First Priority, which has six branches with total assets of $279.7 million as of March 31, will merge with Affinity, a Wyomissing institution with five branches and $176.5 million in assets. According to a statement, the result will be a financial institution with $450 million in assets, $335 million in loans and $390 million in deposits.
The two sides are calling the deal a “merger of equals,” but First Priority shareholders would wind up owning 62 percent of the new holding company which intends to retain the First Priority name and remain based in Malvern. The 12-member board would include six from First Priority, four from Affinity and two players to be named later.
First Priority chairman and CEO David E. Sparks would hold those titles at the holding company level after the deal is completed during the fourth quarter. Steven A. Ehrlich, chairman and CEO of Affinity since it opened in May 2003, would become president of the new holding company.
The company plans to operate as Affinity Bank in Berks County and First Priority Bank in Bucks, Chester and Montgomery counties. Documents filed with the Federal Deposit Insurance Corp. show First Priority with 44 employees as of March 31, while Affinity had 36 employees.
Opened in January 2006, First Priority received about $4.6 million from the U.S. Treasury Department’s Capital Purchase Program, part of the federal Troubled Asset Relief Program, in February 2009.
According to the Treasury’s TARP transactions report dated May 16, First Priority is among the many small community banks that still have not repaid that investment. The Special Inspector General for TARP said 351 regional and community banks remained the CPP as of March 31. A total of 707 financial institutions, or about 10 percent of the banking industry, had received TARP funds during the financial crisis.
First Priority had paid the government $1.24 million in dividends before a quarterly payment scheduled for May 15. Those dividend payments are set to rise to 9 percent from 5 percent in late 2013.