FOR IMMEDIATE RELEASE
May 23, 2012

Contact: David E. Sparks
First Priority Bank
Phone: 610-280-7100

First Priority Financial Corp. and Affinity Bancorp, Inc.
Announce “Merger of Equals”

 

Malvern, PA – May 23, 2012 - Malvern and Wyomissing, Pennsylvania (May 23, 2012) - First Priority Financial Corp. (“FPFC”), the holding company for First Priority Bank, and Affinity Bancorp, Inc. (“ABI”), the holding company for Affinity Bank, jointly announced today that they have signed a definitive agreement to merge their respective holding companies and bank subsidiaries. The proposed combination will create a full-service community bank serving Berks, Chester, Montgomery and Bucks County markets, with little branch overlap. The resulting bank will have 10 branches, approximately $450 million in assets, approximately $335 million in loans, approximately $390 million in deposits and a strong capital position. The transaction is expected to close in the fourth quarter of 2012, subject to receipt of regulatory approvals and the approval of the shareholders of each institution. The Affinity name will continue to be used in the Berks marketplace and the First Priority name will be used in Montgomery, Chester and Bucks Counties. The Company will be headquartered in Malvern, PA.

Under the terms of the merger agreement, unanimously approved by the boards of directors of each company, shareholders of ABI will receive 0.9813 newly issued shares of FPFC (a value of $6.45 per share based on FPFC's adjusted tangible book value at March 31, 2012) in exchange for each ABI share currently held. As a result of the transaction, ABI’s shareholders are expected to own approximately 38% of the combined company and FPFC’s shareholders are expected to own approximately 62%. The transaction, net of one-time transaction costs, is expected to be accretive to earnings immediately and has been structured to facilitate increased shareholder liquidity as the combined company will become an Exchange Act reporting company and will seek to list its shares on the NASDAQ in connection with, or shortly after, the closing of the transaction. As there will be little branch overlap in the contiguous markets of ABI and FPFC, no ABI branch closures are anticipated and no substantial job losses are expected. Cost savings of 12% to 13% of the combined company’s non-interest expenses are expected to be achieved.

David E. Sparks (68) will remain Chairman and CEO of First Priority Financial Corp. and Chairman of First Priority Bank (“FPB”). Steven A. Ehrlich (50) will become President of FPFC and President and CEO of FPB. The Board of the resulting holding company will initially consist of twelve members, six from the existing Board of First Priority and four from the existing Board of Affinity, in addition to Messrs.’ Sparks and Ehrlich. It is expected that the resulting bank Board will also be split based on approximately the same percentages as the holding company board.

According to Mr. Sparks: “We at First Priority are very excited about the significant opportunities created by our merger of equals with Affinity. From a strategic point of view, the combination of these two solid community banking institutions, in markets where we both operate and are well known, will permit us to provide expanded product offerings to our respective customer bases, generate efficiencies which will increase profitability for our shareholders, and enhance our commitment to the communities we serve. We will be a larger and stronger financial institution, better able to compete effectively in today’s challenging environment, with a significantly higher lending limit and a broader array of lending, deposit, and wealth management products. In early conversations, Steve and I concluded that our strategic vision and core company values, as well as the commitment to our employees, customers and the communities we serve, are nearly identical. This transaction should be a “win” “win” combination for all of the constituents of both companies.”

According to Mr. Ehrlich: “This strategic merger offers Affinity the opportunity to gain the size and scale we’ve desired since our founding. We expect to be able to compete much more effectively to benefit our shareholders, customers, employees and community. The core values First Priority and Affinity share will guide our operation as we grow throughout the markets we serve.”

Griffin Financial Group LLC served as financial advisor to First Priority and Stevens & Lee served as its legal counsel. Boenning and Scattergood served as financial advisor to Affinity and Barley Snyder, LLP served as its legal counsel.

About First Priority Financial Corp.
First Priority Financial Corp. is a bank holding company, which along with its bank subsidiary, First Priority Bank, is headquartered in Malvern, Pennsylvania. First Priority Bank, with $279.7 million in assets, was chartered in November, 2005 and opened for business to the public in January, 2006 as a full service commercial bank providing personal and business lending, deposit products and wealth management services through its offices in Malvern, Wyomissing, Newtown, Blue Bell, Plumstead, and Towamencin, Pennsylvania. The common stock of First Priority Financial Corp. is not currently traded on the open market. FPFC’s website can be accessed at http://www.fpbk.com.

About Affinity Bancorp.
Affinity Bancorp, Inc. (“ABI”) is a Pennsylvania business corporation and is registered as a bank holding company. Affinity Bank of Pennsylvania is a wholly-owned subsidiary of ABI and is a state-chartered, FDIC insured, full-service community bank providing general commercial and consumer banking services. Affinity Bank of Pennsylvania, which opened for business in April 2003, has $176.5 million in assets and is headquartered in Wyomissing, PA. The Bank currently operates five full-service banking offices in Wyomissing, Reading, Sinking Spring, Muhlenberg and Exeter. Berks County, PA. ABI’s website can be accessed at www.affinitybankpa.com.

Additional Information About the Merger
In connection with the proposed merger, First Priority will file a registration statement on Form S-4 with the SEC. The registration statement will include the joint proxy statement for the shareholder meetings of First Priority and Affinity, which will also constitute a prospectus of First Priority. The joint proxy statement/prospectus and other relevant materials (when they become available) filed with the SEC, may be obtained free of charge at the SEC’s Website at http://www.sec.gov.

Shareholders are urged to read the joint proxy statement and the other relevant materials when they become available before voting on the merger.

Statements contained in this news release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to number of factors, which include but are not limited to, factors which will be discussed in the proxy statement/prospectus. Neither First Priority nor Affinity undertakes and both specifically disclaim, any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of one or both of them.

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