Ohio-based Civista Bancshares to acquire in-state peer Comunibanc

Sandusky, Ohio-based Civista Bancshares Inc. has signed a definitive merger agreement pursuant to which it will acquire in-state peer Comunibanc Corp.

Henry County Bank, a unit of the Napoleon, Ohio-based Comunibanc, will also merge with and into Civista Bank, a wholly owned subsidiary of Civista, with Civista Bank as the surviving entity.

Under the terms of the deal, each share of Comunibanc common stock will receive 1.1888 shares of Civista common stock and $30.13 in cash for an implied deal value of about $50.2 million in the aggregate or $60.59 per Comunibanc share.

At announcement, S&P Global Market Intelligence calculates the deal value to be 153.42% of common equity and of tangible common equity, 15.26% of assets, 18.19% of deposits and 27.62x earnings. The tangible book premium to core deposits ratio is 7.85%.

S&P Global Market Intelligence valuations for bank and thrift targets in the Midwest region between Jan. 10, 2021, and Jan. 10, 2022, averaged 138.53% of book and 150.69% of tangible book and had a median of 15.95x last-12-months earnings, on a per-share basis.

The transaction is expected to close in the second quarter. The directors of Comunibanc have agreed to vote all Comunibanc shares they own in favor of the merger. One Comunibanc director will join the Civista Bank board pursuant to the transaction.

The combined company will have total assets of about $3.3 billion, total net loans of about $2.1 billion and total deposits of approximately $2.7 billion, based on financial data as of Sept. 30, 2021, according to a news release. The acquisition will add seven branches to Civista in Henry and Wood counties in northwest Ohio and about $276 million in low-cost core deposits.

With the acquisition, Civista will enter Henry County, Ohio, with six branches to be ranked 1st with a 34.85% share of approximately $776.2 million in total market deposits and will enter Wood County, Ohio, with one branch to be ranked No. 14 with a 0.36% share of about $2.74 billion in total market deposits, according to S&P Global Market Intelligence data.

The merger agreement carries a termination fee of $2.0 million, payable by Comunibanc to Civista upon termination of the deal under certain circumstances.

Civista and Comunibanc expect that the transaction will qualify as a tax-free reorganization for the portion of the merger consideration exchanged for Civista common stock. Additionally, the acquisition is expected to be 10% accretive to Civista's EPS in 2023 and thereafter. Any tangible book value dilution created in the transaction is expected to be earned back in about 2.9 years after closing. Post-closing, Civista's capital ratios are expected to continue to exceed "well-capitalized" regulatory standards, according to the release.

Stephens Inc. was the financial adviser to Civista, with Dinsmore & Shohl LLP as legal adviser. ProBank Austin was the financial adviser and Shumaker Loop & Kendrick LLP was legal adviser to Comunibanc.

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