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Civista Bancshares, Inc. CIVB has entered into a definitive merger agreement with United Community Bancorp, wherein the former will acquire the latter. The transaction is likely to be completed by third-quarter 2018, subject to regulatory and shareholder approval.
The move is consistent with Civista’s expansion strategy. The deal will provide Civista low-cost deposits through Southeastern Indiana, where United Bancorp has 8 branches. Given that five such branches of United Bancorp are located in the Cincinnati MSA, the transaction will help Civista in expanding its community banking franchise into and around the area.
Civista’s CEO and president, Dennis G. Shaffer informed, “This is an extraordinary opportunity for Civista and we are very excited to welcome United's customers and employees to the Civista family. We look forward to collaborating with United's leadership team to grow and enhance their banking platform while maintaining strong ties to their community.”
E.G. McLaughlin, president and CEO of United Bancorp stated, “We expect this partnership to accelerate the commercial loan production efforts that we have undertaken in the greater Cincinnati market.”
Terms of the Deal
Per the agreement, shareholders of United Bancorp will receive 1.027 common shares of Civista along with $2.54 per share in cash of their own stock. Based on Civista’s 15-day average closing price as of Mar 9, the total deal value stands at $26.22 per share or nearly $114.4 million.
The deal is expected to be immediately accretive to Civista’s earnings per share (EPS) in 2018 and also accretive to its 2019 EPS by 9.3%.
Notably, any dilution in tangible book value that results from the merger is expected to be earned back in nearly 3.5 years, post closure.
Also, the acquisition is expected to result in one-time pre-tax integration cost of $11 million. Once the deal is complete, it will save nearly 41% of United Bancorp’s total costs.
It is projected that post merger, the combined company will have assets of nearly $2.1 billion, total loans of $1.5 billion and total deposits of $1.7 billion, per data as of Dec 31, 2017.
So far this year, shares of Civista have gained 2.4%, underperforming 8.2% growth of its industry.
Currently, Civista carries a Zacks Rank #2 (Buy).
A few other stocks from the same space worth considering are First Financial Bancorp. FFBC, Enterprise Financial Services Corp. EFSC and Old Second Bancorp, Inc. OSBC.
First Financial Bancorp’s Zacks Consensus Estimate for earnings for 2018 has been revised 7.7% upward in the last 60 days. Also, its share price increased 4.1% in the past twelve months. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Enterprise Financial’s current-year earnings estimates have been revised 13.1% upward in the last 60 days. Further, the company’s shares gained 13.5% in a year’s time. It has a Zacks Rank of 2.
Old Second Bancorp also has a Zacks Rank of 2. Its earnings estimates for 2018 has been revised nearly 18% upward, over the last 60 days. Past year, its shares gained 33.1%.
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Old Second Bancorp, Inc. (OSBC) : Free Stock Analysis Report
First Financial Bancorp. (FFBC) : Free Stock Analysis Report
Civista Bancshares, Inc. (CIVB) : Free Stock Analysis Report
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