First Commonwealth Expands Financial Footprint in Cincinnati

First Commonwealth Financial Corporation Expands in Cincinnati

First Commonwealth Financial Corporation (NYSE: FCF) has embarked on an exciting journey to enhance its presence in Cincinnati through the acquisition of CenterGroup Financial, Inc. This merger represents a transformative move for First Commonwealth, as it sets the stage for an enriched banking experience for both organizations' clients and stakeholders.

Details of the Acquisition

In a recent announcement, First Commonwealth and CenterGroup revealed the signing of an Agreement and Plan of Merger. This strategic decision will see CenterGroup merging with First Commonwealth in an all-stock deal valued at approximately $54.6 million. This is based on the closing stock price of First Commonwealth, prior to the merger.

The merger will significantly bolster First Commonwealth’s asset portfolio, contributing around $348.4 million in assets, alongside three branch locations, a loan production office, and a mortgage office to its Cincinnati framework. This strategic acquisition aligns with First Commonwealth's commercial focus within Cincinnati, as it welcomes a customer base that is remarkably 65% commercial-oriented.

Terms of the Merger Agreement

Under the merger's terms, which have received the necessary approval from both companies’ boards of directors, CenterGroup shareholders will exchange their shares for a fixed exchange ratio of 6.10 shares of First Commonwealth common stock for each center share they hold. This merger is expected to be categorized as a tax-free reorganization and is on track to finalize in the first half of the coming year, pending standard regulatory approvals and the green light from CenterGroup shareholders.

Leadership Insights

Mike Price, President and CEO of First Commonwealth, expressed enthusiasm about welcoming CenterBank into their financial group, emphasizing the cultural harmony between the two entities. He highlighted how this merger allows First Commonwealth to expand its branch network within the Cincinnati region, aiming to not only attract new talent but also strengthen customer bonds and market presence.

CenterGroup's Vision

Stewart Greenlee, President and CEO of CenterGroup, shared insights about the merger's potential. He remarked on the cultural compatibility between the two organizations and viewed this partnership as a promising evolution for CenterBank’s customers, employees, and shareholders. He noted that integrating with a growing and effectively managed franchise like First Commonwealth presents an exciting opportunity to enhance customer service offerings.

Financial Expectations and Impact

From a financial perspective, the transaction is projected to be approximately 2% accretive to First Commonwealth’s earnings in the first year following the merger, which could raise to around 3% by the second year when the anticipated cost synergies are fully integrated. Notably, the expected dilution of tangible book value from the merger is anticipated to remain below 2% when considering the one-time merger charges.

Support and Guidance

Raymond James & Associates is serving as the financial advisor, while Squire Patton Boggs LLP has been appointed as legal counsel for First Commonwealth. In parallel, CenterGroup is receiving advisory services from Janney Montgomery Scott and legal guidance from Dinsmore & Shohl, LLP to navigate this significant transition.

About First Commonwealth Financial Corporation

Headquartered in Indiana, Pennsylvania, First Commonwealth Financial Corporation operates with a distinct mission to serve its communities across 30 counties in Pennsylvania and Ohio. With 125 community banking offices, its diverse portfolio includes various financial services, proving advantageous for consumers and businesses alike. The company encompasses not only commercial banking but also wealth management and insurance through its subsidiaries, enhancing the overall financial landscape for its clients.

About CenterGroup Financial Corporation

Offering a niche in community banking, CenterGroup through its subsidiary CenterBank provides personalized financial services focusing on building relationships with its clients. Established with community values, CenterBank excels at providing specialized banking solutions tailored to improve the banking experience for its clientele, aiming to develop stable, productive ties in the Greater Cincinnati area.

Frequently Asked Questions

What is the main purpose of the First Commonwealth and CenterGroup merger?

The merger aims to expand First Commonwealth's presence in Cincinnati and enhance its customer base and assets through the acquisition of CenterGroup Financial.

How will CenterGroup shareholders benefit from the merger?

CenterGroup shareholders will exchange their shares at a fixed ratio for First Commonwealth stock, potentially increasing their investment's value and benefiting from First Commonwealth's financial growth.

What is the expected financial impact of the merger for First Commonwealth?

The transaction is projected to be around 2% accretive to First Commonwealth’s earnings in the first year, increasing to approximately 3% in the following year as synergies are realized.

Who are the legal and financial advisors involved in this merger?

Raymond James & Associates is the financial advisor for First Commonwealth, while Janney Montgomery Scott is serving the same role for CenterGroup. Legal counsel has been provided by Squire Patton Boggs for First Commonwealth and Dinsmore & Shohl for CenterGroup.

How does this merger align with First Commonwealth's strategic goals?

This merger aligns with First Commonwealth's strategy to enhance its commercial footprint and customer service capabilities, particularly in the thriving Cincinnati market.

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