James C. Gardill, Chairman of the Board, and Todd F. Clossin, President & CEO, of WesBanco and Gary L. Libs, Chairman of the Board, and James D. Rickard, President & CEO, of Your Community, made the joint announcement.
Under the terms of the Agreement and Plan of Merger, which has been approved by the board of directors of both companies, WesBanco will exchange a combination of its common stock and cash for Your Community common stock.
Your Community shareholders will be entitled to receive 0.964 of a share of WesBanco common stock and cash in the amount of $7.70 per share for each share of Your Community common stock for a total value of approximately $39.05 per share or $221.0 million in aggregate based on WesBanco’s market close price of $32.52 on May 2, 2016.
The exchange ratio is based on the average closing prices of WesBanco common stock of $31.96 over the 10 day period ending on April 27, 2016. The merger is expected to qualify as a tax-free reorganization.
The transaction values Your Community at a price to March 31, 2016 tangible book value per share of 173%, a price to LTM earnings per share of 14.5 times, and a price to mean analyst estimated 2016 earnings per share of 13.7 times.
WesBanco president and chief executive officer Todd F. Clossin stated:"The merger with Your Community meaningfully expands WesBanco’s franchise into attractive markets in Kentucky and Southern Indiana, and a top ten market share in the Louisville MSA.
"Jim Rickard and his management team have built a high performing commercial bank with low cost deposits and a strong lending team. We believe we can provide customers of Your Community with a broader array of banking services, including expanded commercial and mortgage lending capabilities as well as trust and wealth management services."
Excluding certain one-time merger charges, the transaction is anticipated to be 6-7% accretive to earnings in 2017, and approximately 9% accretive to earnings in 2018 once anticipated cost savings are fully phased in.
Estimated tangible book value dilution at closing of less than 5% is expected to be earned back in less than 3.5 years using the "cross-over" method, including estimated one-time charges.
The acquisition is subject to the approvals of the appropriate banking regulatory authorities and the approval vote of the shareholders of Your Community. It is expected that the transaction should be completed during the third or fourth quarter of 2016.
WesBanco Chairman of the Board, James C. Gardill said:"Your Community is an outstanding community-based financial institution with a strong management team that shares our commitment to client service and community banking. We are pleased to be able to partner with Your Community and continue to build on the solid platform that has been created."
As a result of the merger, it is anticipated that WesBanco will add two Your Community directors, Gary L. Libs and Kerry M. Stemler, to its board of directors. In addition, Jim Rickard, Your Community’s President & CEO, will join WesBanco as Market President for Kentucky and Southern Indiana.
Rickard said:"We are excited to announce our merger with WesBanco and are delighted to become a part of their fine organization.
"WesBanco’s strong operating performance, demonstrated track record of merger integration and commitment to the communities it serves makes it the ideal partner for Your Community Bank."
Your Community chairman of the board Libs said: "Both Kerry and I are excited about joining the Board of WesBanco.
"By partnering with WesBanco we will be in a better position to deliver value to our clients, our employees, and our shareholders."
At March 31, 2016, WesBanco had consolidated assets of approximately $8.6 billion, deposits of $6.1 billion, loans of $5.1 billion and shareholders’ equity of $1.1 billion.
At March 31, 2016, Your Community had consolidated assets of approximately $1.6 billion, deposits of $1.2 billion, loans of $1.0 billion and shareholders’ equity of $133 million.
In conjunction with closing, WesBanco anticipates shrinking its combined balance sheet to remain under $10 billion in pro forma assets.
Clossin said:"While we have been gradually building our infrastructure over the past few years to prepare WesBanco for the day it eclipses $10 billion in assets, we believe the most prudent course of action is to shrink our balance sheet such that we do not cross over the $10 billion mark at closing.
"On a combined basis, we believe we have the ability to continue our loan growth at an uninterrupted pace while remaining below $10 billion in assets in the near term."
When the transaction is consummated, WesBanco will provide banking services through 177 branch locations in five states. The transaction will expand WesBanco’s franchise by 36 offices located throughout the Louisville, Elizabethtown, Lexington and Evansville MSAs.
All of the directors and executive officers of Your Community have entered into voting agreements with WesBanco pursuant to which they have agreed to vote their shares in favor of the transaction.
The approximate four to six month time period leading to the consummation of the merger has officials of both organizations optimistic that organizing around customer service and product delivery can be accomplished with as little employee disruption as possible.
Investment advisors involved in the transaction were Raymond James & Associates, Inc., representing WesBanco, and Keefe, Bruyette & Woods, Inc., representing Your Community.
Legal representations in the transaction include Phillips Gardill Kaiser & Altmeyer PLC and K&L Gates LLP for WesBanco, and Frost Brown Todd LLC for Your Community.
