Citizens Bancshares of Salineville, Ohio, announced plans Monday to buy Rochester, Pa.-based Century Financial Corp. for $138 million in stock, or 3.6 times book value.
The acquisition of $459 million-asset Century would give Citizens its first presence in Pennsylvania.
"This is a natural extension across the border," said Jack Ingold, an analyst at E.E. Powell & Co., an investment firm in Pittsburgh. "This is a good deal. These are two strong companies, both with tremendous numbers, who should continue to grow."
Citizens' chief financial officer, William L. White 3d, said the $1 billion-asset bank can afford to pay such a large premium for Century because he expects the deal to contribute to earnings in the first full year of combined operations. With the deal scheduled to close in the second quarter of 1998, that would mean sometime during 1999.
Because Citizens' stock is trading at close to 3.5 times its book value, the high price is no surprise, said Mark A. Davis, head of research at Banc Stock Group, Columbus, Ohio.
"Citizens has an amazing ability to take over smaller institutions and offer them big-bank values," he said.
Mr. White said Century's 13 branches would not be renamed. "We see the name as a valuable part of the franchise," he said. Citizens' lead bank is named Citizens Banking Co.
Citizens has been one of the most active community bank buyers in the area, completing 10 transactions in the past 10 years. Earlier this year, president and chief executive officer Marty E. Adams said he wanted Citizens' assets to expand to $2.5 billion by the end of 1999.
The deal for Century continues a move east for the 35-branch Citizens. The bank holding company previously announced it would buy Steubenville, Ohio-based UniBank, with $240 million of assets. After the Century deal closes in late February, Citizens will have 63 branches.
Citizens also owns First National Bank of Chester, a one-branch bank based in West Virginia.
