WesBanco Bulks Up in Pa. with Deal for Fidelity

WesBanco (WSBC) in Wheeling, W. Va., has announced its first bank acquisition in more than four years, striking a deal to buy Fidelity Bancorp (FSBI) in Pittsburgh for $70.8 million in cash and stock.

With the the deal, the $5.6 billion-asset WesBanco would gain 13 branches in the Pittsburgh and roughly $550 million of deposits in western Pennsylvania. WesBanco currently has 112 branches in Ohio, West Virginia and Pennsylvania.

"Fidelity's branches are strategically located in areas that add to WesBanco's branches in western Pennsylvania," James C. Gardill, WesBanco's chairman, said in a news release late Thursday "Their banking locations and access to business opportunities in markets projected for population growth over the next five years will significantly diversify WesBanco's customer base and product distribution."

Under the agreement, shareholders of the $661 million-asset Fidelity would receive .8275 shares of WesBanco common stock and $4.50 per share in cash for each Fidelity common stock they own, the companies said Thursday. The exchange is based on the average closing price of WesBanco's stock over the 15 days prior to the merger announcement.

The deal price works out to about 162% of Fidelity's tangible book value of 162% and a 6.6% premium on core deposits. One-time charges related to the merger are expected to total roughly $7 million with an anticipated cost savings of 35% of Fidelity's total noninterest expense, the companies said. WesBanco expects the deal to be accretive to earnings in 2013, excluding merger-related expenses.

Fidelity's thinly traded shares were up nearly 65% on news of the deal, to $21.02 midday Friday. WesBanco's stock was down 3.5%, to $21.40.

Before the merger closes, Fidelity anticipates redeeming all of its preferred stock and warrants held by the Treasury Department from the Troubled Asset Relief Program. The company had received $7 million in December 2008 under Tarp. Richard G. Spencer, Fidelity's president and chief executive, also will join WesBanco's board.

WesBanco's last full bank acquisition was Oak Hill Banks in Jackson, Ohio, in 2008. About a year later it purchased five branches in Columbus, Ohio, from AmTrust Financial in Cleveland.

The acquisition is expected to close late in the fourth quarter or in early 2013.