United Community Banks in Blairsville, Ga., has agreed to buy Tidelands Bancshares in Mount Pleasant, S.C.
The $9.6 billion-asset United said in a press release Monday that it would pay $2.2 million in cash, or 52 cents a share, for the $466 million-asset Tidelands. United will also redeem preferred stock that Tidelands issued to the Treasury Department under the Troubled Asset Relief Program for $9 million, or a 56% discount.
The deal, expected to close in the third quarter, would set United up to cross over $10 billion in assets, where it would face mandatory stress testing and caps on interchange fees, among other things. United said in the release that doing so would cost it about 2 cents a share each quarter, with the earliest hit possible in the third quarter of 2017.
Tidelands is based in a suburb of Charleston, S.C. It also has branches in the South Carolina coastal communities of Myrtle Beach and Hilton Head. The company, founded in 2003, lost $1.4 million last year, based on data from the Federal Deposit Insurance Corp. It also lost roughly $38 million from 2008 through 2013.
Tidelands' noncurrent loans as a percentage of total loans stood at 2.38% at the end of last year after peaking at more than 9% in 2011.
For United, the acquisition "significantly accelerates our coastal South Carolina expansion strategy," Jimmy Tallent, United's chairman and chief executive, said in the release. He said the addition of Tidelands would bolster United's presence in Charleston, where it recently hired a team of five bankers that has produced about $85 million of new loans and commitments in the last five months.
United said it expects the deal to be accretive to its 2017 earnings. The company said it should take about two years to earn back the expected 1.5% dilution to its tangible book value.
United, which expects to incur about $5.7 million in pretax merger-related costs, said it plans to cut Tidelands' annual expenses by $5 million. United also said it would record a $16.3 million mark equal to 5% of Tidelands' gross loans and a $6.4 million mark equal to half of the company's other real estate owned.
Sandler O'Neill and Troutman Sanders advised United. Banks Street Partners and Nelson Mullins Riley & Scarborough advised Tidelands.