Creates third-largest bank headquartered in Philadelphia region
with $5.5 billion of assets HARLEYSVILLE and WAYNE, Pa., May 21
/PRNewswire-FirstCall/ -- Harleysville National Corporation (HNC)
(NASDAQ:HNBC) and Willow Financial Bancorp, Inc. (NASDAQ:WFBC)
jointly announced today that they have reached a definitive
agreement for Willow Financial Bancorp to merge with and into HNC.
Willow Financial Bancorp's wholly owned subsidiary, Willow
Financial Bank, a $1.6 billion savings bank with 29 banking offices
in Southeastern Pennsylvania, will merge with and into Harleysville
National Bank and Trust Company (HNB), HNC's banking subsidiary.
Headquartered in King of Prussia, PA, Willow Financial Bank branch
offices are located in Philadelphia, Montgomery, Chester, and Bucks
Counties. Under the merger agreement, which has been unanimously
approved by the boards of directors of both companies, each share
of Willow Financial Bancorp common stock will be exchanged for 0.73
shares of HNC common stock. Based upon HNC's closing share price as
of May 20, 2008, the transaction equates to approximately $10.28
per Willow Financial Bancorp share, for a total transaction value
of approximately $162 million. Following the transaction, current
HNC shareholders will own approximately 73% and current Willow
Financial Bancorp shareholders 27% of the combined company. The
transaction is subject to regulatory and shareholder approval and
is expected to close in the fourth quarter. Paul Geraghty,
President and Chief Executive Officer of Harleysville National
Corporation, said, "Our acquisition of Willow Financial Bancorp
achieves HNC's stated objective to grow through disciplined
in-market expansion. The acquisition delivers the benefit of scale
and synergies in a transaction that we believe will be accretive to
earnings in year one. Willow Financial is a great fit for
Harleysville National Bank, with complementary lines of business, a
solid reputation with customers in growing markets, and a network
of 29 branches that augments the traditional Harleysville National
Bank footprint. In addition, it delivers significant market share
in Chester County, the fastest-growing county in Pennsylvania and
increases our market presence in Bucks, Montgomery, and
Philadelphia counties." Donna Coughey, President and Chief
Executive Officer of Willow Financial Bancorp, said, "We are
delighted to join with Harleysville National, and this merger
combines two locally-focused banks that share a deep commitment to
the communities we serve. At closing, the combined bank will be the
third largest bank headquartered in the Philadelphia region, with
assets of $5.5 billion and 84 branches in attractive banking
markets stretching from Philadelphia and its western suburbs
through the East Penn Bank franchise in the Lehigh Valley. Our
combined product sets offer a range of solutions including retail
banking, corporate banking, trust and estate management, employee
benefits services, and mortgage banking, enabling us to deliver
significant added value for customers." Donna Coughey will continue
with HNC as an executive vice president for a period of one year to
assist with the transition. Two current Willow Financial Bancorp
directors, as mutually agreed, will join the HNC board of
directors. Synergies are estimated to be $15 - $20 million in 2009,
representing 10% to 13% of the combined bank's expense base. In
commenting on synergies, Mr. Geraghty added, "We are making every
effort to minimize the impact of this merger on regional
employment, and we expect that regular attrition will eliminate
some redundancies between now and when the transaction closes.
Because our respective footprints are so complementary, we will not
be closing any branches or making changes to our combined sales
force. Finally, we are committed to selecting the best candidate
for open positions, regardless of which bank they come from so that
we can deliver the best possible customer experience through the
most talented team available." Donna Coughey continued, "A
long-term strategic goal of our bank has been to become a $5
billion financial institution, and this transaction enables us to
accomplish that goal immediately while retaining local decision
making. The combined bank will have the scale, capital base, and
product set to enhance shareholder value, serve customers, and be a
major force in the banking industry for years to come." Mr.
Geraghty continued, "With Willow Financial Bancorp, we also gain
attractive fee-generating businesses, including BeneServ, a
respected provider of employee benefits services, Willow Investment
Services, Carnegie Wealth Management, and a mortgage origination
business that focuses on high-quality regional borrowers. In
addition, the acquisition provides the opportunity to enhance the
investment consulting, estate and business planning, and
compensation planning practices through the products of Cornerstone
companies. It also provides additional cross-sell opportunities for
Harleysville's Millennium wealth management and private banking
business to the Willow Financial customer base." Mr. Geraghty
concluded, "With the additional scale of a $5.5 billion bank, we
have the ability to deliver even more shareholder value through our
expansion, empowerment, and effectiveness initiatives. As a larger
bank we have more opportunities to use advanced technology like
branch remote capture to reduce cost and improve the customer
experience. In fact, we expect to roll out this service to Willow
Financial Bank branches as soon as practicable once the deal
closes, because it provides greater convenience by allowing deposit
credit on the same day regardless of deposit time. A deeper pool of
talented employees generates more ideas, and that lets us improve
how we work and serve our customers. With a larger capital base, we
enjoy an increased legal lending limit to serve the needs of our
business customers as they grow and expand. And our larger branch
footprint enables us to meet the needs of a range of consumers and
businesses throughout the region. We are delighted to welcome
Willow Financial customers, employees, and shareholders to the
Harleysville family." Harleysville National Corporation was advised
by Janney Montgomery Scott LLC and Bybel Rutledge LLP. Willow
Financial Bancorp's financial advisor was Sandler O'Neill and
Partners, L.P. and its legal counsel was Dechert LLP. About
Harleysville National Corporation Harleysville National
Corporation, with assets of $3.9 billion, is the holding company
for Harleysville National Bank (HNB) and its division, East Penn
Bank. Investment Management and Trust Services are provided through
Millennium Wealth Management and Cornerstone, divisions of HNB,
with assets under management of $3.0 billion. Harleysville National
Corporation stock is traded under the symbol "HNBC" and is commonly
quoted on the NASDAQ Global Select Market(R). For more information,
visit the Harleysville National Corporation website at
http://www.hncbank.com/. About Willow Financial Bancorp, Inc. See
What WillPower is Worth Willow Financial Bancorp, Inc. is the
holding company for Willow Financial Bank, a growing community bank
in southeastern Pennsylvania with $1.6 billion in assets. With 29
convenient offices, Willow Financial Bank has a substantial
community presence in Bucks, Chester, Montgomery, and Philadelphia
Counties - some of the fastest-growing communities in southeastern
Pennsylvania. The bank provides a complete line of products and
services, including: retail banking, business and commercial
banking, cash management, wealth management and investments. Our
relentless focus on customer service caters to the distinctive
needs of consumers and small business owners, through sophisticated
commercial clients and high net-worth individuals. Willow Financial
Bank has been recognized as Philadelphia magazine's Best of Philly
(R) - Best Neighborhood Bank 2007. Headquartered in Wayne, Pa.,
Willow Financial Bank has the team, the resources and the
sophisticated products to compete with any bank in the region. To
see what WillPower is worth, visit http://www.wfbonline.com/ or
call 1-800-639-WILLOW. The following disclosure is made in
accordance with Rule 165 of the Securities and Exchange Commission:
Harleysville National Corporation and Willow Financial Bancorp,
Inc. will be filing documents concerning the merger with the
Securities and Exchange Commission, including a registration
statement on Form S-4 containing a prospectus/proxy statement,
which will be distributed to shareholders of Harleysville National
Corporation and Willow Financial Bancorp, Inc. Investors are urged
to read the registration statement and the proxy
statement/prospectus regarding the proposed transaction when it
becomes available and any other relevant documents filed with the
SEC, as well as any amendments or supplements to those documents,
because they will contain important information. Investors will be
able to obtain a free copy of the proxy statement/prospectus, as
well as other filings containing information about Harleysville
National Corporation and Willow Financial Bancorp, Inc., free of
charge on the SEC's Internet site (http://www.sec.gov/), by
contacting Harleysville National Corporation, 483 Main Street,
Harleysville, PA 19438, (Telephone No. (215) 256-8851), or by
contacting Willow Financial Bancorp, Inc. at 170 South Warner Road,
Wayne, PA 19087, Telephone No. 610-995-1700. Directors and
executive officers of Harleysville National Corporation and Willow
Financial Bancorp, Inc. may be deemed to be participants in the
solicitation of proxies from the shareholders of Harleysville
National Corporation and Willow Financial Bancorp, Inc,
respectively, in connection with the merger. Information about the
directors and executive officers of Willow Financial Bancorp, Inc.
and their ownership of Willow Financial Bancorp, Inc. common stock
is set forth in Willow Financial Bancorp, Inc.'s proxy statement
for its 2007 annual meeting of shareholders and can be obtained
from Willow Financial Bancorp, Inc. Information about the directors
and executive officers of Harleysville National Corporation and
their ownership of Harleysville National Corporation common stock
is set forth in Harleysville National Corporation's proxy statement
for its 2008 annual meeting of shareholders and can be obtained
from Harleysville National Corporation. Additional information
regarding the interests of those participants may be obtained by
reading the prospectus/proxy statement regarding the proposed
merger transaction when it becomes available. INVESTORS SHOULD READ
THE PROSPECTUS/PROXY STATEMENT AND OTHER DOCUMENTS TO BE FILED WITH
THE SEC CAREFULLY BEFORE MAKING A DECISION CONCERNING THE MERGER.
Cautionary Statement Regarding Forward-Looking Information: This
release contains forward-looking information about Harleysville
National Corporation, Willow Financial Bancorp, Inc. and the
combined operations of Harleysville National Corporation and Willow
Financial Bancorp, Inc. after the completion of the transactions
described in the release that are intended to be covered by the
safe harbor for forward-looking statements provided by the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are statements that are not historical facts. These
statements can be identified by the use of forward-looking
terminology such as "believe," "expect," "may," "will," "should,"
"project," "plan," "seek," "intend," or "anticipate" or the
negative thereof or comparable terminology, and include discussions
of strategy, financial projections and estimates and their
underlying assumptions, statements regarding plans, objectives,
expectations or consequences of the transactions, and statements
about the future performance, operations, products and services of
the companies and their subsidiaries. Harleysville National
Corporation and Willow Financial Bancorp caution readers not to
place undue reliance on these statements. Harleysville National
Corporation's and Willow Financial Bancorp's businesses and
operations, as well as their combined business and operations
following the completion of the transactions described in this
release, are and will be subject to a variety of risks,
uncertainties and other factors. Consequently, their actual results
and experience may materially differ from those contained in any
forward-looking statements. Such risks, uncertainties and other
factors that could cause actual results and experience to differ
from those projected include, but are not limited to, the
following: ineffectiveness of their business strategy due to
changes in current or future market conditions; the effects of
competition, and of changes in laws and regulations on competition,
including industry consolidation and development of competing
financial products and services; interest rate movements; inability
to achieve merger-related synergies; difficulties in integrating
distinct business operations, including information technology
difficulties; disruption from the transaction making it more
difficult to maintain relationships with customers and employees,
and challenges in establishing and maintaining operations in new
markets; volatilities in the securities markets; and deteriorating
economic conditions. The foregoing review of important factors
should be read in conjunction with the other cautionary statements
that are included in each of Harleysville National Corporation's
and Willow Financial Bancorp's Annual Report on Form 10-K for the
fiscal years ended December 31, 2007 and June 30, 2007,
respectively. See "Additional Information About This Transaction"
below. Neither Harleysville National Corporation nor Willow
Financial Bancorp makes any commitment to revise or update any
forward- looking statements in order to reflect events or
circumstances occurring or existing after the date any
forward-looking statement is made. Additional Information About
This Transaction: Harleysville National Corporation intends to file
a registration statement on Form S-4 in connection with the
transaction, and Harleysville National Corporation and Willow
Financial Bancorp intend to mail a joint proxy statement/prospectus
to their respective shareholders in connection with the
transaction. Shareholders and investors are urged to read the joint
proxy statement/prospectus when it becomes available, because it
will contain important information about Harleysville National
Corporation, Willow Financial Bancorp and the transaction. You may
obtain a free copy of the proxy statement/prospectus (when it is
available) as well as other filings containing information about
Harleysville National Corporation, at the SEC's web site at
http://www.sec.gov/. A free copy of the proxy statement/prospectus,
and the filings with the SEC that will be incorporated by reference
in the proxy statement/prospectus, may also be obtained from
Harleysville National Corporation or Willow Financial Bancorp, by
directing the request to either of the following persons: George
Rapp Noel Devine Executive Vice President and CFO Senior Vice
President Harleysville National Corporation Willow Financial
Bancorp, Inc. 483 Main Street 170 South Warner Road Harleysville,
Pennsylvania 19438 Wayne, Pennsylvania 19087 610-513-2307
610-995-1855 Harleysville National Corporation, Willow Financial
Bancorp and their respective executive officers and directors may
be deemed to be participants in the solicitation of proxies from
the shareholders of Harleysville National Corporation and Willow
Financial Bancorp in favor of the transaction. Information
regarding the interests of the executive officers and directors of
Harleysville National Corporation and Willow Financial Bancorp in
the transaction will be included in the joint proxy
statement/prospectus. DATASOURCE: Harleysville National Corporation
CONTACT: Joseph J. Crivelli of Gregory FCA Communications,
+1-610-228-2100, or +1-610-642-8253 x 123, or cell,
+1-856-607-3869, for Harleysville National Corporation Web site:
http://www.harleysvillebank.com/ http://www.wfbonline.com/
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