After a run of more than 20 years, Traditions Bank in York County has agreed to be acquired by ACNB Corp., a Gettysburg-based institution aiming to push eastward into York and Lancaster counties.
The all-stock deal, expected to close in the first quarter of 2025, is valued at $73.5 million.
The combined bank would have assets of $3.3 billion and a network of 32 branches in Pennsylvania and Maryland.
It also would result in some cost savings, as the banks plan to consolidate several offices in central and western York County.
Banks of all sizes have been under financial pressure due to high interest rates and elevated inflation.
Why is this happening: For ACNB, the larger of the two banks, the deal represents an opportunity to grow in areas that it believes are receptive to its approach.
“York and Lancaster are growing, vibrant markets for community banking, which is at the core of ACNB Corporation’s success for more than 165 years,” ACNB president and CEO James Helt said in a statement.
ACNB also was drawn by the mortgage division of Traditions, which ACNB described in an investor presentation as complementing ACNB’s insurance and wealth management divisions. Such activities provide revenue outside the core banking business of making loans and taking deposits.
Traditions leaders saw an opportunity to partner with a bank with a similar mission and values but greater resources.
“We are pleased to join forces with a company that has laid a clear course for the future, and one which we believe meets the objectives of our stakeholders due to its rich history, strong financial performance and solid record of delivering shareholder value,” Traditions chair and CEO Eugene Draganosky said in a statement.
The buyer: ACNB was founded in 1857 and had long been known as Adams County National Bank.
It is a dominant player in Adams, with nearly 61.3% of the county’s deposits as of June 30, 2023, the most recent figures available from the Federal Deposit Insurance Corp.
In recent years, the bank has been growing through acquisitions in Maryland. In 2017, ACNB purchased New Windsor Bancorp, based in Taneytown, Maryland. Three years later, ACNB acquired Frederick County Bancorp in Frederick, Maryland.
The two Maryland banks operated as divisions of ACNB until 2022, when they were converted to the ACNB brand.
The bank employed 413 full-time equivalents as of the end of 2023, according to its most recent annual report.
For the second quarter of 2024, the bank had a profit of $11.3 million, up from $9.5 million for the year-ago quarter.
The seller: Traditions opened in 2002 as York Traditions Bank, one of several new banks that popped up around the turn of the millennium in Central Pennsylvania.
The name changed to Traditions as the bank began doing more business in Lancaster County, where it opened its first branch in 2021.
The bank, which employs 141 people, now has two branches in Lancaster, as well as a loan office in Cumberland County, in addition to its branches in York County.
As the mortgage business shrank in the face of rising interest rates in 2023, Traditions undertook a strategic realignment to reduce costs.
But the mortgage business is rebounding this year, the bank said in an earnings statement yesterday. Traditions posted a profit of $1.8 million for the second quarter of 2024, up from $1.3 million for the year-ago period.
Where’s the consolidation: It would affect two Traditions branches and an ACNB loan office, all in York County.
The Traditions branch on St. Charles Way in York Township would move into a nearby ACNB branch at South York Plaza, which is off Interstate 83 and South Queen Street.
An ACNB loan production office in York would close and move to a Traditions operations center on Pauline Drive.
The Hanover branch of Traditions would consolidate into a nearby ACNB branch.
Any moves would not take place until the merger closes.
Overall, the estimated cost savings from the acquisition equate to about 35% of Traditions’ non-interest expenses, which include spending on salaries, real estate, technology and other items, according to the investor presentation. The presentation does not detail the sources of savings.
What’s in a name: Traditions branches would continue to operate under their own names but with a tagline indicating Traditions is a division of ACNB.
The consolidated Hanover branches would operate as an ACNB office.
The leadership: Draganosky, who has been CEO of Traditions since 2017, would join the ACNB board as a vice chair.
Traditions president Thomas Sposito II would become president of ACNB’s Traditions Bank division.
Michael Kochenour, who founded Traditions, would become a director emeritus at ACNB.
Two additional Traditions directors, as yet to be determined, would join the ACNB board.
The advisers: Lemoyne-based law firm Bybel Rutledge is the legal counsel for ACNB, while Piper Sandler Companies is the financial adviser.
Traditions’ legal counsel is Harrisburg-area law firm Pillar+Aught. The financial adviser is Stephens Inc.
The footnote: Traditions is the only bank headquartered in York County following the merger this year between Orrstown Bank and PeoplesBank.
The parent of PeoplesBank, Codorus Valley Bancorp, was based in York Township. The merged bank, operating under the Orrstown name, is now based in the Harrisburg area.
Orrstown has a deposit market share in York County of just over 15%.
If the deal with Traditions goes through, ACNB would have a market share in the county of 9.34%, according to the investor presentation. Traditions’ current market share is about 6.88%.
Editor’s note: This story has been updated to correct the board seats that would go to Traditions officers.
