First Commonwealth (FCF) to Acquire Centric for $144 Million
As part of its efforts to expand its presence in the higher-growth metro markets, First Commonwealth Financial Corporation FCF entered an agreement with Centric Financial Corporation, wherein the latter will merge with and into the former. The closing of the deal, subject to certain conditions like approval by Centric shareholders and customary bank regulatory approvals, is expected in the first quarter of 2023.
Following the merger, the combined company will have $10.6 billion in total assets. Centric is expected to contribute $1 billion in total assets, $0.9 billion in total deposits, $0.9 billion in total loans, seven branch locations and one loan production office in the Harrisburg, Philadelphia and Lancaster MSAs to the combined company.
Terms of the Deal & Financial Impact
Per the all-stock merger agreement, shareholders of Centric will be entitled to receive a fixed exchange ratio of 1.09 shares of First Commonwealth common stock for each of their shares held. The deal is valued at $144 million or $16.20 per share.
The merger is expected to qualify as a tax-free reorganization.
Excluding certain one-time merger charges, First Commonwealth expects the transaction to be 5% accretive to its earnings in 2023 and 7% in 2024 once cost savings are fully phased in.
Including the impact of estimated one-time charges, the transaction is anticipated to result in a tangible book value dilution of 3%, which will be earned back in 2 years.
Management Comments
T. Michael Price, the president and CEO of First Commonwealth, stated, “We are genuinely excited about the opportunities that our combined organizations can create. This extension of our physical presence into Harrisburg and Metro Philadelphia allows us to deepen our existing relationships in these markets and improve the financial lives of these businesses and their communities.”
The president and CEO of Centric, Patricia A. Husic, said, “We are equally excited for this strategic partnership and the opportunity to gain deeper market share in Central PA and the greater Philadelphia region. We have admired the leadership of Mike Price, the culture that has been built by their team, and the reputation of First Commonwealth as a premier financial institution in Pennsylvania. This strategic partnership will provide our customers and communities with greater access to additional products and services that we believe will result in an enhanced customer experience for our commercial base and the opportunity to augment the retail portion of our business with their product set and consumer verticals.”
Over the past year, shares of FCF have gained 4.6% against the 5% decline recorded by the industry.
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Currently, First Commonwealth carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inorganic Growth Efforts by Other Firms
TowneBank TOWN signed a deal worth $56 million or $17.82 per share to acquire Farmers Bankshares, Inc. and its subsidiary Farmers Bank. The closing of the deal is expected in the first quarter of 2023.
The transaction is expected to solidify TowneBank’s number one market share in the Virginia Beach-Norfolk-Newport News, MSA. Moreover, with the acquisition, TOWN will be able to expand Towne Insurance revenues.
In an effort to extend data management capabilities, Truist Financial Corporation TFC acquired the key strategic assets from Zaloni, which is an award-winning leader in data technology solution delivery. Following the acquisition, Zaloni’s offshore team will continue to serve its current customers in addition to providing technology delivery services to TFC.
Truist acquired the Zaloni Arena platform to accelerate its data governance, metadata management, advanced analytics, and artificial intelligence and machine learning programs.
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