After dropping plans to merge with a West Virginia banking company, Lincoln Savings Bank in Carnegie, Pa,, is selling out to Integra Financial Corp.
Lincoln, with assets of $250 million, agreed to be acquired by Integra for about $52.2 million in cash, the companies said Tuesday. The price amounts to 1.65 times Lincoln's book value.
The deal follows an aborted merger between Lincoln and City Holding Co., Charleston, W. Va. That agreement was scrapped because of objections by Integra, which held about 5% of Lincoln's stock.
On Tuesday, Lincoln and the Pittsburgh-based Integra sought to play down any discord.
Lincoln's chairman and chief executive, David B. Hartman, said he was pleased with the deal and was sure it would close.
Looking to the South
He said Lincoln had decided to sell because it was tougher to compete with larger banks. "We were as good as we were going to get," he added, noting that Lincoln has a 1.60% return on assets and 13% on capital.
Integra, with $13.9 billion in assets, said the deal would expand its presence south of Pittsburgh.
"We are constantly looking for in-market acquisitions that make economic sense," said William Roemer, Integra's chairman and chief executive.
In scotching Lincoln's merger with the $641 million-asset City Holding, "We weren't attempting to rain on their parade," Mr. Roemer said. "We just didn't like the economics of the transaction."
He added that Integra hadn't been alone in voicing doubts. While the deal was pending, he noted, City Holding's stock had dropped to $26 a share from the $30 range.
Mr. Hartman of Lincoln agreed that the City Holding deal had its problems. Specifically, he said, the West Virginia company's stock is thinly traded and volatile. It was unclear where the shares would stand after the merger.
Lincoln has seven offices south of Pittsburgh. Mr. Roemer said four to five of them could be consolidated and some of Lincoln's 45 employees would likely lose their jobs.
"We will attempt to absorb as many of their people as we can, but there will be some loss of jobs; there always is in an in-market transaction," Mr. Roemer said.
Andrew Brown, a banking analyst with Salomon Brothers Inc., said the deal is small but is consistent with Integra's strategy of gaining market share in existing markets.
"They bought a very healthy institution, a high-performing institution," Mr. Brown said. "At first glance it looks like an attractively priced deal."
The definitive agreement has already been approved by Lincoln's board of directors. Consummation is subject to regulatory approvals and the approval of Lincoln's shareholders.