How F.N.B. landed a deal for NC bank

Better late than never. 

That mantra rings true for F.N.B. Corp. in Pittsburgh, which agreed in May to buy UB Bancorp in Greenville, N.C., for $117 million in stock. 

The $42 billion-asset F.N.B. wasn’t among the first group of banks that the $1.2 million-asset UB Bancorp contacted to gauge interest in a potential deal, according to a regulatory filing tied to the pending acquisition. 

UB Bancorp’s board formed a special committee, then hired an investment bank in late January, to vet buyers. The investment bank contacted 12 potential acquirers; nine expressed an interest and seven signed a nondisclosure agreement to conduct due diligence. 

F.N.B. wasn’t contacted at that time. 

One of the potential suitors submitted an offer by UB Bancorp’s Feb. 16 deadline, proposing a deal that valued the company at $22 a share. At UB Bancorp’s request, the bank increased its offer on Feb. 22 to $22.12 a share. 

Another potential merger partner sent an offer to UB Bancorp on Feb. 25 that had a value of $23.50 a share. 

Each bank was asked to resubmit offers by March 24. Around the same time, UB Bancorp contacted another party to seek an all-cash offer; that bank “indicated that it was not interested in pursuing an acquisition.” 

One of the interested parties sent an offer of $20.88 a share, while the other proposed a deal valued at $22.23 a share – the declines reflected changes in each suitor’s stock price. 

While those banks continued to conduct due diligence, UB Bancorp’s investment bank contacted F.N.B. and another potential acquirer. F.N.B. expressed interest, while the other bank declined to discuss a deal. 

F.N.B. entered into a nondisclosure agreement on March 29. 

UB Bancorp, through its investment bank, asked F.N.B. and the other two suitors to submit their final proposals by May 4. One bank withdrew from consideration. 

F.N.B. proposed an exchange ratio that valued UB Bancorp at $18.43 a share. The other bank’s offer valued UB Bancorp at $18.22 a share, which included a lower exchange ratio from its prior pitch. 

UB Bancorp was able to persuade F.N.B. to slight increase its exchange ratio. The other bank ultimately withdrew its indication of interest. 

F.N.B. and UB Bancorp entered into an exclusivity period on May 17 that was set to last until June 6. A draft of a merger agreement F.N.B. used in another acquisition was sent to UB Bancorp the same day. 

Topics discussed between May 17 and May 27 included termination rights and specific severance and “pay-to-stay” bonuses for UB Bancorp’s non-executive employees. 

UB Bancorp’s board approved the merger and the agreement was signed on May 31. The deal, announced the next day, valued UB Bancorp at 154% of its tangible book value.  

The deal “represents another step in our continued investment in North Carolina,” Vincent Delie Jr., F.N.B.’s chairman, president and CEO, said in a press release announcing the acquisition. 

F.N.B. expects the merger to be about 2% accretive to its earnings per share, including cost savings. The company expects less than 1% dilution to its tangible book value.  

F.N.B. plans to cut about 45% of UB Bancorp’s annual noninterest expenses. It expects to incur $17 million of merger-related expenses.

The latest filing also disclosed the Robert Jones, UB Bancorp's president and CEO, will receive a lump sum payment of nearly $1.4 million if the deal is completed this year.