After being jilted by two would-be buyers, Peoples Community Bancorp Inc. of West Chester, Ohio, now finds itself in a position to pick partners — at least for its branches.
The company said last week that First Financial Bancorp of Cincinnati raised its offer to buy most of Peoples' branches because of an unsolicited bid from an unidentified third party.
Peoples has been trying to raise cash for nearly two years, and a deadline set by regulators to boost its capital levels is coming up next month.
Deals to sell itself to Integra Bank Corp. of Evansville, Ind., and most of itself to CenterBank of Milford, Ohio, fell through when the buyers backed out.
But First Financial, which has matched the outsider bid for the branches, is now expected to pay $15.5 million, or a quarter more than it originally agreed to pay under a deal announced last month. It would get 17 of Peoples' 19 branches, $260 million in loans and $310 million in deposits.
Peoples would be left with $325 million in assets — including all the nonperformers.
Experts said that First Financial likely increased its bid because it is bullish on its home market.
"Cincinnati is a very attractive market, and while there are a number of superregional banks there, there are still plenty of great opportunities in that area," said Charles R. Crowley, a managing director at Stifel, Nicolaus & Co. Inc.
First Financial declined to comment for this story, and Peoples did not return a call.
Peoples said in a securities filing that it chose to renegotiate with First Financial rather than take the new deal because of "the progress that the parties had made toward obtaining required regulatory approvals and the execution and timing risk related to" the new offer.
Peoples, which was critically undercapitalized at the end of the first quarter, has until July 14 to recapitalize its Peoples Community Bank, according to orders from the Office of Thrift Supervision.
In exchange for the higher premium, Peoples agreed to double the penalty it would pay should it terminate the deal to $2 million, as well as allow First Financial to seek damages from the company.
It also withdrew a provision that would give Peoples more flexibility to accept other offers.
When the deal was announced May 18, Peoples' president and chief executive officer, Jerry D. Williams, said that the branch sale would "generate the necessary capital to return the bank to well-capitalized status."
The deal is expected to close in the third quarter.