FNB to Pay $474M for Metro in All-Stock Agreement

PITTSBURGH – F.N.B. Corp., holding company of First National Bank of Pennsylvania, will acquire Metro Bancorp Inc., based in Harrisburg, in an all-stock transaction valued at $474 million, the companies announced Tuesday.

The $474 million translates to $32.72 per Metro share, the companies said, basing the figure on the price F.N.B. shares closed Monday, $13.79. Each shareholder of Metro will receive 2.373 shares of F.N.B. stock in exchange for each share he owns.

FNB shares closed Tuesday at $13.27, down 52 cents in heavy trading, 6.01 million shares, more than six times its normal daily average volume.

Metro shares closed 21% higher than they did Monday at $29.98, up $5.20, its volume more than three times its daily average of 431,000. (Volume was 1.53 million.)

Metro Bancorp, holding company of Metro Bank, has $3.0 billion in assets, $2.4 billion in deposits, $2.1 billion in loans and 32 banking offices in the Harrisburg, York, Lancaster, Reading and Lebanon metropolitan statistical areas.

Pro forma, upon completion of the acquisition – expected in the first quarter of next year subject to regulatory and shareholder approval – F.N.B. would have $19.6 billion in assets, $14.7 billion in deposits, $13.7 billion in loans and more than 300 banking offices in Pennsylvania, Ohio, West Virginia and Maryland.

One director from Metro will join the F.N.B. Board of Directors upon completion of the acquisition, the press release said.

“The transaction meets all of F.N.B.’s prescribed acquisition criteria including strong earnings per share accretion in the first full year of 4% on a GAAP [Generally Accepted Accounting Principles] basis and 6% on a cash basis, and an internal rate of return on capital invested of more than 20%,” the press release said. “Tangible book value per common share is expected to be diluted by approximately 3% at closing supported by an earn-back period of just under five year using the crossover method and less than five months on a pro forma earnings basis.”

Metro, which has 878 employees, reported second-quarter net income of $4.2 million, or 27 cents a share, in late July.

RBC Capital Markets LLC acted as lead financial adviser to F.N.B. and Griffin Financial Group LLC rendered a fairness opinion to the FNB directors. Sandler O’Neill & Partners LP was financial adviser to Metro.

Reed Smith LLP was legal adviser to FNB while Mette, Evans & Woodside and Sullivan & Cromwell LLP acted in the same capacity to Metro.

Pictured: F.N.B. corporate headquarters on Pittsburgh’s North Shore.

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