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Civista Bancshares inks $114.4M deal with United Community Bancorp

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Civista Bancshares inks $114.4M deal with United Community Bancorp

Sandusky, Ohio-based Civista Bancshares Inc. is buying Lawrenceburg, Ind.-based United Community Bancorp in a deal valued at $114.4 million, or $26.22 per share.

Under the deal, United Community shareholders will receive 1.027 Civista common shares and $2.54 in cash for each United Community common share held. The estimated deal value is based on Civista's 15-day average closing price of $23.06 on March 9.

The companies estimated the deal to be 161% of United Community's tangible book value and 24.4x its estimated 2018 earnings per share. Including expected cost savings of about 41% of the seller's noninterest expenses, the deal would be 12.0x its estimated 2018 EPS.

SNL calculates the deal value to be 158.6% of book, 164.7% of tangible book and 34.0x earnings, on a per-share basis. It is also 21.72% of assets and 25.68% of deposits. The premium to tangible book is 10.68% of deposits. The transaction carries a one-day premium of 34.49%, based on United Community's March 9 closing price of $20.20, and a one-month premium of 35.16%, based on its Feb. 9 closing price of $20.10.

For comparison, SNL valuations for bank and thrift targets in the Midwest between March 11, 2017, and March 11, 2018, averaged 152.18% of book, 163.10% of tangible book and had a median of 20.18x last-12-month earnings, on a per-share basis.

As of Dec. 31, 2017, Civista unit Civista Bank had $1.52 billion in assets, while United Community subsidiary United Community Bank had $542.7 million in assets. The combined company will have $2.1 billion in assets, $1.5 billion in loans and $1.7 billion in deposits.

Civista Bank has 29 locations in northern, central and southwestern Ohio, according to a press release. United Community has eight branches in southeastern Indiana, five of which are in the Cincinnati Metropolitan Statistical Area. Civista plans to retain all eight branches. In Indiana, it will enter Dearborn County with five branches, to be ranked first with a 39.55% share of approximately $949.27 million in total market deposits, and enter Ripley County with three branches, where it will rank fourth with a 11.33% share of approximately $732.16 million in total market deposits.

The deal is expected to close in the third quarter. It is subject to regulatory and shareholder approvals.

Upon completion, United Community COO W. Michael McLaughlin will join the combined company as a market executive and United Community Chief Credit Officer Mark Sams will lead commercial lending efforts in the seller's region.

Three existing United Community directors will join Civista Bank's board. Two of these directors, with one being President and CEO Elmer G. McLaughlin, will also join Civista Bancshares' board.

The deal is expected to be immediately accretive to Civista's EPS in 2018 and approximately 9.3% accretive to its EPS in 2019. The internal rate of return is estimated at 17.5%. Civista expects one-time pretax transaction and integration expenses of $11.0 million.

Tangible book value dilution from the transaction is anticipated to be earned back in 3.5 years using the crossover method, or 4.1 years using the simple method.

Under certain circumstances, United Community will pay $3.5 million to Civista if the deal is terminated.

Sandler O'Neill & Partners LP served as Civista's financial adviser, while Tucker Ellis LLP served as its legal adviser. For United Community, Keefe Bruyette & Woods Inc. served as financial adviser, while Kilpatrick Townsend & Stockton LLP served as legal adviser.

SNL is an offering of S&P Global Market Intelligence.