First Commonwealth Bank has signed an agreement to acquire 14 branches of Santander Bank located in State College, Lock Haven, Williamsport and Lewisburg in Pennsylvania.
Image: First Commonwealth to acquire 14 branches of Santander Bank. Photo: Courtesy of Chaiwat/FreeDigitalPhotos.net.
The 14 branches of Santander Bank have $525m in deposits and $120m of retail and business loans as of 31 March this year.
First Commonwealth said that it will pay 7.05% premium on average total deposits acquired during the deal’s closing. The bank also intends to apply cash received at closing to repay wholesale borrowings, which are expected to reduce its loan to deposit ratio to 90% and improve its net interest margin.
With the acquisition, First Commonwealth will have the opportunity to expand its footprint in Pennsylvania by adding nearly 22,000 retail and small business households.
The deal is expected to be immediately accretive to First Commonwealth’s earnings per share.
First Commonwealth CEO T. Michael Price said: “The contiguous expansion of our footprint into these new towns, which have complementary demographics and culture to our core Western Pennsylvania markets, makes perfect sense for us.
“These branches have a long history as community bank branches. We look forward to improving the financial lives of our new neighbors and businesses in these communities.”
Price continued saying: “The deposits that we are acquiring with these branches provide low-cost, stable funding that will immediately improve our profitability and, more importantly, allow us to continue the steady pace of our loan growth in the face of a competitive deposit market.
“This transaction is similar in size and scope to the four low-risk transactions that we have completed in recent years, each of which has exceeded our expectations.”
Subject to regulatory approval, the transaction is expected to be closed in the third quarter of this year.
In May last year, First Commonwealth completed the acquisition of Garfield Acquisition, the parent company of Ohio-based Foundation Bank.
Foundation Bank operates five full service banking offices in Cincinnati. The acquisition was announced back last January and the transaction was valued at $58m.