Regal Bank to Acquire Community First Bank

On Oct 20, 2015

Regal Bank and Community First Bank announced today that they have entered into a definitive agreement for the merger of Community First into Regal Bank, with Regal Bank as the surviving bank.

The strategic combination of these two organizations will create a community banking organization with total assets approaching $500 million, total loans in excess of $400 million, total deposits of approximately $415 million and total capital in excess of $45 million.  Combined, the banks will create a stronger banking organization to better serve customers through eight full-service branch locations. The transaction will bring Regal Bank into Union and Somerset Counties for the first time.

The agreement provides that 90 percent of the outstanding shares of Community First will be exchanged for Regal Bank shares of common stock, with the actual exchange ratio for Regal Bank shares based on the valuation of Regal Bank common stock as of month end prior to closing, as more fully explained in the Agreement. The remaining 10 percent of the consideration will be in cash.  Community First stockholders will be able to elect between receiving cash or Regal Bank shares of common stock, subject to proration and allocation so that 90 percent of outstanding Community First shares are exchanged for stock and 10 percent exchanged for cash.  The agreement includes provisions for downward price adjustments based on certain capital thresholds of Community First.

The parties value the transaction at approximately $9.7 million, based on Community First’s stockholders equity as of September 30, 2015.

The transaction is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes and Community First stockholders are not expected to recognize a gain or loss to the extent of the stock consideration received.

David Orbach, chairman of the Board of Regal Bank, said, “Regal Bank has had great success over the past eight years with its organic growth. We feel that this transaction, and hopefully future ones, will greatly complement the successes we have had thus far.”

In announcing the transaction, Thomas Lupo, President and Chief Executive Officer of Regal Bank said “Regal Bank is excited by the opportunity to partner with Community First.  We are delighted to be combining with Community First and increasing Regal Bank’s asset size and geographic footprint. We look forward to providing Community First customers with the same high level of service that Regal Bank customers currently enjoy.”

Pete Schoberl, chairman, president and Chief Executive Officer of Community First, will be joining Regal Bank’s management team, and stated, “We are pleased to have reached an agreement to merge with Regal Bank. Through this process we have come to know their culture and know that our customers and stockholders will be well served in the years ahead.”

The transaction, which has been unanimously approved by the boards of directors of both Regal Bank and Community First is expected to be completed during the first quarter of 2016. The transaction is subject to approval by the stockholders of Community First and RegalBank, regulatory approvals and other customary closing conditions.  Certain stockholders of Community First and Regal Bank have entered into voting agreements in support of the merger.

The Kafafian Group, Inc. acted as financial advisor to Regal Bank and delivered a fairness opinion to its Board of Directors. Windels Marx Lane & Mittendorf, LLP served as legal counsel to Regal Bank. Sandler O’Neill + Partners, L.P. delivered a fairness opinion to the Board of Directors of Community First. Giordano, Halleran & Ciesla, P.C served as legal counsel to Community First.

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