Shore Bancshares, of Easton, Md., the holding company of Shore United Bank; and Severn Bancorp, of Annapolis, the holding company of Severn Savings Bank, have entered into a definitive agreement under which Severn will merge with and into Shore in a stock and cash transaction valued at approximately $146 million (including common stock and stock options). The price is based on $11.30 per share of Severn common stock, from the closing price for Shore’s common stock of $15.64 as of March 2, 2021, and $1.59 per share in cash.
Shore expects the transaction to be over 30 percent accretive to EPS in 2022, based on anticipated cost savings of approximately 35 percent.
Severn had $952.6 million in total assets, $679.2 million in gross loans and $806.5 million in total deposits as of Dec. 31, 2020. It operates seven offices located in Anne Arundel County. The transaction will increase Shore’s total assets to approximately $2.9 billion (on a pro forma basis) as of Dec. 31, 2020.
“It is an opportunity for Severn to join forces with a larger organization and remain committed to community banking,” said Alan Hyatt, president and CEO of Severn. “We look forward to the opportunities and benefits this combination will bring to our shareholders, in terms of prospects for future earnings growth, immediate dividend pick-up and diversification, as well as to clients, employees and the many communities we serve.”
The transaction is expected to close in the third quarter of 2021.