Omega Deal Would Give F.N.B. More Pa. Markets

By Kuehner-Hebert, Katie | American Banker, November 12, 2007 | Go to article overview
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Omega Deal Would Give F.N.B. More Pa. Markets


Kuehner-Hebert, Katie, American Banker


F.N.B. Corp. in Hermitage, Pa., has been anxious to expand beyond its Rust Belt markets, and on Friday it struck a deal that would move it into some of the faster-growing regions of its home state.

The $6.1 billion-asset parent of First National Bank of Pennsylvania said it is buying the $1.8 billion-asset Omega Financial Corp. of State College for $393 million in stock.

F.N.B. already has a handful of branches in central Pennsylvania, and the deal for Omega would give it 64 more in the heart of the state, including State College, home to Pennsylvania State University and several technology firms.

"This is consistent with our strategic plan of moving east into some of the stronger Pennsylvania markets and this strengthens our presence in the central part of the state," Stephen J. Gurgovits, F.N.B.'s president and chief executive officer, said in an interview Friday.

And it may not be done acquiring, he said. "In the future, we hope to move further east - the Philadelphia suburbs would be ideal - and southeast to Maryland."

The deal would make F.N.B. the fifth-largest bank holding company in the state, with $8 billion of assets and 210 branches.

Most of its operations are in western Pennsylvania and northeast Ohio. Peter J. Winter, an analyst with Bank of Montreal's BMO Capital Markets Corp, said that it is smart for F.N.B. to go east, because its current markets to the west - the heart of the Rust Belt - are fairly slow.

"This acquisition puts them in better growth markets and strengthens their overall franchise," Mr. Winter said. "It might be more expensive to get into Philly, because of the better growth prospects, but F.N.B. is a company that's disciplined on pricing."

The deal is priced at 2.4 times Omega's tangible book value. Mr. Winters said the price is fair to both companies.

F.N.B. moved into central Pennsylvania on a smaller scale two years ago when it bought the $382 million-asset Legacy Bank in Harrisburg. The deal for Omega would be the largest for F.N.B. since it spun off its Florida subsidiary in 2004. Fifth Third Bancorp bought that bank, the $6 billion-asset First National Bank of Florida in Naples, the following year for $1.5 billion.

The Omega acquisition would also continue a trend of consolidation in Pennsylvania, where organic growth has been hard to come by in recent years.

Donita R. Koval, Omega's president and CEO, said in an interview Friday that her company decided to sell itself because it was getting too difficult to remain independent in the current operating environment.

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