Blairsville, Ga.-based United Community Banks plans to buy Mt. Pleasant-based Tidelands Bank for $2.2 million, which will be paired with a $9 million federal share buyback created in the depths of the financial crisis. The deal – expected to close in the third quarter – will include seven branches and could add $466 million in assets to United Community Bank. This “increases the likelihood” of United Community Bank exceeding the $10 billion asset threshold, which comes with significant regulatory changes, according to leaders.
The deal also follows a string of purchases by United into new markets, including a $240.5 million purchase of Greenville-based The Palmetto Bank. The acquisition “significantly accelerates” United’s strategy to expand in the Lowcountry, stated the company’s chairman and CEO Jimmy Tallent, who said he expects future regional expansions.
“The recession took its toll on Tidelands, as it did to so many other community banks in the Southeast,” he stated. “Despite their challenges, Tidelands’ bankers were able to build a solid franchise in outstanding markets with loyal customers and a core deposit base.”
The purchase could push United Community Bank past the $10 billion asset threshold, stated United’s president and COO Lynn Harton. The effect could be felt as early as the third quarter of 2017, and could bring earnings per share down by 2 cents per quarter due to increased regulatory costs.
Tidelands’ common shareholders will receive cash equal to $0.52 per share, or an aggregate of approximately $2.2 million, according to a news release. United also inked a deal with the U.S. Department of Treasury to redeem all of Tidelands’ fixed-rate cumulative preferred stock. The stock was issued under the Treasury’s Capital Purchase Program, created to stabilize the financial system with additional capital to banks.
The repurchase will be $9 million in aggregate, which represents a 56 percent discount.
Tallent said the purchase follows United’s decision to establish a Charleston office last fall, who “have produced approximately $85 million of new loans and commitments within the last five months.”
Tidelands operates four branches in Charleston, two in Myrtle Beach, and one in Hilton Head. As of Dec. 31, 2015, Tidelands reported approximately $466 million in assets, $421 million in deposits and $325 million in loans.
“This acquisition is consistent with our long-term strategy of targeting attractive markets that we know well, identifying a great team of bankers to deliver the United experience, and then either building brick-and-mortar around them or finding an attractive partner to accelerate their success,” said Harton. “In this case, Tidelands brings meaningful market share, a great branch distribution system, and a talented team who successfully managed the bank during challenging times.”
Based in Blairsville, Ga., United Community Banks Inc. is a $9.6 billion-asset bank holding company in the Southeast. Subsidiary United Community Bank operates 134 offices in Georgia, North Carolina, South Carolina and Tennessee.