(Reuters) – WesBanco (NASDAQ:) has agreed to buy smaller rival Premier Financial in an all-stock deal valued at $959 million, the lenders said on Friday, offering another sign of growing consolidation in the U.S. regional banking industry.
WHY IT IS IMPORTANT
Regional banks in the U.S. continue to remain more susceptible to economic fluctuations triggered by high interest rates than their so-called “too-big-to-fail” rivals.
The failure of three mid-sized U.S. lenders reverberated across the global financial system last year.
In the aftermath, Treasury Secretary Janet Yellen had said the current banking environment and pressures on earnings might lead to some concentration in the sector, and regulators would likely be open to such mergers.
CONTEXT
Earlier this year, regional lender UMB Financial (NASDAQ:) agreed to buy smaller rival Heartland Financial in an all-stock deal valued at about $2 billion.
United Bankshares (NASDAQ:) also agreed to buy Piedmont Bancorp in a deal valued at about $267 million in May.
WesBanco expects the deal with Premier to help it expand significantly and have more than 250 financial centers, as well as loan production offices, across nine states.
It has also agreed to raise capital to support the transaction led by a $125 million contribution from private investment firm Wellington Management.
The deal is expected to create a combined bank with roughly $27 billion in assets.
BY THE NUMBERS
Premier shareholders will be entitled to receive 0.80 of a share of WesBanco common stock for each share of Premier common stock they own.
As of June 30, WesBanco had consolidated assets of around $18.1 billion, while Premier’s came in at roughly $8.8 billion.
Premier stock has gained 5.7% so far this year, giving the lender a market value of $912.5 million, according to LSEG data.
MARKET REACTION
Premier shares rose nearly 1% in morning trading, while WesBanco declined 7%.