The Wheeling, West Virginia-based WesBanco has agreed to acquire Premier Financial in Defiance, Ohio, in an all-stock transaction valued at $959 million.
The merger agreement, signed Thursday, culminated six months of negotiations that began when WesBanco CEO Jeff Jackson struck up a conversation with Gary Small, his Premier counterpart, at a banking conference in January.
"We got to talking, and some of our directors talked to each other," Jackson said Friday on a conference call with analysts. "We realized we had a lot of synergies and similar characteristics. It almost feels like we're acquiring a smaller version of ourselves."
The pending deal for the $8.8 billion-asset Premier would make WesBanco "a stronger regional financial services institution," Jackson said on the conference call. It would be WesBanco's largest-ever acquisition. The merged company would hold more than $27 billion of assets and rank as the eighth-largest bank in Ohio by deposit market share. Acquiring Premier deepens WesBanco's footprint across Northern Ohio and into Indiana. It would also move the company into Southeastern Michigan, where Premier maintains five branches, as well as a loan production office in Ann Arbor.
Jackson said he expects the deal to close in the first quarter. WesBanco has engaged in "good preliminary discussions with regulators," Jackson added.
WesBanco plans to appoint four Premier directors to its board.
WesBanco's deal for Premier comes a day after two Michigan banks
WesBanco expects its transaction to be more than 40% accretive to 2025 earnings. Tangible book value dilution is projected at 13% with an earn-back period of just under three years. WesBanco is also projecting cost savings totaling $41 million, about 26% of Premier's expense base, with 75% realized in 2025, Chief Financial Officer Daniel Weiss said on the conference call. The $959 million purchase price values Premier at $26.66 per share, a 5% premium over its July 25 closing price, and 142% of tangible book value, according to Hovde nalyst Brendan Nosal.
Seaport Research Partners Senior Analyst Laurie Hunsicker estimated in a research note Monday that the average price-to-tangible-book ratio for 2024 bank deals was 117%.
In a research note Friday, Janney Montgomery Scott Analyst Daniel Cardenas characterized the acquisition of Premier as a good deal for WesBanco "as it is acquiring a well run company with an attractive Ohio footprint."
"The deal is accretive to EPS, improves WesBanco's profitability profile and has a reasonable tangible-book-value earnback period," Cardenas added.
Nosal, for his part, expressed some surprise. Premier's decision to sell comes a little more than a year after it
WesBanco announced plans Friday to consolidate 12 of its branches in a cost-cutting move expected to save $4 million annually. The move resulted in a one-time $3.8 million charge included in WesBanco's second-quarter financial results.
To bolster its capital levels, WesBanco is raising $200 million from several investor groups, including Wellington Management, Glendon Capital Management and Klaros Capital. Wellington is investing $125 million. When the deal is completed, Premier shareholders will own 30% of the merged company. Participants in the capital raise will own 8%.
WesBanco has a history of dealmaking, acquiring 20 banks since 1991. Its last purchase came in 2019, when it paid $489 million to acquire Old Line Bancshares of Bowie, Maryland. It's WesBanco's first deal under Jackson, who
