FORT LEE, N.J.–(BUSINESS WIRE)–NMB Financial Corporation (OTC Pink: NMBF) a bank holding company and parent of New Millennium Bank, announced that a Letter of Intent has been sent to the Board of Directors of Noah Bank, Elkins Park, Pennsylvania related to a cash acquisition of Noah. The Letter of Intent provides for the cash acquisition of all outstanding shares of Noah at 100% of Noah’s tangible common equity as of March 31, 2022, less any transaction expenses over $2 million. Based upon publicly available information on Noah as of December 31, 2021, and assuming the transaction expenses are at or below $2 million, and there are no issues identified in normal due diligence, the value that would be delivered to Noah shareholders, using December 31, 2021 financial information, would be approximately $6.95 per share, based upon Noah having 4.235 million shares outstanding.
US Department of Treasury Emergency Capital Investment Program Investment into NMB
NMB is on its way to receive $75.1 million investment through the US Department of Treasury’s Emergency Capital Investment Program (“ECIP”). NMB is one of 186 community development financial institutions (“CDFI”) and minority depository institutions (“MDI”) that are eligible to receive $8.7 billion in capital through the ECIP. It is anticipated that the Department of Treasury will be investing $75.1 million in preferred stock of NMB Financial Corporation, with the investment expected to close at the end of May 2022.
The investment by the US Department of Treasury is part of the Federal Government’s response to the COVID-19 pandemic. The ECIP was designed to provide direct funding to CDFIs and MDIs, as these types of financial institutions focus their efforts on increasing access to capital in traditionally underserved markets such as minority communities and other targeted populations.
Hong Sik Hur, Chief Executive Officer of NMB, stated, “I am delighted at the prospect of receiving this historic investment into NMB by the Department of Treasury, and it is a transformational, and a significant game changer for NMB.” NMB plans to put the capital to work by increasing its lending to minority owned small businesses and low- to moderate-income customers as well as the targeted populations and communities that NMB serves. With this increase in capital, NMB will be able to grow its assets well in excess of $1 billion and provide additional products and services to customers within its footprint.
NMB Proposal to Acquire Noah
NMB plans to utilize a portion of the capital received to undertake the acquisition of Noah, which will increase the total assets of the surviving entity into the $1 billion range and provide the capital necessary to support future growth. NMB is only one of two Korean-American, MDI financial institutions in the United States that will be receiving the ECIP funds, and it is a testament to the work that has been done by NMB in building its banking franchise in New Jersey, New York, and Georgia. With the acquisition of Noah, if completed, NMB would also expand into Pennsylvania, and total assets of the combined entity would approach $1 billion.
James S. Ryu, Chief Corporate Officer of NMB, stated, “I am confident in accomplishing a seamless acquisition of Noah, a neighboring community bank, which is also a MDI and a CDFI. As one, we will be able to far more effectively serve the targeted populations, underserved communities, and low- to moderate-income individuals, families, and communities throughout the Eastern United States and beyond, which is our core mission.”
NMB is aware that Noah is under an agreement with a group of private investors concerning a common stock investment to acquire control of Noah, which would increase the capital account, but would not result in any liquidity to Noah shareholders. If the acquisition of control of Noah is completed by the private investors, which is expected to be at a significant discount to Noah’s existing book value per share, Noah’s existing shareholders could realize a significant dilution to their book value per share at the same time that majority control is transferred to the private investor group.
Alternatively, the combination of NMB and Noah would create a significant Korean-American banking franchise on the East Coast and is anticipated to provide significant cash value to Noah’s existing shareholders.
Noah shareholders have not had the opportunity to vote on the sale of control to the private investors and may not be aware of the dilution that could take place. NMB believes its offer to acquire Noah based upon the tangible common equity as of March 31, 2022 is a superior proposal, providing much needed liquidity for Noah shareholders. Also, the anticipated blending of the two organizations will allow the combined institution to provide additional products and services available to customers and provide continued employment opportunities for Noah employees.
As part of the Letter of Intent, NMB has notified the Board of Directors of Noah that it has communicated with the regulatory agencies of its desire to move forward with the acquisition and deliver a definitive agreement, as well as complete due diligence, in 30 days or less upon the execution of the Letter of Intent. The transaction does not require the approval of the NMB shareholders but would require the approval of two-thirds of the outstanding shares of Noah. The transaction is also subject to regulatory approval and normal and customary closing conditions. The Boards of Directors of NMB have unanimously approved moving forward with the Letter of Intent and it is hopeful that the acquisition can be completed in third quarter of 2022.
About NMB
Established in 1999, New Millennium Bank is a Minority Depository Institution designated by the FDIC, serving minority communities in New Jersey, New York and Georgia through 9 full-service branch locations. NMB also operates loan production offices in Dallas Texas and Seattle Washington.
