Pennsylvania community bank strikes deal for in-state rival

Susquehanna Community Financial in West Milton, Pennsylvania, has agreed to sell itself to the $2.6 billion-asset Citizens & Northern Corp. in Wellsboro, Pennsylvania, for $44.3 million in stock.

The $598 million-asset Susquehanna becomes the eighth Pennsylvania-based bank to agree to a merger since September 2023.

The deal is expected to close in the fourth quarter. It would expand buyer Citizens & Northern into several new Central Pennsylvania markets, including Susquehanna’s home base of Union County, where it ranks number 2 in market share, with 31% of the $1.1 billion deposit market, according to the Federal Deposit Insurance Corp.  

“This combination continues our strategic efforts to enter attractive markets through acquisition and leverages the strengths of two reputable community banks that share a similar culture and customer-first mindset,” Citizens & Northern CEO Bradley Scovill said Monday in a press release. 

A Citizens & Northern spokesperson did not return a reporter’s call by deadline.

Citizens & Northern’s announcement Monday comes a little more than two weeks after regulators approved Columbus, Ohio-based Northwest Bancshare’s planned purchase of the $2.3 billion-asset Penns Woods Bancorp in Williamsport, Pennsylvania. That deal, valued at approximately $270 million, is expected to close in late July.

Meanwhile, the $6.3 billion-asset CNB Financial Corp in Clearfield, Pennsylvania, expects its $214 million deal for Stroudsburg, Pennsylvania-based ESSA Bancorp, with assets of $2.2 billion, to close in the third quarter.

A proposed merger-of-equals between the $600 million-asset Mifflinburg Bancorp in Mifflinburg, Pennsylvania, and the $666.5 million-asset Northumberland Bancorp in Northumberland, Pennsylvania, is projected to close in the second or third quarter.

But the pace of deals involving Pennsylvania community banks is likely to slow, due to a shortage of buyers, according to Robert Kafafian, CEO of the Kafafian Group, a consulting firm that works closely with Keystone State financial institutions.

“There are fewer and fewer buyers because most are getting sold,” Kafafian told American Banker. 

Where a community bank interested in selling might have received a half-dozen or more offers in the past, “now it’s down to one, two or three if they’re lucky,” Kafafian said. “In some cases, it’s none.”

Citizens & Northern reported first-quarter net income totaling $6.3 million, up 19% from the same period in 2024. It’s projecting 17% earnings accretion in 2026 after acquiring Susquehanna. The combined company would start with $2.3 billion of loans and $2.6 billion of deposits.

Susquehanna CEO Dave Runk has agreed to join the Citizens & Northern management team as an executive vice president and strategic advisor. “We believe the time is right for SQCF to partner with a significant and growing bank like [Citizens & Northern] that will provide our customers access to a diversified product set and expanded banking capabilities,” Runk said. 

Susquehanna Chairman Chris Trate is expected to join the merged company’s board of directors. Susquehanna President and Chief Operating Officer Jeffrey Hollenback has agreed to serve as a market president after the deal closes.

While Citizens & Northern is no stranger to bank merger-and-acquisition activity, Susquehanna would be its first acquisition since July 2020, when it bought the $608 million-asset Covenant Bank in Doylestown, Pennsylvania.

Citizens & Northern’s all-stock offer amounts to $15.58 for each Susquehanna share.