425: NBT Bancorp to Acquire Evans Bancorp in $236 Million All-Stock Deal

NBT Bancorp Inc. (NBTB) and Evans Bancorp, Inc. (EVBN) have announced a definitive agreement for NBTB to acquire EVBN in an all-stock transaction valued at approximately $236 million, aimed at expanding NBT's presence in Upstate New York.

Summary

• NBT Bancorp Inc. (NBTB) will acquire Evans Bancorp, Inc. (EVBN) in an all-stock transaction.
• The aggregate purchase price is approximately $236 million.
• The exchange ratio is fixed at 0.91x NBTB shares for each EVBN share.
• The merger will create a combined entity with approximately $16 billion in assets.
• The combined franchise would have the #1 ranked deposit market share in Upstate New York for all banks under $100 billion in assets.
• The transaction is expected to be 13.6% EPS accretive.
• Tangible book value per share dilution is estimated at (4.7%) with an earnback period of 2.3 years.
• Evans CEO, President & Director, David Nasca, will join NBT's Board.
• The deal is expected to close in Q2 2025, with a simultaneous system conversion.
• Pre-tax cost savings are estimated at 25% of EVBN's operating expenses, or $13.2 million.
• The transaction includes a gross credit mark of $17.7 million on EVBN's loan portfolio.
• The pro forma company will have a loan portfolio of $11.6B and deposits of $13.2B.

Sentiment

Score: 7

Explanation: The document presents a positive outlook on the merger, highlighting the strategic benefits, financial accretion, and growth opportunities. While there are some expected dilutions, the overall tone suggests confidence in the success of the transaction.

Positives

• The merger is expected to be 13.6% EPS accretive for NBT Bancorp.
• The transaction provides NBT with expansion into attractive markets in Upstate New York, specifically Buffalo and Rochester.
• Evans has a strong track record of organic growth and stellar credit quality, with a 2 bps net charge-offs average from 2019-2024 YTD.
• The integration is considered low-risk due to no branch overlap and highly complementary franchises.
• The combined franchise would have the #1 ranked deposit market share in Upstate New York for all banks under $100 billion in assets.
• The deal is expected to produce double-digit EPS accretion with short tangible book value earnback.

Negatives

• The transaction is expected to result in a (4.7%) dilution in tangible book value per share for NBT Bancorp.
• The tangible book value per share earnback period is estimated at 2.3 years.
• There are pre-tax merger-related charges of $28.5 million fully reflected in pro forma TBV dilution at closing computation.

Risks

• The businesses of NBT and Evans may not be combined successfully, or the combination may take longer than expected.
• Cost savings from the merger may not be fully realized or may take longer to realize than expected.
• Operating costs, customer loss, and business disruption following the merger may be greater than expected.
• Governmental approvals of the merger may not be obtained, or adverse regulatory conditions may be imposed.
• Evans' shareholders may fail to approve the merger.
• The merger may be more expensive to complete than anticipated.
• Management's attention may be diverted from ongoing business operations and opportunities.
• The parties may be unable to achieve expected synergies and operating efficiencies.
• Integration may be more difficult, time-consuming, or costly than expected.
• Revenues following the proposed transaction may be lower than expected.
• Changes in general economic conditions, including changes in market interest rates and monetary and fiscal policies, could adversely affect the combined company.
• Legislative and regulatory changes could impact the combined company.

Future Outlook

The merger is expected to close in Q2 2025, with a simultaneous system conversion. The combined company aims to leverage its expanded presence in Upstate New York to drive growth and shareholder returns.

Management Comments

• David Nasca, current Evans CEO, President & Director, will join NBT's Board of Directors.

Industry Context

This merger reflects a trend of consolidation in the banking industry, particularly among community banks seeking to gain scale, expand their market presence, and improve efficiency. The deal positions NBT to better compete with larger regional and national banks in the Upstate New York market.

Comparison to Industry Standards

• The price/TBV multiple of 1.32x is in line with or better than comparable deals.
• The pay-to-trade ratio is favorable compared to recent nationwide transactions.
• The transaction is expected to result in strong pro forma capital levels and compelling ongoing capital generation.
• The document compares the deal to the last 15 nationwide bank and thrift transactions where the buyer was major exchange-traded and target assets were between $1.5 and $3.5 billion, excluding merger-of-equals and strategic merger transactions.

Management Changes

Stakeholder Impact

• Shareholders of Evans Bancorp will receive NBT Bancorp stock.
• Customers of both banks can expect a broader range of products and services.
• Employees of both banks may experience changes in roles and responsibilities due to the merger.
• The merger is expected to create a stronger community bank presence in Upstate New York.

Next Steps

• Evans shareholder approval is required.
• Customary regulatory approvals must be obtained.
• The transaction is anticipated to close in Q2 2025.
• Simultaneous system conversion is anticipated at closing.

Key Dates