Integra Bank Corp. of Evansville, Ind., is planning to bulk up in the Cincinnati area and increase its assets by more than a third - and it plans to do so on the cheap.
The $2.7 billion-asset Integra announced a deal Thursday to buy the $1 billion-asset Peoples Community Bancorp Inc. of West Chester, Ohio, for $85.6 million in stock and cash. Integra said the price works out to 0.99 times the seller's book value and a 4.5% premium to core deposits.
It is unusual for a banking or thrift company to sell itself for below book value, but Peoples has had troubles of late. It lost $4.1 million last year because of credit quality problems, and a formal agreement signed in March with the Office of Thrift Supervision required its Peoples Community Bank to clean up its loan portfolio and reduce classified assets.
Integra would gain 19 southwestern Ohio and southeastern Indiana branches that Mike Vea, its chairman, president, and chief executive officer, said are in "excellent locations." Once the deal closes, Integra would have 27 branches in eight counties in the Cincinnati area. It has a total of 80 branches, in Ohio, Indiana, Kentucky, and Illinois.
"This transaction is consistent with Integra's strategy to expand in faster-growing, higher-income, more densely populated markets, especially those that our management team knows well," Mr. Vea said in a press release.
The deal values each Peoples share at $17.69, or a 9.9% premium over Wednesday's closing price.
The stock climbed 4.8% on news of the deal Thursday, to close at $16.88 a share. Integra's stock slipped 1.9%, to $18.10.
Jerry Williams, Peoples' CEO, said in a press release that Integra "was our first choice for a partner." He said that with Integra's management depth and experience in the Cincinnati market, he expects it to become one of the top banking companies in the area.
The deal is expected to close in the first quarter and be accretive to earnings next year. Integra said it would cut Peoples' operating expenses 27% in the first 12 months after the deal closes.
Peoples Community Bank would be merged into the buyer's Integra Bank.
