Wheeling, W.Va.-based WesBancoInc. struck a dealthat will bring the $8.57 billion bank to the brink of$10 billion in assets.
WesBanco plans to purchase New Albany, Ind.-based ina cash-and-stock deal valued at about $39.05 per share, or $221.0 million.The value is based on WesBanco's closing price of $32.52 on May 2.
Your Community shareholders will be entitled to receive 0.964of a WesBanco common share plus $7.70 in cash for each Your Community share. Theexchange ratio is based on the average closing price of WesBanco common stock of$31.96 over the 10-day period ending April 27. The merger is expected to qualifyas a tax-free reorganization.
The transaction values Your Community at a price-to-March 31tangible book value per share of 173%, a price-to-last-12-months earnings per shareof 14.5x, and a price-to-mean analyst estimated 2016 earnings per share of 13.7x,according to a merger release.
On a per-share basis, SNL calculates the deal value to be 160.3%of book and 172.9% of tangible book, and 14.5x LTM earnings. The price is 17.85%of deposits and 14.25% of assets.
In addition, SNL data show that the one-day premium is 15.94%based on Your Community's May 2 closing price of $33.68. The one-month premium is22.03% based on Your Community's April 4 closing price of $32.00.
SNL valuations for bank and thrift targets in the Midwest regionbetween May 3, 2015, and May 3, 2016, and averaged 135.07% of book, 143.81% of tangiblebook and had a median of 19.00x LTM earnings, on a per-share basis.
Your Community has $1.55 billion in assets, and WesBanco saidit expects to shrink the combined balance to remain below the $10 billion threshold."While we have been gradually building our infrastructure over the past fewyears to prepare WesBanco for the day it eclipses $10 billion in assets,we believe the most prudent course of action is to shrink our balance sheet suchthat we do not cross over the $10 billion mark at closing," WesBancoPresident and CEO Todd Clossin said in a statement. "On a combined basis, webelieve we have the ability to continue our loan growth at an uninterrupted pacewhile remaining below $10 billion in assets in the near term."
Excluding certain one-time merger charges, WesBanco expects thedeal to be 6% to 7% accretive to 2017 earnings and about 9% accretive to 2018 earningsafter cost savings are phased in. The bank estimates that TBV dilution will be lessthan 5% at closing using the "crossovermethod" measurement method; the earnback period is expected tobe less than 3.5 years, including estimated one-time charges.
The deal is expected to close during the third or fourth quarter,subject to approval by regulators and Your Community shareholders. It will add 36offices to WesBanco's franchise, bringing its total footprint to 177 branches infive states.
Data compiled by SNL indicates that WesBanco Inc. will enterKentucky with 21 branches to be ranked No. 19 with a 0.95% share of approximately$74.73 billion in total market deposits and will enter Indiana with 15 branchesto be ranked No. 29 with a 0.51% share of approximately $113.11 billion in totalmarket deposits.
"[T]he merger with Your Community meaningfully expands WesBanco'sfranchise into attractive markets in Kentucky and Southern Indiana, and a top tenmarket share in the Louisville MSA," Clossin stated. "We believe we canprovide customers of Your Community with a broader array of banking services, includingexpanded commercial and mortgage lending capabilities as well as trust and wealthmanagement services."
In relation to the deal Your Community directors Gary Libs andKerry Stemler will join the WesBanco board. Your Community President and CEO JamesRickard will become WesBanco's market president for Kentucky and Southern Indiana.The merger release also indicated that all Your Community directors and executiveofficers have agreed to vote their shares in favor of the transaction.
Raymond James & Associates Inc. acted as financial adviserto WesBanco in the deal and Keefe Bruyette & Woods Inc. acted as financial adviserto Your Community. Phillips Gardill Kaiser & Altmeyer PLC, represented by JamesGardill, and K&L Gates LLP were legal advisers to the buyer and Frost BrownTodd LLC, represented by Alan MacDonald and Nathan Berger, provided legaladvice in the deal to the target bank.