Highlights of the Announced Transaction:
- Creates a bank holding company with approximately
$6 billion in assets and a market
capitalization of approximately $650
million
- The combined company will have more than 40 branches, with
leading and commanding market share positions in attractive
Maryland markets and a growing
presence in Virginia and
Delaware
- Significant EPS accretion for Shore
- Attractive, low-cost core funding base
- Like-minded institutions with strong cultural alignment and
a deep commitment to shareholders, customers, employees, and the
communities served by Shore and TCFC
- Meaningful value creation to shareholders and strong pro
forma profitability
- Increased trading liquidity for both companies and increased
dividends for TCFC shareholders
EASTON,
Md. and WALDORF,
Md. , Dec. 14, 2022 /PRNewswire/ -- Shore
Bancshares, Inc. (NASDAQ: SHBI) ("Shore"), the holding company
of Shore United Bank, N.A. and The Community Financial Corporation
(NASDAQ: TCFC) ("TCFC"), the holding company of Community Bank of
the Chesapeake, today announced
they have entered into a definitive agreement under which TCFC will
merge with and into Shore in an all-stock transaction valued at
approximately $254.4 million, or
$44.71 per share of TCFC common
stock, based on a closing price for Shore's common stock of
$19.20 as of December 13, 2022. The transaction is expected to
be over 40% accretive to Shore's EPS in 2024. The combined company
will have total assets of approximately $6.0
billion on a pro forma basis as of the assumed closing date
of June 30, 2023.
Lloyd L. "Scott" Beatty, President and Chief Executive Officer
of Shore, commented, "This combination creates a solid and very
promising future for the combined organization. We are bringing
together two well-known financial services brands that focus on
providing remarkable client experiences, helping individuals and
businesses reach their financial goals. The combined bank will
remain committed to our employees and the relationships that they
have developed over decades of serving our communities. The
shareholders of Shore and TCFC should benefit from the pro forma
profitability metrics that should continue to drive shareholder
value. An important consideration for this combination was to
find a successor for me. Jimmy
Burke is not only a capable banker, but he has also been a
banker in Maryland for a long
time. He has proven that he is worthy of taking over as
President and CEO of the combined company at closing. Clearly
Jimmy shares the same philosophy and values as we do at Shore
United Bank."
James M. ("Jimmy") Burke, President and Chief Executive Officer
of TCFC, commented, "Shore and TCFC are both community-focused
organizations, with similar cultures and visions for the future.
Our combined size and resources will significantly enhance our
scale and ability to help customers through higher loan limits,
greater investment in technology and increased career opportunities
for employees. This will allow the combined bank to continue to
deepen its presence in our core markets and will also allow us to
expand more effectively in the markets that we wish to serve. I am
honored by the trust and confidence that Scott Beatty and the Board of Directors has
placed in me by appointing me to be the President and Chief
Executive Officer of the combined company. Scott has successfully
led Shore through significant organic and strategic growth through
his tenure. I am proud to succeed Scott to lead a talented
management team. We will execute a business strategy with a
focus on delivering exceptional customer service and increasing
shareholder value while continuing to honor our community
values."
Transaction Details
Under the terms of the definitive
agreement, which was unanimously approved by the boards of
directors of both companies, holders of TCFC common stock will have
the right to receive 2.3287 shares of Shore common stock. Existing
Shore shareholders will own approximately 60% of the outstanding
shares of the combined company and TCFC shareholders are expected
to own approximately 40%.
Name, Branding, Headquarters and Markets
The combined
company will trade under the Shore ticker symbol "SHBI" on the
Nasdaq Global Select Market, will operate under the "Shore
Bancshares, Inc." name, and the combined bank will operate under
the "Shore United Bank, N.A." name. The administrative
headquarters of the combined company will be located in
Easton, Maryland.
The combined company will operate a desirable, contiguous
footprint throughout the Delmarva Peninsula, Southern Maryland, the Greater Baltimore-Washington area and
Central Virginia with plans to
expand into attractive neighboring counties such as Prince George's County, Maryland.
Governance and Leadership
The combined company's board
of directors will have twenty directors, consisting of twelve
directors from Shore (which will include four representatives from
the former Severn Bancorp, Inc. previously acquired by Shore) and
eight directors from TCFC.
- Alan J. Hyatt, Shore's current
Chairman, will continue to serve as Chairman of the combined
company board of directors.
- Austin J. Slater, Jr., TCFC's
current Chairman, will serve as Vice Chairman of the combined
company board of directors.
The combined company will be led by a well-respected management
team that is comprised of individuals with significant financial
services experience.
- James M. Burke, TCFC's current
President and Chief Executive Officer, will serve as President and
Chief Executive Officer of the combined company.
- Donna J. Stevens, Shore's
current Chief Operating Officer, will continue to serve as Chief
Operating Officer of the combined company.
- Todd L. Capitani, TCFC's current
Chief Financial Officer, will serve as Chief Financial Officer of
the combined company.
- Andrea Colender, Shore's current
Chief Legal Officer, will continue to serve as Chief Legal Officer
of the combined company.
- B. Scot Ebron, TCFC's current
Chief Banking Officer, will serve as Chief Banking Officer of the
combined company.
- Charles "Charlie" Ruch, Shore's current Chief Credit Officer,
will continue to serve as Chief Credit Officer of the combined
company.
- The remainder of the executive team will draw from both Shore
and TCFC.
Timing and Approvals
The transaction is expected to
close late in the second quarter or early in the third quarter of
2023, subject to satisfaction of customary closing conditions,
including regulatory approvals and shareholder approval from Shore
and TCFC shareholders. TCFC directors and executive officers have
entered into agreements with Shore pursuant to which they have
committed to vote their shares of TCFC common stock in favor of the
merger of TCFC with and into Shore. Shore directors and executive
officers have entered into agreements with TCFC pursuant to which
they have committed to vote their shares of Shore common stock in
favor of the issuance of shares of Shore to TCFC shareholders in
the merger. For additional information about the proposed merger of
TCFC with and into Shore, shareholders are encouraged to carefully
read the definitive agreement that will be filed with the
Securities and Exchange Commission ("SEC") today.
Advisors
Piper Sandler & Co. acted as
financial advisor to TCFC and delivered a fairness opinion to the
Board of Directors of TCFC. Kilpatrick
Townsend & Stockton LLP served as legal counsel to
TCFC. Keefe, Bruyette & Woods, A Stifel Company
acted as financial advisor to Shore in the transaction and
delivered a fairness opinion to the Board of Directors.
Holland & Knight LLP served as legal counsel to Shore.
Investor Presentation Details
A presentation regarding
the merger announcement will be filed with the SEC and made
available at the SEC's website, www.sec.gov, or by accessing
Shore's website at www.shorebancshares.com under the "Investor
Relations" link and then under the heading "Documents."
About Shore Bancshares, Inc.
Shore
Bancshares, Inc. is the largest independent financial holding
company headquartered on the Eastern Shore of Maryland. It is the parent company of Shore
United Bank. The Bank operates 31 full-service branches, 32 ATMs, 5
loan production offices, and provides a full range of commercial
and consumer banking products and services to individuals,
businesses, and other organizations in Anne Arundel County, Baltimore County, Caroline County, Dorchester County, Howard County, Kent
County, Queen Anne's
County, Talbot County and
Worcester County in Maryland, Kent
County and Sussex County in
Delaware and in Accomack County, Virginia. The Company
engages in trust and wealth management services through Wye
Financial Partners, a division of Shore United Bank.
About The Community Financial
Corporation
Headquartered in Waldorf, MD, The Community Financial
Corporation is the bank holding company for Community Bank of the
Chesapeake, a full-service
commercial bank with assets of approximately $2.4 billion as of September 30, 2022. Through its branch offices
and commercial lending centers, Community Bank of the Chesapeake offers a broad range of financial
products and services to individuals and businesses. TCFC's
branches are located at its main office in Waldorf, Maryland, and branch offices in
Bryans Road, Dunkirk, Leonardtown, La
Plata, Charlotte Hall,
Prince Frederick, Lusby and California, Maryland; and Fredericksburg - Downtown and Fredericksburg - Harrison Crossing,
Virginia. More information about
Community Bank of the Chesapeake
can be found at www.cbtc.com.
FORWARD-LOOKING STATEMENTS
This press release contains
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 regarding the financial
condition, results of operations, business plans and
the future performance of Shore and TCFC.
Words such as "anticipates," "believes,"
"estimates," "expects," "forecasts," "intends,"
"plans," "projects," "could," "may," "should," "will" or other
similar words and expressions are intended to identify
these forward-looking statements. These forward-looking
statements are based on Shore's and TCFC's current
expectations and assumptions regarding Shore's and
TCFC's businesses, the economy, and other
future conditions. Because forward-looking
statements relate to future
results and occurrences, they are subject to
inherent
uncertainties, risks, and changes in circumstances that are difficult
to
predict. Any number of risks, uncertainties, or other factors
such as the COVID 19 pandemic could
affect Shore's or TCFC's future
financial results and performance and could
cause actual results or performance to
differ materially from anticipated results
or performance. Such risks and uncertainties include,
among others: the occurrence of any event,
change or other circumstances that could
give
rise to the right of one or both of the
parties to
terminate the definitive agreement and plan of merger between Shore and
TCFC; the outcome of any legal proceedings
that may be instituted against Shore or TCFC; delays
in completing the proposed transaction; the
failure to obtain necessary regulatory
approvals (and the
risk that such approvals may result in the imposition of
conditions that could adversely
affect the combined company or the expected
benefits of the proposed
transaction) or shareholder approvals, or to satisfy any of the other conditions
to the proposed transaction on a
timely basis or at all, including the ability of
Shore and TCFC to meet expectations regarding the timing,
completion and accounting and tax treatments of the proposed
transaction; the possibility that the anticipated benefits of the
proposed transaction are not
realized when expected
or at all, including as a result of the
impact of, or problems arising from, the
integration of the two companies
or as a result of the
strength of the economy and
competitive factors in the areas where
Shore and TCFC do business; the
possibility that the proposed transaction may be
more expensive to complete than
anticipated, including as a result of
unexpected factors or events; the possibility
that revenues following the proposed transaction may be lower than
expected; the impact of certain restrictions during the pendency of
the proposed transaction on the parties' ability to pursue certain
business opportunities and strategic transactions;
diversion of
management's attention from ongoing
business operations and
opportunities; potential adverse
reactions or changes to business
or employee relationships, including those resulting from
the announcement or completion of the proposed
transaction; the ability to complete the
proposed transaction and integration of Shore and TCFC
successfully; the dilution caused by Shore's
issuance of additional shares
of its capital stock in connection with
the proposed transaction; and the potential impact of general
economic, political or market factors on the companies or the
proposed transaction and other factors that may affect future
results of Shore or TCFC. Except to the extent
required by applicable law
or regulation, each of Shore
and TCFC disclaims any obligation to
update such factors or to publicly
announce the results
of any revisions to any of the forward-looking statements
included herein to reflect future events
or developments. Further
information regarding Shore, TCFC and
factors which could
affect the forward-looking statements contained
herein can be found in Shore's Annual Report
on Form 10-K for the fiscal
year ended December
31, 2021, its Quarterly Reports on
Form 10-Q for the periods ended March
31, 2022, June 30, 2022 and September 30,
2022, and its other filings with the SEC, and
in TCFC's Annual Report on Form 10-K for the fiscal
year ended December 31, 2021, its Quarterly Reports on Form
10-Q for the periods ended March 31,
2022, June 30,
2022 and September 30, 2022, and its other
filings with the SEC. SEC filings are available free of
charge on the SEC's website at www.sec.gov.
Annualized, pro forma, projected, and estimated numbers in this
document are used for illustrative purposes only, are not forecasts
and may not reflect actual results.
Additional Information About the Merger and Where to Find
It
This press release does not constitute an offer to sell
or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval with respect to the proposed
transaction.
In connection with the proposed transaction,
a registration statement on Form S-4 will be
filed with the
SEC that will include a joint proxy
statement of TCFC and Shore and a
prospectus of Shore, which will be
distributed to the shareholders of TCFC
and Shore in connection with their votes
on the merger
of TCFC with and into Shore and the
issuance of Shore common stock in the
proposed transaction. INVESTORS AND
SECURITY HOLDERS ARE ENCOURAGED TO READ
THE REGISTRATION STATEMENT AND JOINT
PROXY STATEMENT/PROSPECTUS WHEN THEY BECOME AVAILABLE (AND
ANY
OTHER DOCUMENTS FILED WITH THE SEC IN
CONNECTION WITH THE PROPOSED TRANSACTION OR
INCORPORATED BY
REFERENCE INTO THE JOINT PROXY STATEMENT/PROSPECTUS) BECAUSE
SUCH DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION REGARDING THE
PROPOSED MERGER AND RELATED MATTERS.
Investors and
security holders will be able to
obtain these documents, and any other documents
Shore and TCFC have filed with the SEC, free of
charge at the SEC's website, www.sec.gov, or by
accessing Shore's website at
www.shorebancshares.com under the
"Investor Relations" link and
then under the heading "Documents," or by
accessing TCFC's website at
https://www.cbtc.com/about/investor-relations/. In addition, documents
filed with the SEC by Shore or TCFC
will be available free of charge by
(1) writing Shore at 18 East Dover Street,
Easton,
MD 21601, Attention: Vance W.
Adkins, or (2) writing TCFC at 3035 Leonardtown
Road, Waldorf, MD 20601, Attention: Todd
Capitani.
Participants in the Solicitation
The directors,
executive officers and certain other members of
management and employees of Shore may be deemed to be
participants in the solicitation of proxies from the
shareholders of Shore in connection with the proposed
transaction. Information about Shore's directors and executive
officers is included in the proxy statement for its
2022 annual meeting of Shore's shareholders, which was filed with
the SEC on April 11, 2022.
The directors, executive officers and certain
other members of management and employees of TCFC may also be
deemed to be participants in the
solicitation of proxies in connection with the proposed
transaction from the shareholders of TCFC. Information about
the directors and executive officers of TCFC is
included in the proxy statement for
its 2022 annual meeting of TCFC shareholders,
which was filed with the SEC on April
14, 2022.
Additional information regarding the interests of those
participants and other persons who may be deemed participants in
the transaction may be obtained by reading the joint proxy
statement/prospectus regarding the proposed transaction when
it becomes available. Free copies of this document may be obtained
as described above.
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SOURCE Shore Bancshares, Inc.