United Community Banks Inc. of Blairsville, Ga.,
"This merger completes that circle, filling in a very important gap in one of the fastest-growing metropolitan areas in the country," Jimmy Tallent, United's chief executive and president, said during a conference call with analysts.
The $7.1 billion-asset United agreed to pay $217 million for First Bank of Lawrenceville, Ga., or 3.2 times tangible book value.
"It does look expensive, but you'd have to go a long way to find a bank as profitable as this one," said James Schutz, an analyst at Sterne, Agee & Leach Inc. in Birmingham, Ala.
Gwinnett Commercial Group Inc., First Bank's holding company, has had impressive earnings growth throughout its six years. Last year its profit rose 50%, to $11.9 million.
"When you look at yearend 2006, they had a return on assets of 1.94%, return on equity over 17%, a net interest margin of over 5%, and an efficiency ratio under 35%," Mr. Tallent said. The performance ratios are "the best I've ever seen," he said.
More than 60% of First Bank's $583 million of deposits pay low interest rates. "This clearly illustrates that this team of bankers is committed to customer relationships, not transactions," Mr. Tallent said.
United's 88 branches are in Georgia, Tennessee, and North Carolina. First Bank's five branches are in three Atlanta markets that would be new markets for United. Gwinnett County, where First Bank is headquartered, is perhaps the most attractive of the three.
Gwinnett County's 2006 median household income was nearly $77,000, versus $47,400 for the Southeast as a whole, United said. Its population is projected to grow 26.5% over the next five years, triple the rate for the region, it said.
"United has been interested for many, many years in expanding into one of the best markets in the entire country and that is Gwinnett County," Mr. Tallent said. "First Bank provides us with a strong entree into Gwinnett as well as north Fulton and a portion of DeKalb counties."
United Community entered the Atlanta area in 2000 by buying Independent Bancshares of Powder Springs, Ga., for $32 million. By acquiring First Bank, it would have 39 offices and $3 billion of assets in what Mr. Tallent called "the heart of the economic engine of the South."
Retaining First Bank's management staff is essential, he said, "because this is a very dynamic market that requires people that know the market, know how to operate a community bank, understand how to manage risk, and understand growing shareholder value."
First Bank's CEO, Glenn White, and its president, Steven Williams, would retain those roles at United, which has "locked up" 17 other First Bank employees, Mr. Tallent said.
Chris Marinac, an analyst with FIG Partners LLC in Atlanta, said Mr. Tallent's organization would weather any turnover caused by the First Bank deal.
"United Community has such a deep team that if there were to be turnover, I think that they can come right in and back-fill and not miss a beat," Mr. Marinac said. "And that's what's unique about the deal."
The First Bank deal is expected to close next quarter.
