UPDATE: Integrity price looks high, but S&T CEO says company is ‘very comfortable’ with it

Integrity Bank CEO and President Jim Gibson said of the merger, "We believe now this will just be Integrity Bank on steroids."-(File)

The $155 million price tag S&T Bancorp Inc. paid for Integrity Bancshares Inc. of Camp Hill admittedly looks a little high, S&T President and CEO Todd Brice said.

But on a conference call with investors Thursday morning, the Indiana, Pa.-based bank executive said he was “very comfortable” with the price.

“We like the price,” Brice said during the call. “When you look at the price to book, it may appear a little high. But when you put the multiples in mind, I’m very comfortable.”

S&T paid $155 million, or $52.50 per stock share. Integrity started the day trading at $27 but had skyrocketed to $50.50 by 10:45 a.m. on the strength of the merger announcement.

“It was a very attractive price for us,” Brice said later in the call. “I hope it works for (Integrity President and CEO) Jim (Gibson) and his shareholders as well.”

The two sides announced the merger Thursday morning to form a $5.8 billion asset bank by the time the deal closes in the first quarter of 2015. The boards of directors of both have approved the merger.

Gibson said the high price S&T paid and the concessions Integrity Bank received proved how much the bank’s performance has turned heads in the banking community.

“Integrity Bank was not for sale,” Integrity CEO and President Jim Gibson said this morning after the merger announcement. “We were (highly ranked) in our category in the nation, and a lot of people noticed that. We always have to look at our shareholders, and we believe this is the second-highest price paid for a bank since 2008.”

Gibson said the philosophies of the two banks match, that Integrity will keep its executive team intact and S&T isn’t sending any of its managers to Central Pennsylvania.

“We believe now this will just be Integrity Bank on steroids,” he said. “The power they give us is a power we’ve never had before.”

Gibson will join S&T’s board of directors. Four of Integrity’s top executives — including Chief Operating Officer Thomas Sposito, who Gibson has said was brought to Integrity to someday take over the bank’s CEO job — have already entered into two-and-a-half-year employment agreements with S&T.

Even more telling of Integrity’s power in the deal, it will keep its name and now be known as “Integrity Bank — A Division of S&T Bank,” which will “continue to build upon Integrity Bank’s strong growth momentum,” according to an S&T news release.

Gibson said the name will last at least three years.

The one thing Integrity couldn’t avoid, however, is staff reduction. About 30 positions will be eliminated from the pool of 130 employees, Gibson said. But with a new branch opening at the West Manchester Mall in York County in 2015 and another in the East York area in 2016, Gibson said he hopes only between 10 and 15 employees will lose their jobs.

“Integrity is the best performing bank in southcentral Pennsylvania and is well positioned in a high-growth market,” said Todd Brice, president and CEO of S&T Bancorp. “They have a seasoned staff and experienced management team and we’re really looking forward to partnering with them and working together to expand our presence in southcentral Pennsylvania.”

Shareholders of Integrity can choose to receive $52.50 per share or 2.0627 shares of S&T Bancorp common stock for each share of Integrity they own.

Integrity had been making a name for itself over the last few years. It announced a 61 percent jump in net income in its third-quarter report compared to last year, it moved into the top 10 in deposit market share in the midstate in September, and in June, it was ranked one of the best banks in the nation on average equity return.

The merger marks the first move into Central Pennsylvania for S&T, which has retail branches in 12 Pennsylvania counties. The closest it came previously was State College.

Integrity trades on the OTC market at the ticker symbol ITBC. It operates eight branches in Cumberland, Dauphin, Lancaster and York counties.

S&T Bancorp Inc. stock trades on the NASDAQ market under the symbol STBA.

Michael Sadowski

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