425: WesBanco to Merge with Premier Financial Corp. in $959 Million Deal, Bolstering Regional Presence

WesBanco and Premier Financial Corp. have agreed to merge in an all-stock transaction valued at approximately $959 million, creating a larger regional financial services institution.

Summary

• WesBanco, Inc. and Premier Financial Corp. have entered into a definitive agreement for WesBanco to acquire Premier in an all-stock transaction.
• Premier shareholders will receive 0.80 of a share of WesBanco common stock for each Premier share, valuing the deal at approximately $959 million, or $26.66 per share based on WesBancos closing stock price on July 24, 2024.
• WesBanco will raise $200 million through a capital raise, with Wellington Management leading a $125 million investment.
• The merger is expected to be over 40% accretive to 2025 earnings, excluding certain merger-related charges and transaction related provision for credit losses.
• Tangible book value dilution of 13% at closing is expected to be earned back in approximately 2.8 years.
• The combined company will have approximately $27 billion in assets and will operate over 250 financial centers across nine states.
• The transaction is expected to close in the first quarter of 2025, pending regulatory and shareholder approvals.
• Four members of Premiers current Board of Directors will be appointed to WesBancos Board of Directors upon completion of the merger.

Sentiment

Score: 8

Explanation: The announcement is generally positive, highlighting the strategic benefits of the merger, expected earnings accretion, and the strengthening of the combined company's balance sheet. The management comments are optimistic, and the deal is expected to close in a reasonable timeframe.

Positives

• The merger creates a larger regional financial services institution with approximately $27 billion in assets.
• WesBanco expects the merger to be over 40% accretive to 2025 earnings, excluding certain merger-related charges and transaction related provision for credit losses.
• The combined company will have an expanded geographic footprint, serving customers in nine states.
• The capital raise strengthens WesBancos balance sheet and regulatory capital ratios.
• The merger is expected to provide increased investment in products and services.

Negatives

• WesBanco expects tangible book value dilution of 13% at closing, although it anticipates earning it back in approximately 2.8 years.
• The merger is subject to regulatory and shareholder approvals, which could delay or prevent the transaction from closing.

Risks

• The integration of the two companies may not be successful or may take longer than expected.
• Expected cost savings and revenue synergies may not be fully realized within the expected timeframes.
• Disruption from the merger may make it more difficult to maintain relationships with customers, associates, or suppliers.
• Required governmental approvals may not be obtained on the expected terms and schedule.
• Shareholders of WesBanco and/or Premier may not approve the proposed merger and the merger agreement.

Future Outlook

The merger is expected to be completed during the first quarter of 2025, subject to regulatory and shareholder approvals. The combined company is expected to have significant economies of scale and strong pro forma profitability metrics.

Management Comments

• Jeff Jackson, President and Chief Executive Officer of WesBanco, stated, 'This transformative merger will bring together two high-caliber institutions to create a community-focused, regional financial services partner strongly positioned to serve the unique needs of both our new and legacy communities.'
• Gary Small, President and Chief Executive Officer of Premier, said, 'The combination of WesBanco and Premier makes for an excellent strategic fit. Both organizations value community level banking, are well aligned from a culture perspective, and are focused on performance.'

Industry Context

The merger reflects a trend of consolidation in the banking industry, as institutions seek to achieve greater scale and efficiency in a competitive environment. The deal will create the 8th largest bank in Ohio, based on deposit market share.

Comparison to Industry Standards

• The transaction values Premier at a price to June 30, 2024 tangible book value per share of 142% and a price to mean analyst estimated 2024 earnings per share of 12.9 times.
• Comparable transactions in the banking sector often see price-to-tangible book value multiples in a similar range, depending on the specific characteristics of the target company and market conditions.
• The expected earnings accretion of more than 40% is a significant positive, suggesting that the combined entity will be more profitable than the two companies operating independently.

Stakeholder Impact

• Shareholders of Premier will receive WesBanco shares, potentially benefiting from the combined company's future performance.
• Customers will have access to a broader range of banking and wealth management services.
• Employees are expected to experience minimal disruption, with efforts to organize around customer services and product delivery.
• Communities served by both banks are expected to benefit from increased investment and support.

Next Steps

• Obtain regulatory approvals.
• Obtain shareholder approvals from both WesBanco and Premier.
• Complete the $200 million capital raise.
• Integrate the two companies following the closing, expected in the first quarter of 2025.

Key Dates