Citizens Bank to merge with Union Bankshares

Vermont Business Magazine, Mar 01, 1999

In the future, banking pundits now muse, the united States banking scene "will look like a dumbbell," there will be a few huge mega-banks at one end and many community banks at the other end and very little in-between. Union bankshares Inc of Morrisville and Citizens Savings and Trust Community are merging to solidify their positions as community banks by affiliating within the Union Bankshares holding company.

Union President Kenneth Gibbons said in a prepared statement: "Union has for some time desired to expand its presence in another market similar to Lamoille County. The affiliation with Citizens will accomplish this goal and provide for the growth and expansion of Union. Citizens, with its staff, will be able to extend even further its presence in the communities it serves. This is a classic example of two small community banks affiliating to take advantage of each other's strengths."

Citizens President Jerry Rowe, who will continue as president of Citizens, said in a prepared statement: "The affiliation of Citizens with Union will provide our customers with larger lending limits and additional services and products, such as SBA loans and "secondary market" residential loans. The operation of Citizens as a separate subsidiary of Union will retain the local decision making and customer service which has been a trademark of Citizens for over 10 years."

Union Bankshares and Citizens jointly announced the signing of an affiliation agreement dated February 18. The affiliation of the two companies would be accomplished through the merger of Citizens and a newly organized merger subsidiary of Union, with Citizens shareholders receiving as merger consideration 6.52 shares of Union Common Stock, subject to customary anti-dilution adjustments. Fractional shares would be settled in cash. The merger is subject to, among other conditions, shareholder and federal and state regulatory approvals. The transaction is expected to be treated as a pooling of interests for accounting purposes and a tax-free exchange.

Following the merger, citizens would continue its present business operations with the same management and employees, but as a wholly-owned subsidiary as Union bankshares. Union Bankshares is the parent company of Union bank in Morrisville. Union and Citizens expect that the merger will be completed during the third quarter of 1999, subject to receipt of required shareholder and regulatory approvals.

As of December 31, 1998, Union Bankshares had $191.2 million in assets $162.5 million in deposits, net income of $3,5 million (per share, $1.70) and had 2,034,140 shares outstanding. Citizens had $98.9 million in assets, $86.4 million in deposits, net income of $1.1 million (per share, $7.25), and 152,000 shares outstanding.