KBW Downgrades Your Community Bankshares To Market Perform

KBW has downgraded Your Community Bankshares Inc YCB to Market Perform from Outperform after the company agreed to sell itself to WesBanco Inc WSBC for $39.05 per share or $221 million in a stock and cash deal.

"With cost saves from the FFKY deal realized (the deal nearly doubled its total size in early 2015), preferred gone, higher profitability (1 percent ROA, 12 percent ROTCE) and a cleaner balance sheet (0.4 percent NPAs to loans and OREO), YCB has clearly come a long way in a short period of time," analyst Frank Barlow explained.

Barlow noted the deal value represents 13.7x his 2016 EPS estimate, with the one-day premium at 16 percent and core deposit premium of 9 percent. The deal is expected to close in the third or fourth quarter of 2016.

Related Link: Keefe, Bruyette & Woods Downgrades Your Community Bankshares To Market Perform, Raises PT To $39.50

"While we believe the premium is well deserved, we're also glad to see the nice EPS accretion and reasonable TBVPS earnback period for WSBC as well," Barlow added.

The analyst raised his price target to $39.50 from $37, while his 2016/2017 EPS estimates remain unchanged at $2.85/$3.06.

"Together the combined franchise will have nearly $10 billion in asssets and will be well-positioned as one of the larger, more dominate players in its markets," Barlow highlighted.

Shares of Your Community Bankshares closed Monday's regular trading at $37.40, and were trading slightly up in the first thirty minutes of Tuesday's regular trading session, at $37.50.