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Will FNB Corporation Gain More Following Yadkin Deal Nod?

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F.N.B. Corporation (FNB - Free Report) is a step closer to acquire Yadkin Financial Corporation . The shareholders of both the companies approved the merger deal last week. Additionally, the deal has been approved by the North Carolina Commissioner of Banks.

The $1.4 billion stock deal is expected to close in the first quarter of 2017. The shareholders of Yadkin will be receiving 2.16 shares of FNB Corporation for each share of Yadkin.

The deal is anticipated to be accretive to FNB Corporation’s GAAP earnings by nearly 5.5% in 2018 and continue growing thereafter. Further, the deal will lead to cost synergies as well.

For FNB Corporation, the deal is in sync with its strategy to expand market share through acquisitions. Over the years, the company completed several branch/bank acquisitions. Among the notable branch acquisition deals are 17 Fifth Third Bancorp (FITB - Free Report) branches and five Bank of America Corporation (BAC - Free Report) branches in Pennsylvania.

In addition, FNB Corporation has acquired many banks. In 2016, the company closed the deal to acquire Metro Bancorp, Inc. for $474 million. Notably, since 2004, it has acquired 11 banks, thus significantly expanding its footprint.

Since the announcement of the Yadkin deal on Jul 21, the shares of both FNB Corporation and Yadkin jumped significantly. FNB Corporation shares increased 24.2%, while Yadkin surged 35.5%. Notably, both the companies underperformed the Zacks categorized Southeast Banks industry’s gain of 42.1%, over the same time period.



Despite this substantial surge in shares, FNB Corporation stock seems underpriced on the basis of Price-to-Earnings (P/E) and Price-to-Book (P/B) ratios. FNB Corporation has a P/E ratio of 17.98 compared with the industry average of 19.95. Also, its P/B ratio of 1.39 is below the industry average of 1.44.

Currently, FNB Corporation carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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