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Peoples Bancorp Inc. ("Peoples") (NASDAQ:PEBO) and Limestone Bancorp, Inc. ("Limestone") (NASDAQ:LMST), jointly announced today the signing of a definitive agreement and plan of merger (the "Merger Agreement") pursuant to which Peoples will acquire, in an all-stock merger, Limestone, a bank holding company headquartered in Louisville, Kentucky, and the parent company of Limestone Bank, Inc. ("Limestone Bank"). Under the terms of the Merger Agreement, Limestone will merge with and into Peoples (the "Merger"), and Limestone Bank will subsequently merge with and into Peoples' wholly owned subsidiary, Peoples Bank, in a transaction valued at approximately $208.2 million.
Upon completion of the Merger, the combined company will have approximately $8.5 billion in total assets, $5.7 billion in total loans and $7.1 billion in total deposits with 150 locations in Ohio, West Virginia, Kentucky, Maryland, Virginia and Washington, D.C.
Limestone, through its community bank subsidiary and 226 associates, operates 20 branches in 14 counties in Kentucky. As of September 30, 2022, Limestone had, on a consolidated basis, $1.5 billion in total assets, which included $1.1 billion in total net loans, and $1.2 billion in total deposits.
"We are excited about our partnership with Limestone and our entrance into strategically important markets in Kentucky. We view Limestone's corporate culture and philosophy as very similar to our own and have been impressed with what John Taylor and his team have been able to accomplish," said Chuck Sulerzyski, President and Chief Executive Officer of Peoples. "Over the years we have expanded our presence in Kentucky to 25 branches, with Limestone adding an additional 20 branches to our Kentucky footprint. We look forward to welcoming Limestone shareholders, employees and customers to become part of the Peoples team, and we are ecstatic to offer additional locations to new and existing Peoples Bank clients."
John Taylor, President and Chief Executive Officer of Limestone commented, "Peoples is an outstanding organization with exceptional leadership. Our shareholders, customers and employees will benefit from Peoples' track record of profitable growth and successfully executing acquisitions, and the opportunities this merger of our banks offers. We are excited about Peoples' expansive suite of products, which will provide us the ability to deliver new products and services, including insurance and investment products, to our valued customers in the communities we serve. Peoples' community banking model, culture and commitment to high-quality customer service makes Peoples an excellent partner for Limestone."
According to the terms of the Merger Agreement, which has been unanimously approved by the Boards of Directors of both companies, shareholders of Limestone will receive 0.90 shares of Peoples common stock for each share of Limestone common stock, and the Merger is expected to qualify as a tax-free reorganization for Limestone shareholders. Based on Peoples' closing price of $30.28 per share as of October 21, 2022, the aggregate deal value is approximately $208.2 million, or $27.25 per share. The transaction is expected to be immediately accretive to Peoples' estimated earnings before one-time costs, with a tangible book value earn back of approximately 2.8 years (inclusive of interest rate marks), and an internal rate of return in excess of 20%.
The acquisition is expected to close during the second quarter of 2023, subject to the satisfaction of customary closing conditions, including regulatory approvals and the approval of the shareholders of Peoples and Limestone.
Peoples was advised by Raymond James & Associates, Inc. and the law firm of Dinsmore & Shohl LLP. Limestone was advised by Piper Sandler & Co. and the law firm of Wyatt, Tarrant & Combs, LLP.
