Pittsburgh-based F.N.B. Corporation FNB is nearing the closure of its proposed $474-million merger with Metro Bancorp, Inc. METR , which will likely make FNB Corp the largest regional bank in the Pennsylvania region (in terms of assets and market capitalization on a pro forma basis). Notably, the company has received necessary approvals from the federal regulators, and the deal is expected to be completed on or around Feb 16, 2016.
Moreover, an exemption by the Federal Reserve Bank of Cleveland relieves the company from filing an application for the merger at the parent company level. The deal, however, awaits approval from the Pennsylvania Department of Banking and Securities. Further, shareholders of both the parties will vote for or against the merger at a special shareholders' meeting scheduled on Jan 14, 2016, separately for each of the parties.
More importantly, the company remains on track to complete the integration process as of the anticipated transaction closure date.
The acquisition will add $2.4 billion in deposits and $2.1 billion in loans to FNB Corp's balance sheet, along with a network of 32 banking offices in Harrisburg, Lancaster, York, Reading and Lebanon metropolitan statistical areas or "MSAs".
In fact, this strategically compelling acquisition will enable the company to immediately increase the scale of its operations, thereby becoming the 5th largest market shareholder in the Pennsylvania region, and the 3rd largest in the Harrisburg MSA.
Additionally, the transaction is projected to increase the company's GAAP earnings per share by 4% in the first full year of acquisition, with an internal rate of return of above 20%.
Of late, FNB Corp has embarked upon various transactions with an aim to enhance its position in Pennsylvania. In Sep 2015, the company completed acquisition of 5 branches from Bank of America Corporation BAC . Prior to that, it had inked a deal to acquire 17 branches from Fifth Third Bancorp FITB . Upon completion of the two pending deals, the company will have more than 325 banking branches across its footprints.
With cash and cash equivalents of $258.8 million as of Sep 30, 2015, we believe that FNB Corp will continue with its inorganic expansion strategy. Further, such transactions will likely help lower the strain on its revenues, exerted by a low interest rate environment, as well as support the company's bottom line.
Notably, FNB Corp's projected sales growth (F1/F0) of 6.13% ensures that it will continue to reap benefits from its growth strategies. Further, this will aid its bottom line, which is expected to grow at a rate of 10% for 2015.
Currently, FNB Corp carries a Zacks Rank #3 (Hold).