F.N.B. Corp (FNB) Wraps Up All-Stock Deal to Buy UB Bancorp
F.N.B. Corporation FNB has completed the acquisition of Greenville-based UB Bancorp. Further, UB Bancorp's bank subsidiary, Union Bank, merged with FNB's bank subsidiary, First National Bank of Pennsylvania. The acquisition further bolstered the company’s presence in North Carolina and added “low-cost granular deposits,” which will likely be accretive to its financials amid the present economic backdrop.
Following the completion of the transaction, F.N.B. Corp has nearly $44 billion in total assets, $35 billion in deposits and $29 billion in total loans on a proforma basis. Vincent J. Delie, Jr., chairman, president and CEO of F.N.B. Corp. said, “The Union Bank acquisition leverages FNB’s current investments in the fast-growing North Carolina markets which now have more than 110 FNB branches and over 300 ATMs while also providing a favorable deposit mix.”
The all-stock deal, announced in June, was valued at $117 million. FNB received all the necessary regulatory approvals from the Federal Reserve and the Office of the Comptroller of the Currency in October.
Under the terms of the deal, stockholders of UB Bancorp received 1.61 shares of F.N.B. Corp common stock for each share of UB Bancorp common stock. The exchange ratio is fixed, and the deal qualifies as a tax-free exchange for UB Bancorp stockholders.
As announced in June, F.N.B. Corp expects the deal to be almost 2% accretive to earnings with fully phased-in cost savings on a GAAP basis. Cost savings worth approximately 45% of UB Bancorp's non-interest expense is anticipated, with 75% to be achieved in the first year of deal closure and 100% thereafter. One-time transaction-related costs are projected to be roughly $17 million. FNB anticipates the tangible book value per common share impact to be less than 1% and the CET1 ratio to remain unchanged on a proforma basis.
Our Take
Acquisitions are a major portion of F.N.B. Corp’s business expansion plan and top-line and footprint diversification efforts. Since 2005, the company has successfully integrated 15 buyouts. Also, it acquired several branches from other banks.
In January 2022, FNB acquired Howard Bancorp in an all-stock deal. This, along with prior deals, will continue to be accretive to the company’s financials. Given a solid balance sheet and liquidity position, the company is likely to continue its inorganic expansion strategy.
Shares of FNB have jumped 21.1% over the past six months, outperforming the industry’s rally of 10.4%.
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At present, the stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Similar to FNB, many banks are undertaking inorganic expansion efforts to diversify. Last month, Washington Federal, Inc. WAFD announced it is entering the lucrative and “fast-growing” California market. The company signed an agreement to acquire Luther Burbank Corporation LBC and its wholly-owned subsidiary, Luther Burbank Savings, for $654 million.
Washington Federal is expected to use the deal as “a platform for growth in attractive California markets.” The company intends to enhance multifamily loan origination capabilities and expand commercial banking activities to Northern and Southern California.
At present, LBC operates in California, Washington and Oregon through 11 full-service branches and seven loan production offices. Upon closure (expected by June 2023-end), the combined entity will have almost $29 billion in assets, $23 billion in total loans and $22 billion in deposits across 212 locations in nine western states.
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