Small. Cheap. Safe. Accretive.

Those four words sum up a $28 million bank merger in South Carolina on Tuesday, and may define most deals on the horizon as anxious buyers navigate the most tepid bank M&A market in years.

The states' biggest hometown bank — the $4 billion-asset SCBT Financial Corp., of Columbia — announced a deal Tuesday for a troubled, seven-branch lender upstate that pointedly aims to please acquisition-wary investors.

The all-stock deal for the $550 million-asset Peoples Bancorporation Inc. of Easley strives — and for now succeeds — to avoid exposing SCBT to a so-called buyer's curse, or nickname for the steep sell-off plaguing acquirers this year.

Robert R. Hill Jr., SCBT's president and CEO, did his best to sell the merits of his company's fourth acquisition in two years (the other three involved failed banks).

"We have poured through a lot of deals over the last few years and none really hit all of the boxes that we check off," Hill said in a Tuesday conference call with analysts and investors.

His pitch came down to size. SCBT, with 70 branches, is fairly big. The seller is tiny; it has eight branches in the northern part of South Carolina, where SCBT only has five offices. The price is low, but the returns could be sizable.

SCBT is buying Peoples for 62% the value of the seller's tangible book, or assets like loans and securities excluding goodwill and other intangibles. That would make it the lowest-priced bank and thrift deal to be publicly announced in five months, according to data from KBW Inc.'s Keefe, Bruyette & Woods Inc.

SCBT pegs the deal's internal rate of return at more than 20%, with plans to cut about a third of Peoples' costs without closing any branches. Such savings, paired with revenue gains from selling new loans and services through a stronger pipeline in the richest part of the state, should offset the deal's two main financial drags: the $13.2 million in Troubled Asset Relief Program funds that SCBT intends to repay for Peoples and a $34 million markdown SCBT will book on Peoples' bad home and business property loans.

Dilution to shareholders and capital should be minimal because SCBT does not need to raise money to fund the deal. In two years, SCBT expects to earn back enough money to replace an expected 2% hit to its tangible book value from absorbing Peoples' $300 million in loans and $472 million in deposits.

"It has minimal impact on capital levels, which just allows us to have capacity for other acquisitions in the near future," Hill said.

Hill framed the acquisition as a low-risk deal, highlighting SCBT's record of making money and doing deals in South Carolina. Peoples has a loan book SCBT understands: the banks have similarly heavy concentrations in construction and owner-occupied real estate, though Peoples is more heavily involved in one-to-four family mortgages and loans to businesses that rent space to others.

The banks have discussed a merger for three years, which gave SCBT ample time for due diligence, having first scoured Peoples' loan book in 2009. "We know many of their customers, we know that market," Hill said.

Jeff Davis, an analyst at Guggenheim Securities LLC, said reasonably priced deals involving small bank targets will likely dominate bank consolidation in 2012. The vast majority of banks in the country are small, Davis said, and more of them are coming to the same conclusion that Peoples did: doing a share swap with a bigger company at a cheap price could result in a big payoff down the line.

"You get your dividend back, and if the world doesn't end and the buyer continues to executive you are getting into the stock at a moderate multiple," Davis said.

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