Citizens & Northern buys Bucks County’s Monument Bank for $43 million

Citizens & Northern Corp. of Wellsboro, Pa., said Friday that it had agreed to pay $42.7 million — stock or cash worth $28.10 a share — for privately owned Monument Bancorp Inc. of Doylestown, pending regulatory and Monument shareholder approval. The deal would make Citizens & Northern the latest out-of-town entry into the Philadelphia market.

Citizens & Northern, with $1.3 billion in loans and other assets, has 26 branches, mostly in Bradford, Lycoming, and Tioga Counties, plus others in six neighboring counties in north-central Pennsylvania and New York state's Southern Tier. The bank is one of several upstate lenders that prospered in the natural-gas boom of the early 2000s and have sought to expand into neighboring areas. Monument "aligns with our strategic plan to enter attractive markets" by adding banks "that share a similar culture," said Citizens & Northern chief executive J. Bradley Scovill in a statement.

"The time is right for Monument to partner with a significant and growing bank like Citizens & Northern," so it can offer bigger loans, newer technology, and additional services such as corporate treasury management, chief executive Chris Nardo said in a statement.

He said the buyer will keep him on as area market president, along with Michelle Pedersen as head of business lending and Ben Crowley as retail banking manager. The company employs about 35 people. Typically in mergers, at least some back-office staff are let go as computer systems and headquarters are combined; branch staff is kept on unless there are duplicate offices. The buyer said it would give more details of its plans in a future report to the Securities and Exchange Commission.

Nardo said the deal was priced to give him and other Monument shareholders "an attractive return on their investment" and an opportunity to make more money as publicly traded Citizens & Northern (Nasdaq: CZNC) prospers or is sold in the future.

Monument, which has $348 million in assets and offices in Doylestown and Newtown, was founded in 2008, on the eve of the financial crisis, by managers and investors who had been part of Bucks County's Premier Bank, which was sold to Fulton Bank of Lancaster in 2003.

Monument has steadily boosted loans and deposits, increasing its capital from an initial $9 million to around $33 million as of June 30. The bank reported net profits of $2 million for the first six months of 2018, about as much as it earned in all of 2017, its best previous year, according to Federal Deposit Insurance Corp. reports. Monument has posted a profit in its FDIC reports every year since its founding.

But bankers have complained that federal regulation designed to prevent another banking crisis, plus prolonged low interest rates on loans and the demand for secure new digital technology as more people do their banking by mobile phone, has made it tough to expand and boost profits in recent years, especially for banks with less than $1 billion in assets. As a result, local banks have been disappearing in a wave of acquisitions as the industry accelerates its long consolidation and few new banks are being formed.

Big out-of-town lenders including BB&T of North Carolina and KeyCorp of Cleveland have bought smaller banks in the Philadelphia area in recent years, competing with Wells Fargo, TD, Citizens, PNC, and other multi-state banks that acquired Philadelphia's dominant banks in the late 1900s, plus a dwindling band of locally based lenders — WSFS, Bryn Mawr Trust, Univest, Firstrust, DNB — for area deposits and loans. JPMorgan Chase & Co. chief executive Jamie Dimon said Monday he plans 50 new Chase bank branches in the Philadelphia area over the next five years.