DCB Financial (DCBF), First Commonwealth Financial (FCF) Enter Merger Agreement

October 3, 2016 8:52 AM EDT

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First Commonwealth Financial Corporation (NYSE: FCF) and DCB Financial Corp (OTC: DCBF) jointly announced the signing of a definitive Agreement and Plan of Merger providing for the merger of DCB Financial with and into First Commonwealth in a stock and cash transaction valued at approximately $14.50 per share, or approximately $106 million in the aggregate. Following the merger of the parent holding companies, DCB Financial's subsidiary, The Delaware County Bank & Trust Company, will merge with and into First Commonwealth's subsidiary, First Commonwealth Bank.

The acquisition of the Delaware County-based bank will provide First Commonwealth with approximately $556 million in total assets, $467 million in total deposits, $397 million in total loans and nine full-service banking offices in the Columbus MSA. The transaction represents a continuation of First Commonwealth's Ohio growth strategy, and builds upon its recently announced acquisition of 13 branches in northern Ohio and its acquisition of Columbus-based First Community Bank in 2015.

Under the terms of the Agreement and Plan of Merger, which has been unanimously approved by the board of directors of both companies, DCB Financial shareholders will be entitled to receive either 1.427 shares of First Commonwealth common stock or $14.50 in cash for each DCB Financial common share. Subject to proration to ensure that the aggregate merger consideration is comprised of 80% First Commonwealth common stock and 20% cash, DCB Financial shareholders may elect to specify the number of their shares to exchange for the cash consideration and the number of their shares to exchange for the stock consideration. The merger is expected to qualify as a tax-free reorganization. The merger is expected to be completed in the second quarter of 2017, subject to certain closing conditions, including approval by DCB Financial shareholders and approval by appropriate bank regulatory authorities.

"We could not be more pleased to welcome DCB Financial's customers and employees to First Commonwealth," said T. Michael Price, First Commonwealth's Chief Executive Officer. "DCB Financial's customer-focused culture is a perfect fit with First Commonwealth's core values. This expansion into central Ohio will enable us to help a broader range of central Ohio families and businesses reach their financial goals."

"First Commonwealth, like us, is the bank that works for you," said Ron Seiffert, President and Chief Executive Officer of DCB Financial. "We are happy to be partnering with a bank that is just as committed to our community banking philosophy and our core markets as we are. Our customers will enjoy a broader range of products and services, while still receiving the same high level of community bank service to which they've been accustomed."

Excluding certain one-time merger charges, the transaction is anticipated to be approximately 4% accretive to First Commonwealth's earnings in 2017, and approximately 7% accretive to earnings in 2018 once anticipated cost savings are fully phased in. Estimated tangible book value dilution at closing of less than 4% is expected to be earned back in less than 5 years using the "cross-over" method, including estimated one-time charges.

As a result of the merger, First Commonwealth will add one DCB Financial director to its board of directors.


FBR Capital Markets & Co. served as financial advisor and Squire Patton Boggs (US) LLP served as legal counsel to First Commonwealth. Keefe, Bruyette & Woods, Inc. served as financial advisor and Porter, Wright, Morris & Arthur LLP served as legal counsel to DCB Financial.


An investor presentation related to this transaction is available on First Commonwealth's website at www.fcbanking.com/investorrelations. First Commonwealth will host a conference call this afternoon to discuss the transaction. The call will begin at 2:00 p.m., Eastern Time. To access the call, please dial 1-844-792-3645. A listen-only live webcast of the call will be available at www.fcbanking.com/investorrelations. A replay of today's call will also be available for 30 days following the conclusion of the call by dialing 1-877-344-7529 and entering the conference ID 10094062.

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