People Bancorp of Marietta, Ohio, has signed a definitive merger agreement with ASB Financial of Portsmouth, Ohio. ASB is the parent of American Savings Bank, fsb. The transaction, expected to be completed during the second quarter of 2018, will have ASB merge into Peoples and American merging into Peoples Bank. The transaction is valued at $40 million.
American, with assets of $294 million, has five offices in Ohio and one in South Shore, Ky. It had deposits of $210.4 million and loans of $241.5 million as of June 30. As a federal savings bank, the organization specialized in mortgage lending and Chuck Sulerzyski, Peoples president and CEO, said the bank expected the acquisition to double Peoples’ mortgage origination capability.
“We are excited to acquire ASB with its strong core deposit base and profitable mortgage origination business,” Sulerzyski said. “American’s presence in Cincinnati will add to our footprint in southwestern Ohio and accelerate our expansion in Cincinnati. American’s Portsmouth franchise will also provide contiguous locations to our presence in Ashland, Ky., and serve as a connection between our southeast and southwest Ohio franchises. We are especially thrilled to incorporate American’s successful Cincinnati Mortgage Origination Division into Peoples Bank.”
The transaction is expected to be immediately accretive to Peoples’ estimated earnings before one-time costs, with a tangible book value earn back under two years, and an internal rate of return which exceeds internal thresholds.
The agreement was announced the same day Peoples released its third quarter earnings of $10.9 million. “Our key metrics, including earnings per share, efficiency ratio, return on average assets and return on average stockholders’ equity, improved as we continued to focus our attention on strengthening our core business,” said Sulerzyski. “Our efficiency ratio was the lowest it has been in seven years. We are being disciplined in our approach to growing revenues faster than expenses, and we believe we are poised to continue to provide strong shareholder returns as we move into the fourth quarter of 2017 and into 2018.”
Jack Kuntz, president and CEO of ASB and American also commented on the transaction. “This is an attractive combination with one of the strongest banks in Ohio. Our customers will have an opportunity to become part of a multi-billion dollar banking franchise with immediate access to an expanded array of products and services…and which we believe is well-positioned for continued growth.”
The acquisition is still subject to ASB shareholder approval, regulatory approval and other conditions set forth in the merger agreement.
Peoples has $3.6 billion in assets and 67 full-service branches.