F.N.B. Corporation (NYSE: FNB) and UB Bancorp (OTCQX: UBNC) are signing of a definitive merger agreement for FNB to acquire UB Bancorp, including its wholly-owned banking subsidiary, Union Bank, in an all-stock transaction valued at $19.56 per share, or a fully diluted market value of approximately $117 million, based upon the closing stock price of FNB as of Tuesday, May 31, 2022.
Union Bank, based in Greenville, North Carolina, has approximately $1.2 billion in total assets, $1.0 billion in total deposits of which approximately 40% are non-interest bearing, and $0.7 billion in total loans and leases as of March 31, 2022. Union Bank operates 15 full-service banking offices in 12 counties located throughout Eastern and Central North Carolina. This merger further increases FNB's presence in North Carolina, moving its proforma deposit market share to eighth in the state1, while also adding low-cost granular deposits, which will continue to be value accretive in a rising rate environment.
Following the proposed merger with UB Bancorp on a proforma basis, FNB will have approximately $43 billion in total assets, $35 billion in deposits and $28 billion in total loans. Under the terms of the merger agreement, which has been unanimously approved by the Boards of Directors of both companies, stockholders of UB Bancorp will be entitled to receive 1.61 shares of FNB common stock for each share of UB Bancorp common stock they own. The exchange ratio is fixed, and the transaction is expected to qualify as a tax-free exchange for UB Bancorp stockholders.
FNB expects the merger to be approximately 2% accretive to earnings per share with fully phased-in cost savings on a GAAP basis in addition to enhancing FNB's profitability metrics. FNB anticipates the tangible book value per common share impact to be de minimis at less than 1% and expects the CET1 ratio to remain unchanged on a proforma basis at closing.
FNB and UB Bancorp expect to complete the transaction in late 2022 after satisfaction of customary closing conditions, including regulatory approvals and the approval of UB Bancorp's stockholders. Union Bank will merge with and into FNB's subsidiary, First National Bank of Pennsylvania.
BofA Securities, Inc. is serving as financial advisor and Reed Smith LLP is serving as legal counsel to FNB. Piper Sandler & Co. is serving as financial advisor and Fenimore Kay Harrison LLP is serving as legal counsel to UB Bancorp.