United Community Banks Inc. and North Carolina-based Four Oaks Fincorp Inc. have signed a definitive agreement for United to acquire Four Oaks. The deal will be for common stock and cash and it valued at approximately $124 million based on share closing prices as of June 23.
Both boards of directors have approved the transaction and it is expected to close in the fourth quarter, according to a news release.
It marks the second transaction announced by United Community since April. The bank announced an all-stock transaction to purchase HCSB Financial Corp. The value of that deal is estimated at $66 million and moves United Community into the Myrtle Beach-Conway area of the state.
Four Oaks Fincorp Inc., the parent company to Four Oaks Bank & Trust Co., has 14 banking offices primarily in the Raleigh, N.C. area. They also have loan offices in Raleigh and Apex and banking offices in Dunn and Wallace, N.C. United Community Bank is based in Blairsville, Ga. and has other corporate offices in Greenville.
“Four Oaks provides a strong customer base and an excellent springboard for additional growth in metropolitan Raleigh,” said Jimmy Tallent, chairman and CEO of United Community Banks Inc., in the release. “It will also greatly assist us in attracting strong, in-market bankers to grow in this new market area for United. With a number of merger transactions taking place across North Carolina, and in the Raleigh MSA in particular, we are confident in the opportunities such market disruption will offer.”
Under the terms of the acquisition, Four Oaks will “receive merger consideration” of 90% United Community common stock and 10% cash, or $1.90 per share of Four Oaks. Based on the June 23 closing price of United Community stock — $26.48 per share — the transaction is valued at approximately $124 million.
United officials said the transaction “is expected to be less than 1% dilutive to United’s tangible book value per share.”
"We are especially pleased to join forces with a 105-year-old, highly-respected community bank with a tremendous core deposit and customer base. Four Oaks' commitment to outstanding customer and community service is well aligned with our own, making this a great cultural fit,” Tallent said. “The combined franchise will be well positioned for growth and success and we will be focused on investing in additional lending resources to take advantage of this great opportunity.”
As of March 31, Four Oaks had $737 million in assets, including $513 million in loans and $560 million in deposits.
"Four Oaks shareholders will be rewarded through the superior financial performance of United and Four Oaks customers will find that they share our focus on outstanding personalized service,” said David Rupp, Four Oaks CEO, in the release. “Together, we will leverage the new resources and products available through United Community Bank to expand relationships and continue to grow in North Carolina.”
The acquisition is subject to regulatory approvals and the approval of Four Oaks’ shareholders.
Banks Street Partners LLP was financial advisor to United while Troutman Sanders LLP was United’s legal adviser. Four Oaks was advised financially by Sandler O’Neill + Partners LP and legally by Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan LLP.