ESSA Bancorp, Inc. (NASDAQ Global Market SM “ESSA”), the parent company of ESSA Bank & Trust, and First Star Bancorp, Inc., (Pinksheets: FSSB), the parent company of First Star Bank today jointly announced the execution of a definitive merger agreement for ESSA Bancorp to acquire First Star for approximately $24.2 million, or approximately $11.20 per share, based on ESSA Bancorp’s closing price of $10.50 per share on December 21, 2011. The total consideration will vary based on ESSA Bancorp, Inc.’s stock price at closing, subject to a collar, and is payable 50% in cash and 50% in stock.
Subject to regulatory and First Star shareholder approval, the companies anticipate the transaction would close in mid-2012. ESSA Bancorp has total assets of approximately $1.1 billion and First Star has approximately $423 million in assets. ESSA Bank & Trust conducts the majority of its business in Monroe County, Pa., with branches in neighboring Northampton and Lehigh Counties, commonly known as the Lehigh Valley. The acquisition will add nine full service locations, all in the Lehigh Valley, to ESSA Bancorp, Inc.’s existing 17-branch network. No branch closings are anticipated as a result of this transaction.
Gary S. Olson, President and CEO of ESSA, said: “Merging our organizations will create a community banking franchise with significant size and scope in the region. We have long recognized the opportunity to serve the Lehigh Valley, having entered this market during the past two years with three branch openings. Merging with First Star, an established institution with nine branches and deposits of $320 million, will enable ESSA Bank & Trust to establish a greatly expanded banking presence in the Lehigh Valley.”
“One of our goals has been to build a banking organization with the size to compete effectively and have a significant presence in the Lehigh Valley. This combination will accomplish that goal, creating a $1.5 billion asset bank with 26 banking locations, with roughly one third of our combined deposits in the Lehigh Valley. Additionally, we envision being able to achieve cost savings of approximately 30% over the next two years.”