F.N.B.'S Pittsburgh Deal Is 2nd in 3 Months

By Kuehner-Hebert, Katie | American Banker, February 19, 2008 | Go to article overview

F.N.B.'S Pittsburgh Deal Is 2nd in 3 Months


Kuehner-Hebert, Katie, American Banker


Defying the tough market for mergers and acquisitions, F.N.B. Corp. of Hermitage, Pa., announced its second deal in three months, to snatch up one of the last remaining community banking companies in Pittsburgh's attractive southern suburbs.

F.N.B. said Friday that it had agreed to pay $86.1 million in cash and stock for the $300 million-asset Iron and Glass Bancorp Inc. of Pittsburgh.

The $6.1 billion-asset parent of First National Bank of Pennsylvania would gain eight branches - four in southern Pittsburgh and four in suburbs south of the city. It has 15 of its 163 branches in the city and its northern suburbs.

"This is one of the last remaining community banks left in the attractive South Hills of Pittsburgh, where we are conspicuously absent," Stephen J. Gurgovits, F.N.B.'s chairman and chief executive, said in an interview Friday. "The alternative was to pursue a de novo branch strategy, which would take a lot of time and energy to accomplish and would probably be dilutive to our shareholders."

Mr. Gurgovits said the deal for Iron and Glass, expected to close in the third quarter, would be accretive to earnings within the first 12 months of its closing. He would not say by how much.

The agreement calls for each Iron and Glass share to be exchanged for $75 in cash or five shares of F.N.B.

The price works out to a 41.5% premium over Iron and Glass' closing price Thursday of $53 a share.After the deal was announced, its stock soared 35.2%, to $71.65. F.N.B.'s stock was up 0.1% Friday, to $14.93.

Mike Hagan, the CEO of Iron and Glass, said several banking companies had been wooing it.

"We chose F.N.B. because we felt it was a great deal for our shareholders - not only because of the price, but also because of the potential for future growth in F.N.B.'s stock price," he said.

David W. Darst, an analyst at First Horizon National Corp.'s FTN Midwest Research Securities Corp., said the deal works out to 2.2 times the seller's tangible book value and roughly 23 times its 12-month trailing earnings from the quarter that ended Sept. 30.

The pricing is in line with other Pennsylvania deals, which have been happening at a brisk pace, he said. …

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