UPDATE 2-Integra Bank to buy Peoples Community for $85.6 mln

(Adds details from conference call, slide presentation, share movement)

Sept 13 (Reuters) - Integra Bank Corp IBNK.O said it has agreed to acquire loss-making Peoples Community Bancorp Inc PCBI.O in a cash and stock deal valued at $85.6 million to expand its presence in the Greater Cincinnati market.

Under the deal, each share of Peoples stock will be converted into the right to receive 0.6175 shares of Integra and $6.30 in cash, the companies said in a statement.

Based on Integra's Wednesday close of $18.45, the offer is equivalent to about $17.69 a share. This represents a premium of about 10 percent to Peoples Community's Wednesday close of $16.10.

Merger related cost of 5 cents a share in 2008 will offset the expected accretion of 1 cent to 2 cents a share to Integra's 2008 earnings, the company said in a conference call.

The deal will, however, add 3 cents to 5 cents a share to its 2009 earnings.

The deal structure provides adequate credit protection and enhances Integra's branch presence in Cincinnati, Chief Executive Michael Vea said in the call.

The 65 percent stock and 35 percent cash deal is expected to close in the first quarter of 2008. The combined entity will be called Integra Bank NA.

Shares of Integra fell about 2 percent to $18.09, while Peoples Community's shares rose over 7 percent to $17.35 in morning trade on the Nasdaq. (Reporting by Swagata Gupta, Sweta Singh in Bangalore)