NBC Capital Corp. in Starkville, Miss., is aggressively expanding outside its home state into faster-growing markets of the Southeast.
The $1.4 billion-asset company opened its first branch in the Birmingham, Ala., market last fall, and in the past month it has announced a plan to open a Nashville-area branch and deals for banks in Florida and Georgia.
Lewis F. Mallory Jr., NBC Capital's chairman and chief executive officer, said the expansion is "motivated by a desire to move into new growth markets."
Even before Hurricane Katrina leveled the Gulf Coast last summer, Mississippi had the nation's second-highest unemployment rate and ranked 37th in job growth, according to census data. By the end of the third quarter last year it had the highest unemployment rate in the nation and ranked 49th in job growth.
James Schutz, an analyst at Sterne, Agee & Leach in Birmingham, said he likes what NBC Capital is doing.
"There are some high-growth markets" in Mississippi, "but they are few and far between," he said.
Acquisitions are a big part of the strategy at NBC Capital, the parent of Cadence Bank.
On Tuesday it announced an agreement to buy the $76 million-asset Seasons Bancshares Inc. in Blairsville, Ga., near the Tennessee border, for $22 million in cash and stock. Five days earlier it announced it was buying the $132 million-asset SunCoast Bancorp Inc. in Sarasota, Fla., for about $35 million. Both deals are expected to close in the third quarter.
Mark Muth, an analyst with First Horizon National Corp.'s FTN Midwest Research Securities Corp. in Nashville, said that by buying Seasons, NBC Capital would be well positioned for further expansion in Georgia.
Under Georgia law, out-of-state banks cannot branch there unless they acquire a bank charter. After buying Seasons, NBC Capital "will be able to move down that corridor into metro Atlanta," Mr. Muth said. "It will be a great growth opportunity for them over the next several years."
Florida also does not let out-of-state banks branch there without a bank charter. Mr. Schutz said that on closing the SunCoast deal, NBC Capital will be in one of Florida's most dynamic areas.
"Those markets have just grown like crazy," he said. "So if you get a decent platform down there, you will see some decent loan growth."
Cadence Bank used to be National Bank of Commerce. NBC changed the banking subsidiary's name last fall because National Bank of Commerce and variations of it are common in names of Southeast banks and it wanted something unique.
NBC Capital is certainly not the only Mississippi-based banking company to cross state lines in search of growth in recent years. Eight others have acquired or announced plans to acquire banks in Tennessee, Alabama, Arkansas, and Louisiana since February 2004, according to SNL Financial LC of Charlottesville, Va.
Mr. Mallory would not say whether NBC Capital is looking at other acquisitions, but Mr. Schutz said the Seasons and SunCoast deals will not be its last.
Andrew W. Stapp, the vice president of research at Cohen Brothers & Co. in Philadelphia, said the two deals could be too much, too soon for a company NBC's size.
"I'm a little concerned that they are biting off more than they can chew," he said. Mr. Stapp said that he does not disapprove of the expansion, but "would have preferred to have seen them do it at a more measured pace."
Mr. Muth said he would be surprised if NBC Capital announced another deal this year. "They've got a young de novo in Birmingham, a de novo in Nashville that should open in the very near term, and add on top of that two acquisitions," he said. "That gives them a pretty full plate."
