F.N.B. to buy Howard in Baltimore for $418M

F.N.B. Corp. in Pittsburgh has agreed to buy Howard Bancorp in Baltimore. 

The $38 billion-asset F.N.B. said in a press release Tuesday that it will pay $418 million in stock for the $2.6 billion-asset Howard. The deal, which is expected to close in early 2022, priced Howard at 160% of its tangible book value.

Howard, which entered Baltimore with the 2018 acquisition of 1st Mariner Bank, has 13 branches, $2 billion of deposits and $1.9 billion of loans. The acquisition will more than double F.N.B.'s deposits in Baltimore, to $3.5 billion.

“FNB and Howard share a deep cultural commitment to client and community service,” Vincent Delie Jr., F.N.B.’s chairman, president and CEO, said in the release. 

“Combined, we will have the sixth-largest deposit share in the Baltimore market, reinforcing our strong presence and presenting our organizations with the opportunity to deliver an enhanced experience for our customers, communities and dedicated teams," Delie added.

F.N.B. plans to cut about half of Howard's annual noninterest expenses. Nearly two-thirds of Howard's branches are within two miles of an F.N.B. location. The company expects to incur $32 million of merger-related expenses.

F.N.B. said it expects the merger to be 4% accretive to its earnings per share. The company said it should take about three years to earn back a projected 2% dilution to its tangible book value. 

"We were not surprised by this morning's announcement," Casey Orr Whitman, an analyst at Piper Sandler, wrote in a note to clients. 

"We believe that the premium afforded to Howard ... reflects sizable cost saves and the company's significant scarcity value as the largest local bank in Baltimore with a commercial focus and a formidable deposit base," Whitman added.

Morgan Stanley and Reed Smith advised FNB. Keefe, Bruyette & Woods and Nelson Mullins Riley & Scarborough advised Howard.