Civista Bancshares Inc. (NASDAQ: CIVB), the Sandusky-based holding company for Civista Bank, announced on Tuesday January 11 that it had agreed to acquire Comunibanc Corp., a company based in Napoleon, the parent company of Henry County Bank. (OTCPK: CBCZ) in Northwestern Ohio.
The combination gives Civista, founded in 1884, a new foothold in the large market in Toledo, an area in which it was seeking to gain a foothold.
The transaction with Comunibanc, which has total assets of around $ 309 million, will add seven branches in Henry and Wood counties to Civista – none of which are currently expected to be closed, as there is no branch overlap. existing – representing approximately $ 276 million in deposits.
The combined company will have estimated total assets of $ 3.3 billion, total net loans of approximately $ 2.1 billion, and total deposits of approximately $ 2.7 billion. Its branch network will include a total of 42 offices in northern, central and southwestern Ohio, southeastern Indiana and northern Kentucky.
It is estimated that five or six other banks have made an offer on Comunibanc, according to the executives.
Under the terms of the transaction, each common share of Comunibanc will receive 1.1888 common shares of Civista and $ 30.13 in cash.
The mixed cash and equity agreement, scheduled to close in the second quarter, is valued at $ 50.2 million in total or $ 60.59 per Comunibanc share based on the closing price of the common share. de Civista on Jan. 7 for $ 25.62. Civista executives highlight the deal for the new presence it brings to the bank in the Toledo MSA, where the bank planned to hire a new commercial credit banker this year. The company describes the region as the fifth largest market in Ohio and the second fastest growing MSA in the state.
“We have known the Comunibanc team for a very long time and have always admired the straightforwardness and its strong and stable presence in their local communities,” Civista President and CEO Dennis Shaffer said in a statement. “We look forward to working with the Comunibanc management team to develop and improve their banking platform. The current Civista team has significant experience in the Northwest Ohio market and is very excited to partner with Comunibanc and accelerate its growth. ”
A member of Comunibanc’s board of directors will join Civista’s board of directors upon closing of the transaction.
The merger will serve as a succession plan for Comunibanc, as the three main executives of the company will retire, according to a presentation to investors. the agreement.
“We believe the partnership with Civista will provide us with the increased ability to provide the products and services our customers are looking for and accelerate the commercial loan production efforts we have undertaken in the Northwest Ohio market,” said Comunibanc chairman and chairman Bill Wendt said in a statement. “Our relationship with the Civista management team goes back almost 30 years and we have always felt that our two organizations share a similar culture and operating philosophy. This transaction represents a win-win solution for all our stakeholders. “
So far, observers tend to agree.
“This is a natural market extension agreement for Civista since Comunibanc is in a contiguous market,” commented Fred Cummings, banking analyst and chairman of Elizabeth Park Capital. “This was a reasonably priced transaction at 150% of tangible book value and is expected to be accretive to 10% to earnings per share in 2023.”
The larger size will allow Civista to offer larger offerings to its business customers, especially in the new market. Executives told investors that on the commercial lending front, Civista’s “sweet spot” is a deal between $ 2 million and $ 5 million, more or less. The bank’s internal loan limit of around $ 22.5 million is also expected to increase slightly. There will also be opportunities to offer clients the widest range of Civista services, such as cash and wealth management.
Civista’s last deal was in 2018 and involved the acquisition of United Community Bank of Indiana. The deal, valued at $ 114 million, gave the bank a new presence in the markets of northern Indiana and Cincinnati.
Shaffer told investors on Tuesday, “I think we are in a position to get maybe another deal” this year. His “ideal” sweet spot would be a deal with a company with assets between $ 300 billion and $ 1 billion.
“We don’t want to pay too much for something,” he said, nothing from Civista would “stay disciplined” as it contemplates other acquisitions.
In general, Cummings expects bank mergers and acquisitions to continue at a similar pace in 2022 compared to last year.
“2021 has been a great year for bank mergers and acquisitions and we believe it will remain robust over the next two years based on the large valuation gap between buyer and seller, a favorable credit environment and strong buyer capital and liquidity positions, ”Cummings said.
Civista is Northeast Ohio’s 16th largest bank in terms of deposit market share, according to Crain research.