First Chester County Corp., the parent of the First National Bank of Chester County, under pressure from regulators because of problem loans, has agreed to a $64 million buyout offer from Tower Bancorp Inc. of Harrisburg, the banks said today.
The deal, which valued First Chester County at $10.22 per share, an 86 percent premium to Thursday's close of $5.50, will unite two banks of similar size. First Chester has 23 branches in Southeastern Pennsylvania and $1.3 billion in assets. Tower, which operates Graystone Bank and Tower Bank in central Pennsylvania and Maryland, has 27 branches and $1.4 billion in assets.
The price could go up or down, depending on changes in the level of loan delinquencies at First Chester.
As part of the deal, which is expected to close in the second quarter, Tower agreed to increase its lending facility to First Chester to as much as $26 million and to purchase up $100 million in loans from First Chester. Those moves are designed to ensure that First Chester meets regulatory requirements of the Office of the Comptroller of the Currency.
First Chester shares were up 70.36 percent late this morning, to $9.37, on volume of 67,165 shares; average daily volume over the last three months was 5,123. Tower Bancorp was down 3.06 percent to $21.86.