By Ritchie Starnes, News Editor
Thursday, December 19, 2013 —
Bank of North Carolina is set to buy Home Savings Bank of Albemarle for $23.7 million in cash and stock options, the financial institutions announced Wednesday.
The deal calls for BNC to pay Home Savings stockholders $8.85 per share. As a result, BNC will acquire two Home Savings branch-es in Albemarle, one in Locust and one in Oakboro.
“This all came out of the blue,” said Ron Swanner, president and chief executive officer at South Street Financial Corp., the parent company for Home Savings.
“The Bank of North Carolina came to see us. We have a responsibility to our shareholders to listen.”
Home Savings’ board of directors voted in favor of the buyout.
“We felt like we could increase our shareholders’ value,” said Doug Stokes, a board member for the last 25 years.
“That is our primary responsibility — to maximize the shareholders’ value.”
Next, shareholders will vote via a mailed proxy in February, Swanner said. If approved, the closing will take place in April.
BNC will acquire the private bank’s portfolio of $195.5 million in loans and $238.1 million in deposits. Home Savings records $274.1 million in assets, serving consumers, professionals and small businesses in the area.
At the time of closing, BNC will have approximately $865 million in loans and $725 million in deposits for the Charlotte region.
Swanner said the sell to BNC is a great deal for everyone involved.
“Our shareholders will be getting a great return on their investment,” Swanner said.
“Our customers will have access to a large bank with more services. Our employees will have more opportunities for advancement.”
Because BNC averages as many as 35,000 trades daily, compared to Home Savings’ 200, the selling shareholders will benefit from greater stock liquidity, Swanner said.
BNC, which also announced Wednesday the acquisition of the Harrington Bank of the Chapel Hill area, continued its recent trend of buying smaller banks in North Carolina en route to becoming one of the fastest growing banks in the Southeast.
“Our companies share the same core values of trust and service that are critical to operating a successful, vibrant organization,” Rick Callicutt, president and CEO of BNC, said in a press release.
“We look forward to the opportunity to bring a wide range of financial services to the customers and citizens of Albemarle, Oakboro and Locust.”
In spite of the economic crisis that plagued numerous financial institutions, Home Savings managed to show profits throughout the nation’s fiscal meltdown.
“We made money every month. We never lost money,” Swanner said.
“This was not a distress sale.”
While Home Savings weathered a tough economy over recent years, the banking landscape has changed of late to make it more difficult for smaller banks to post profits.
“There’s a lot of pressure on small, community banks to survive,” said Banks Garrison, Home Savings’ board member.
“We felt like we had to do something. It’s a difficult climate to cope with a lot of the regulations that are in the industry.”
The sell will lead to the dissolving of Home Savings’ board of directors, since BNC does not use local or advisory boards, Swanner said.
Board members are less concerned about losing a local institution.
“It’s not locally owned anymore,” Stokes said.
“It’s owned by the shareholders who are all over the United States.
“The bank isn’t going anywhere.
“It will still serve local customers by local employees. The only thing that will change is the name on the door.”
Swanner, an Albemarle native, said he plans to retire after serving the 102-year-old bank for 40 years. He will serve as a banking consultant.
David Smith, also of Albemarle, will assume the executive duties as chief operating officer for the county’s branches.
In recent years, Home Savings evolved into a private bank, which requires less accountability by the Securities and Exchange Commission, Swanner said.
“We did it to save money,” said Swanner, adding that the change led to a significant decrease in legal fees.
Home Savings has approximately 230 shareholders.
Terms of the agreement call for the shareholders to have the option of cash for their stock, or between 0.6000 and 0.6941 shares of BNC common stock. Eighty percent of the total consideration received by South Street common shareholders will be BNC common stock and the remainder will be cash.
Call Ritchie Starnes at (704) 982-2121 ext. 28 or email firstname.lastname@example.org.