Bank M&A in the Southeast has been hotter than blue blazes.

The region is leading the nation in several key M&A metrics, accounting for a third of all bank mergers and more than half of total deal volume at midyear, based on data compiled by Keefe, Bruyette & Woods and S&P Global Market Intelligence.

Those trends should continue for the foreseeable future as an improved economy, promising demographics and a long list of well-run acquirers fuel more consolidation, industry experts said. A new class of buyers has also emerged, keen on scooping up community banks that might be too small to entice bigger acquirers.

“The Southeast has strong M&A because of the ongoing growth that has been happening for 20 years through the different cycles,” said Tom Rudkin, a principal at DD&F Consulting. “The region’s economic strengths attract more banks from outside of the region that aren’t experiencing the same kind of growth.”

Overall, 37 banks in the Southeast have agreed to sell themselves through June 30, with the aggregate deal volume topping $9.5 billion. The region also boasted the highest average core deposit premium, at 13.5%, and a healthy average price to tangible book value of 190%, according to a note that FIG Partners issued in late June.

Much of the consolidation is happening in North Carolina. Eight banks in the state, including Capital Bank Financial, Park Sterling and Paragon Commercial Bank, agreed to sell themselves earlier this year. Six deals have been announced in Florida, while four acquisitions involved sellers in Georgia.

A surge in deals shows that the Southeast has rebounded after being hard hit during the financial crisis, industry experts said. The Federal Deposit Insurance Corp.’s Atlanta region had 171 bank failures from 2008 to 2013.

Unemployment peaked at 9.5% in late 2009 and early 2010, based on Bureau of Labor data for territory stretching from Delaware to Florida. The area’s unemployment rate in May was 4.6%, slightly higher than the 4.3% national rate.

It’s unlikely that the region’s past woes will scare off outsiders looking to expand, experts said. The economy has diversified since the financial crisis, with tourism, technology, health care and other professional services rapidly growing. Some states, such as South Carolina, have added plenty of good manufacturing jobs.

“I don’t see anything slowing down,” said Lee Burrows, CEO of Banks Street Partners, an investment bank in Atlanta. “Currencies are strong for buyers and most buyers are still interested in continuing to grow. There are new … buyers every day replacing some of the companies that have been acquired.”

Many buyers have used acquisitions to become regional players, including Iberiabank in Lafayette, La.; Pinnacle Financial Partners in Nashville, Tenn.; Renasant in Tupelo, Miss.; South State in Columbia, S.C.; and United Community Banks in Blairsville, Ga. Many of those banks have developed reputations for having solid management teams, strong currencies and growth potential, industry observers said.

United Community Banks, which recently agreed to buy Four Oaks Fincorp in North Carolina, sees “a window of opportunity” to take advantage of regional consolidation, said Lynn Harton, the company’s president and chief operating officer. Factors such as squeezed margins, declining overdraft-fee income and heightened competition for commercial loans are pushing more banks to sell, he said.

“There is still some runway on deals,” Harton said, though he noted that the window will eventually close when the best banks have been bought.

There could be some “ebb and flow” of deal activity, said Peyton Green, an analyst at Piper Jaffray, adding that some of the Southeast’s biggest acquirers may need time to digest a recent spate of large deals.

Still, a number of smaller banks are on the hunt for acquisitions.

Carolina Financial in Charleston, S.C., which has completed two deals in the past two years, recently agreed to buy First South Bancorp in Washington, N.C.

Acquisitions are part of the $2.2 billion-asset Carolina First’s strategy to generate “real value enhancement” by reaching $5 billion to $7 billion in assets, said Jerry Rexroad, the company’s president and CEO.

“There are other banks that share our culture and we fit nicely together to form a more formidable community bank,” Rexroad said. “Combining the culture and the performance of other banks with ours has been successful for us.”

Piedmont Bancorp in Norcross, Ga., announced its first acquisition in March, agreeing to buy Mountain Valley Bancshares in Cleveland, Ga. The $567 million-asset Piedmont, which had been considering a deal for a while, looked at various opportunities but couldn’t find the right fit to justify the risk, said Monty Watson, the company’s chairman and CEO.

“I think to overcome the risks of an acquisition you have to feel strongly there is more than just one compelling business reason,” Watson said. “There needs to be a capital benefit. There needs to be a real operating benefit. Cultures and people need to align closely. If any of those things feel risky, you might lose people in particular, and I couldn’t afford to do that. If we bought something and then lost a team you could find yourself buying something and having nothing left.”

More banks could make those determinations, which could continue to spur more Southeastern consolidation, industry experts said. Creative thinking could also play a role.

“Smaller sellers have to adjust their thinking,” said Jonathan Hightower, a lawyer at Bryan Cave in Atlanta. “They’re used to going to certain banks and having them respond, but at this point those buyers have reached a maturity level. Smaller banks have to reach out to players they maybe haven’t thought of before.”

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