Letchworth Independent Bancshares Corp., parent of the Bank of Castile, is buying a majority stake in the downstate Mahopac National Bank for about $12 million.
The deal creates an interesting alliance between the 11-branch Bank of Castile in Western New York and the three-branch community bank in Putnam County, a growth area north of Westchester County.
Letchworth Independent Bancshares will own between 58 percent and 66 percent of the bank headquartered in Mahopac when the deal closes, and has reached agreement with nearly all remaining shareholders to purchase their stock within two years.
The company is paying only about 1.45 times book value, a small ratio by today's bank acquisition standards, to become majority owner.
James W. Fulmer, president and CEO of Letchworth, said the acquisition price is low enough that the deal will contribute to earnings without the need for cost-saving measures. "We bought what we think is a fairly good value," he said.
Mahopac National Bank is about half the size of the Bank of Castile. Mahopac had average assets of $146.1 million and average deposits of $131.7 million in 1998, compared with assets of $283 million and deposits of $280 million for Bank of Castile.
The new bank enhances the growth potential of the Wyoming County holding company. Mahopac, about 1000 miles east of West Point, is a rapid-growth area with a high median income.
"Forming a strategic alliance with a bank in that region will enable our company to grow more rapidly than if we remained exclusively in Western New York," Fulmer said.
Mahopac National Bank earned $1.35 million during the first nine months of 1998, a 16.7 percent increase from a year earlier.
Mahopac National Bank CEO Stephen E. Garner will add the title of bank president. Fulmer and Garner have been friends for several years.
Mahopac Bank Chairman William D. Spain, Jr., the long time president and grandson of the bank's founder, assumes a position on the Letchworth Independent Bancshares board.