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First Commonwealth Financial Corporation FCF, the parent company of First Commonwealth Bank, has announced the signing of an agreement and plan for an all-stock merger with CenterGroup Financial, Inc., the holding company for CenterBank. The transaction was valued at nearly $54.6 million in aggregate, based on the closing stock price of First Commonwealth as of Dec. 17, 2024.
Details of FCF’s Acquisition of CenterGroup
As a result of the agreement, CenterGroup will merge into First Commonwealth, and subsequently, CenterBank into First Commonwealth Bank.
According to the agreement, which has been approved by both businesses' boards of directors, CenterGroup’s shareholders will receive 6.10 shares of First Commonwealth common stock for every CenterGroup common share.
The merger is anticipated to be finalized in the first half of 2025 and qualify as a tax-free reorganization, provided that it passes key closing requirements, such as shareholders’ approval from CenterGroup and standard bank regulatory approvals.
Strategic Implications of FCF’s Acquisition of CenterGroup
The merger will significantly expand First Commonwealth's market share in Cincinnati by adding roughly $348.4 million in total assets, three branch offices, a loan production office and a mortgage office to its Cincinnati franchise.
The deal will strengthen First Commonwealth's commercially focused strategy in the Cincinnati market by adding a 65% business client base.
The acquisition is projected to be roughly 2% accretive to First Commonwealth's earnings in 2025, excluding certain one-time merger charges, and roughly 3% accretive to earnings in 2026, with anticipated cost savings fully realized. It is anticipated that the dilution of tangible book value, including the effect of estimated one-time charges, will be less than 2%.
First Commonwealth’s Management Remarks
Mike Price, president and chief executive officer of First Commonwealth stated, “We are pleased to welcome CenterBank into our organization, further expanding our commercial franchise within the attractive Cincinnati market. We have known the CenterBank team for a long time and believe their customer-focused, commercially oriented business model is a strong cultural alignment and augments our existing Cincinnati growth plans.” “The expansion of our branch network within greater Cincinnati allows us to attract additional talent, create meaningful customer relationships and deepen our penetration within the market,” he added.
First Commonwealth's Price Performance and Zacks Rank
Over the past six months, FCF’s shares have gained 30% compared with the industry’s 33.3% growth.