425: United Bankshares to Acquire Piedmont Bancorp in $267 Million Deal

United Bankshares, Inc. will acquire Piedmont Bancorp, Inc. in a stock-for-stock transaction valued at approximately $267 million, expanding United's presence in the Southeast.

Summary

• United Bankshares, Inc. (United) has agreed to acquire Piedmont Bancorp, Inc. (Piedmont) in a merger valued at approximately $267 million.
• The transaction involves a fixed exchange ratio of 0.300 shares of United for each share of Piedmont.
• United expects the merger to strengthen its position in the Mid-Atlantic and Southeast, becoming the 39th largest banking company in the U.S. based on market capitalization.
• The combined organization will have over $32 billion in assets and more than 240 locations across eight states and Washington, D.C.
• Piedmont, headquartered in Peachtree Corners, GA, has approximately $2.1 billion in assets and 16 locations.
• The merger is expected to close in the fourth quarter of 2024 or early in the first quarter of 2025, pending shareholder and regulatory approvals.
• Monty Watson, CEO of Piedmont Bank, will become Regional President responsible for Georgia operations at United upon closing.

Sentiment

Score: 8

Explanation: The document presents a positive outlook on the merger, highlighting the strategic benefits, financial impact, and growth opportunities. The retention of key personnel and the expansion into a new market contribute to the positive sentiment.

Positives

• The merger strengthens United's position in the Mid-Atlantic and Southeast regions.
• The acquisition provides United with an entrance into the high-growth Greater Atlanta area.
• Piedmont is a well-run and profitable franchise with sound asset quality.
• The transaction is expected to be accretive to United's earnings per share (EPS) in 2025 and 2026.
• Key senior management and executives from Piedmont are being retained.

Negatives

• The transaction is expected to result in dilution to United's tangible book value per share of (3.5)%.
• The tangible book value earnback is estimated to be 2.8 years.

Risks

• The businesses of United and Piedmont may not be combined successfully.
• Expected growth opportunities or cost savings from the merger may not be fully realized.
• Deposit attrition, operating costs, customer losses, and business disruption may be greater than expected.
• Required regulatory approvals may not be obtained on the proposed terms or schedule.
• Piedmont's shareholders may fail to approve the merger.
• Legislative or regulatory changes may adversely affect the businesses.
• There is a risk of increased scrutiny by governmental authorities.
• Competitive pressures on product pricing and services may arise.
• The merger may make it more difficult to maintain relationships with employees, customers, or other parties.
• Management time may be diverted to merger-related issues.
• There is a potential dilutive effect of the shares of United common stock to be issued in the merger.
• Reputational risk and the reaction of each company's stakeholders to the transaction are factors.
• The failure of closing conditions in the merger agreement to be satisfied or any unexpected delay in closing the transaction could occur.
• Legal proceedings may be instituted against United or Piedmont.
• General competitive, economic, political, and market conditions may affect future results.
• Uncertainty in U.S. fiscal and monetary policy may arise.
• Volatility and disruptions in global capital and credit markets may occur.
• The nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations may impact the merger.

Future Outlook

The merger is expected to close in late 2024 or early in the first quarter of 2025, subject to customary closing conditions, including approval by the shareholders of Piedmont and the receipt of required regulatory approvals.

Management Comments

• Richard M. Adams, Jr., CEO of United Bankshares, Inc., stated that they are excited to bring these two great companies together and share similar commitments to serving customers and communities with a relationship-focused approach.
• Monty Watson, Chairman and CEO of The Piedmont Bank, stated that Piedmont is thrilled to join the United Bank family and believes this merger will allow them to better serve current customers and reach new audiences with enhanced products and services, all while maintaining their personalized community bank approach.

Industry Context

This announcement reflects the ongoing consolidation trend in the banking industry, where larger institutions are acquiring smaller ones to expand their market presence, enhance their product offerings, and achieve economies of scale. The acquisition allows United to enter the attractive Greater Atlanta Area, a market with robust economic growth opportunities.

Comparison to Industry Standards

• The transaction's valuation metrics, such as price-to-earnings and price-to-tangible book value, are within the typical range observed in recent bank mergers and acquisitions.
• The core deposit premium of 6.7% is also comparable to similar transactions in the industry.
• The EPS accretion and tangible book value dilution figures are key metrics that investors will use to assess the financial attractiveness of the deal, and these figures appear to be within an acceptable range for both companies.
• Comparable companies include Truist, PNC, and Regions Financial, which have also grown through strategic acquisitions.

Management Changes

Stakeholder Impact

• Shareholders of Piedmont will receive shares of United Common Stock.
• Customers of Piedmont will gain access to a broader range of products and services.
• Employees of Piedmont will become part of a larger organization with more opportunities.
• The communities served by Piedmont will benefit from United's commitment to community banking.

Next Steps

• Piedmont will seek shareholder approval for the merger.
• United and Piedmont will pursue required regulatory approvals.
• The companies will work towards the integration of their operations and systems.

Key Dates