Park Sterling Corporation (PSTB) in Charlotte, N.C., announced Monday that it is buying Citizens South Bank in Gastonia, N.C., in a deal that would instantly double its size.
The $1.1 billion-asset parent of Park Sterling Bank said it would pay $77 million in cash and stock for Citizens, the sole banking subsidiary of the $1.1 billion-asset Citizens South Banking Corporation (CSBC), excluding the exchange of $20.5 million Citizens received from the Treasury Department's Small Business Lending Fund.
The deal would combine one of North Carolina's newest banks with one of its oldest. Park Sterling was founded in 2006 and more than doubled its size late last year when it acquired Capitalbank in Greenwood, S.C. Citizens South was founded in 1904 and has 21 branches in the Carolinas and north Georgia.
Park Sterling said it would pay the equivalent of $7 per share for Citizens, which works out to a 40% premium over the Citizens' closing price Friday. Citizens' shares were up nearly 25% in early trading Monday, to $6.40.
Citizens has struggled with credit quality of late. The company reported a loss of $2.3 million last quarter, more than twice what it lost in the same quarter last year, following an internal loan review that increased its level of chargeoffs.
In a news release, Park Sterling's chief executive, James C. Cherry, said that the deal is a "culmination of extensive due diligence and thoughtful discussions.
"We believe this transformational partnership will be positive for our shareholders, customers, employees and communities. Citizens South's footprint is virtually a perfect fit with Park Sterling's," he said. "In combination, we will be the largest community banking franchise in the very desirable Charlotte-Gastonia market. In addition, our combined footprint will extend through the attractive Upstate region of South Carolina, including the high growth Greenville-Spartanburg corridor, into north Georgia."
Park Sterling said that Citizens Chairman and CEO Kim S. Price would become vice chairman of Park Sterling's board but would relinquish any executive responsibilities after the deal closes. The company said it would also donate $500,000 to Gastonia-area charities on behalf of Price and two other Citizens directors.
The sale is expected to close in the fourth quarter.
