incur about $27.6 million of merger-related expenses.
Stephens and Hogan Lovells US advised CNB, while Piper Sandler provided a fairness opinion to CNB’s board. PNC FIG Advisory and Luse Gorman advised ESSA.