February 20, 2013

Bank acquisition to create fifth-largest bank in S.C. in deposits

A $302 million deal will give SCBT Financial Corp. a bigger statewide presence and, its leaders say, will position the bank for future growth.

A $302 million deal will give SCBT Financial Corp. a bigger statewide presence and, its leaders say, will position the bank for future growth.

SCBT said Wednesday it will acquire First Financial Holdings, owner of Charleston’s second-biggest bank, in a deal that is likely to bring up to 1,500 jobs to the Midlands and the Lowcountry over the next five to seven years.

The banks together have 24 branches in Horry and Georgetown counties. They are either the dominant banking presence or a significant one in the Horry and Georgetown markets, their CEOs said Wednesday afternoon, and only a few of the Horry and Georgetown branches share similar locations and may be combined.

The combined bank will be headquartered in Columbia. When the deal closes in the fall, it will be the fifth largest operating bank in South Carolina, based on deposits, and the 14th largest in the Southeast, officials said. The deal also will give SCBT a strong presence along the S.C. coast – an area where it had been lacking.

“You put the two (banks) together and we really have an incredible overall presence,” said SCBT chief executive officer Robert Hill, in “markets that have a robust economic environment to help drive our future down the road. They just complement each other almost market by market.”

The banks’ operations now stretch from Savannah, Ga., to Wilmington, N.C., and the two CEOs see the merged business as being a dominant regional bank.

“This is a situation where one and one equals three,” Hall said.

Hill said the banks now are known as local, community banks. The two together also will have the size to service both small and large businesses as well as their individual customers.

SCBT has been in an aggressive growth mode since the worst recession in a lifetime devastated the banking industry nationwide. The nearly 80-year-old bank has been snapping up financial institutions around South Carolina and Georgia, buying six banks since 2010.

In a conference call with financial analysts Wednesday, Hill said the bank’s buying spree will be put on hold for the rest of 2013 and most of 2014 as it integrates its latest merger and, after that, likely will shift outside the state.

“In the latter part of (2014), if things are going well … then we will begin to plan for the next steps,” he said. “The odds of us doing additional acquisitions in South Carolina would not be really high … maybe one or two (deals). The bulk of the opportunity would come from outside of South Carolina.”

With the newest merger, SCBT is in the top 5 for market share in South Carolina’s major markets, Hill told The State after the analyst call. Looking forward, SCBT wants to grow its market share in Georgia and North Carolina, where it already has a presence, and possibly enter Virginia, he said.

“We feel like having a meaningful presence in every market is important,” Hill said.

Wednesday’s merger will result in a combined 148 S.C. bank branches, the banks said, with only about 10 percent overlapping. That means the banks would expect around 15 branches that are in close proximity eventually to close. Most of the job losses as a result of the closures likely could be handled through attrition, Hill said.

But as the bank grows its assets to a projected $20 billion from its current $8.3 billion over the next five to seven years, more support jobs will be added, Hill said. He anticipates the bank will add 1,000 to 1,500 jobs at support centers in Charleston, Columbia and Orangeburg, where SCBT has its roots.

The two banks have been talking about a merger since 2009, Hill said, but held off amid economic uncertainty and tumult in the banking industry.

Several years ago, First Financial brought in Wayne Hall as chief executive, who made enhancements to the bank and helped stabilize it, Hill said.

“Today just made sense,” Hall said Wednesday. “We were back very strong with seven or eight straight quarters of (positive) earnings.”

The banks will call their parent holding company First Financial Holdings but have not decided how they will brand bank branches, Hill said. The bank expects to roll out a new branding strategy sometime in 2014, he said.

“In the short term, it will be business as usual,” Hill said. “Really nothing is going to change until next year. ... Our brand structure today is just not something that can be maneuvered through multiple states,” where SCBT operates under the local name of banks that it has acquired.

The merged companies said they will have about $8.3 billion in total assets, $6.9 billion in total deposits and $6.1 billion in total loans. The merger has been approved unanimously by the boards of the two banks but still needs regulatory and shareholder approval.

First Financial shareholders will receive 0.4237 shares of SCBT common stock for each share of First Financial common stock that they own. Based on SCBT’s closing stock price of $43.18 on Tuesday, the deal is worth $302.4 million with 16.5 million shares of First Financial common stock outstanding.

Hall will become president of SCBT Financial Corp., the banks said. Hill will remain chief executive of SCBT.

SCBT chairman Robert Horger will remain in that position. SCBT will add five First Financial directors to its 18-member board. First Financial chairwoman Paula Harper Bethea will become vice chair of the board.

The Sun News reporter Steve Jones contributed to this report.

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