RBC Centura Bank of Raleigh emerged as the big winner Wednesday, buying 39 of the 52 branches AmSouth Bancorp. was required to sell to get government clearance for its deal with Regions Financial Corp.
The Royal Bank of Canada subsidiary's new branches are all in Alabama: Mobile, Montgomery, Selma, Tuscaloosa, Huntsville, and Decatur. The terms of the deal were not released, but RBC Centura is buying $2 billion of deposits and $1.5 billion of loans.
RBC Centura recently returned to the U.S. market for bank deals after a three-year hiatus. In August it agreed to buy the $1.8 billion-asset Flag Financial Corp. of Atlanta. The cash deal is valued at $456 million.
"Alabama is a strategic and logical extension of our current footprint and banking center network," said Scott Custer, the chief executive officer of RBC Centura. "Key Alabama markets closely resemble other diverse and growing markets in which RBC Centura has had a longtime presence and solid understanding."
The six Mississippi branches AmSouth had to shed, in Greenwood, Greenville, Clarksdale, and the Starkville area, are being bought by Citizens Bank of Russellville, Ala.
FirstBank of Lexington, Tenn., agreed to buy AmSouth's seven Tennessee branches in Crossville, Dayton, Fayetteville, Woodbury, Paris, Shelbyville, and Smithville.
"Each of these companies shares our commitment to excellent customer service, and we will work closely to ensure a smooth transition for our customers. I'm also pleased that each has agreed to offer positions to the AmSouth associates in these branches. This will provide continuity and help make this a seamless process," said Dowd Ritter, the chairman, president, and chief executive officer of AmSouth.
Mobile was considered the trophy market among the divestitures required by the late May deal between AmSouth and Regions.
The Justice Department required the Birmingham, Ala., companies to sell 52 branches with $2.7 billion of deposits in markets where they overlap, including Jackson, Miss.; Cannon, Tenn.; Huntsville, Ala.; and Montgomery, Ala.
But the divestiture order will have the most profound impact in Mobile, a $5.3 billion-deposit market where the companies are expected to sell 22 branches with more than $1 billion of deposits.
"That's roughly 20% of the market up for grabs," said Jeff Davis, an analyst at First Horizon National Corp.'s FTN Midwest Securities Corp. "In that market, you will never have that potential for market-share movement again."
The opportunity in Mobile, nestled between Florida and Mississippi on the Gulf Coast, attracted scores of banks, analysts said. "You have to assume that all" the regional players "are at least taking a look at it," said Mark Muth, another FTN analyst.
Regions cut its deal with the Justice Department on Oct. 19, after the government raised concerns that the $10 billion transaction would concentrate some markets and limit choices for consumers.
Mobile is the most affected market by far. According to an analysis by Keefe, Bruyette & Woods Inc., AmSouth will have to shed $1.06 billion of deposits in Mobile. The next-biggest divestiture is three times smaller - $346 million of deposits in Tuscaloosa, Ala.
James Schutz, an analyst with Sterne, Agee & Leach, said that "Mobile has kind of a tailwind behind it" in the aftermath of Hurricane Ivan in 2004 and Hurricane Katrina last year.
"There's a lot of rebuilding and a lot of economic activity," Mr. Schutz said. "It has become a more attractive market than it was, say, four years ago."
The $870 million-asset Citizens Bank currently has 24 branches in Alabama, Mississippi, and Tennessee.
FirstBank is the largest independently owned bank in Tennessee. After this acquisition it will have 43 locations and approximately $1.9 billion of assets.
The Regions-AmSouth transaction is expected to be completed early this month, and the branch sales are expected to be completed in the first quarter.
