First Commonwealth Financial in Indiana, Pa., has agreed to buy Centric Financial in Harrisburg, Pa.
The $9.6 billion-asset First Commonwealth said in a press release Tuesday that it will pay $144 million in stock for the $1.1 billion-asset Centric. The deal, which is expected to close in the first quarter, priced Centric at 131% of its tangible book value.
Centric has seven branches, a loan production office, $900 million of deposits and $900 million of loans.
“We are genuinely excited about the opportunities that our combined organizations can create,” Mike Price, First Commonwealth’s president and CEO, said in the release. “This extension of our physical presence into Harrisburg and metro Philadelphia allows us to deepen our existing relationships in these markets and improve the financial lives of these businesses and their communities.”
Patti Husic, Centric’s president and CEO, will join First Commonwealth’s board.
First Commonwealth said that, excluding merger charges, the transaction should be about 5% accretive to its 2023 earnings and roughly 7% accretive the next year. It should take about two years for First Commonwealth to earn back an estimated 3% dilution to its tangible book value.
First Commonwealth plans to cut about 35% of Centric’s annual noninterest expenses. The company expects to incur $14.6 million of pretax merger-related expenses.
First Commonwealth will eventually lose about $13 million in annual interchange revenue by crossing over $10 billion of assets.
Keefe, Bruyette & Woods and Squire Patton Boggs (US) advised First Commonwealth. Stephens and Stevens & Lee advised Centric.