PNC to buy New Jersey bank Yardville for $403 mln

Thu Jun 7, 2007 8:28am EDT

(New throughout)

NEW YORK, June 7 (Reuters) - PNC Financial Services Group Inc. (PNC.N), a large northeast U.S. regional bank, on Thursday said it agreed to buy Yardville National Bancorp YANB.O for $403 million to expand in affluent central New Jersey counties and in eastern Pennsylvania.

Pennsylvania's largest bank announced the purchase three months after paying $6 billion for Baltimore's Mercantile Bankshares Corp., becoming the 10th-largest U.S. bank.

Yardville shareholders will receive 0.2923 of a PNC share and $14 in cash for each of their shares. The terms value the company at $35 per share, a 2 percent discount to the stock's Wednesday closing price of $35.77 on the Nasdaq.

"The transaction results in leading deposit share in several very attractive counties in New Jersey," said PNC President Joseph Guyaux in a statement. He expected a 15 percent internal rate of return.

Pittsburgh-based PNC said the purchase will help it rank first in deposit share in three wealthy New Jersey counties: Hunterdon, Mercer and Somerset.

Yardville, based in Hamilton, New Jersey, ended March with $2.68 billion of assets, $2.06 billion of deposits and $2 billion of loans. It operated 33 branches in six New Jersey counties and Bucks County, Pennsylvania.

The transaction is expected to close early in the fourth quarter, pending shareholder and regulatory approvals, and add to PNC earnings per share in 2008. PNC expects a $27 million fourth-quarter charge.

Hovde Financial and the law firm Pepper Hamilton LLP advised Yardville. Citigroup and the law firm Wachtell Lipton Rosen & Katz advised PNC.

PNC shares closed Wednesday at $71.84 on the New York Stock Exchange.

((Reporting by Jonathan Stempel, editing by Martin Golan; Reuters Messaging: jon.stempel.reuters.com@reuters.net, 646 223 6317)) Keywords: YARDVILLE PNC/

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