Evans Bancorp, Inc. Announces Agreement To Sell the Insurance Operations Of The Evans Agency, LLC To Arthur J. Gallagher & Co. For $40M

Author: Benzinga Newsdesk | November 07, 2023 06:56pm

Evans Bancorp, Inc. (the "Company" or "Evans") (NYSE:EVBN), a community financial services company serving Western New York since 1920, announced today that it has entered into a definitive agreement to sell The Evans Agency, LLC ("TEA") to Arthur J. Gallagher & Co. (NYSE:AJG) ("Gallagher") for $40 million. The transaction is subject to customary closing conditions and is anticipated to be completed in the fourth quarter of 2023.

Key Highlights:

• Evans' growth of TEA over the years culminates with the capture of a valuation premium, providing capital to strategically redeploy across the core banking franchise.
• Demonstrates significant value creation and delivers measurable shareholder value
  
  ~ 3.9x LTM Insurance Agency Revenue and ~ 20.3x 9/30/23 LTM Earnings
• The net gain on sale, on an after-tax basis, is expected to be approximately $15.1 million.
• Eliminates $12 million of goodwill and other intangibles.
• Transaction is financially compelling with approximate pro forma impact to capital, prior to potential deployment of proceeds:
  • TCE / TA: Improves by 112 basis points to 7.47%
  • Tier 1 Leverage: Improves by 119 basis points to 10.58%
  • Total Risk Based Capital: Improves by 151 basis points to 14.80%
  • Tangible Book Value Per Share: Improves by 18.9% to $29.77
• Transaction proceeds provide potential net income and earnings per share enhancements as generated capital is deployed through strategic and franchise growth initiatives over time.

David J. Nasca, President and CEO of Evans Bancorp, Inc., said, "For 23 years, the insurance business has been an integral part of Evans Bank. During that time, the Bank acquired over 15 agencies and successfully built a customer-centric, high-performing operation with strong values and a reputation for outstanding talent and service excellence. After extensive diligence, we believe AJG is the right partner, providing optimal benefit for all stakeholders, including assuring our associates and clients are well taken care of. This transaction realizes a significant valuation premium and is immediately accretive to Evans' capital, tangible book value, and liquidity. The additional capital provides flexibility to evaluate and pursue various strategic initiatives to redeploy capital in support of our core banking business with a focus on continuing to enhance long-term shareholder value."

Aaron Whitehouse, President of The Evans Agency, added, "Evans Agency associates will be joining a global insurance brokerage, risk management, and consulting services firm with an unrivaled tool kit to respond to client needs. Clients will have access to enhanced resources and a greater breadth of insurance expertise, while continuing to work with the existing talented team of Evans Agency associates and leadership. Our partnership with Evans has been marked by two core principles: a commitment to excellent client service and creating a culture where associates thrive and can realize their full potential. Together, we chose to partner with Gallagher as they share these same principles. I am very excited about what this partnership will mean for our clients and associates."

Founded in 1913, The Evans Agency is a retail insurance agency offering life insurance, employee benefits, and property and casualty insurance throughout New York and the Northeast. Current leadership and direct employees of The Evans Agency are expected to join Gallagher.

Piper Sandler & Co. acted as exclusive financial advisor and Luse Gorman, PC acted as legal counsel to Evans Bancorp, Inc.

Posted In: AJG EVBN