United Community Banks in Greenville, South Carolina, plans to bolster its presence in South Florida, striking an all-stock deal to acquire First Miami Bancorp for $115.9 million.
United Community's pending deal for the $1 billion-asset First Miami, disclosed Monday afternoon, comes six weeks after the company completed
Headquartered in South Miami, First Miami is the holding company for the 70-year-old First National Bank of South Miami. United Community expects the deal to close in the third quarter.
United Community entered South Florida in 2020, after agreeing to acquire Three Shores Bancorp of Orlando for $180 million in cash and stock. Monday's deal would push United Community's footprint south into the lucrative, burgeoning Miami market, while boosting total Florida deposits to $2.2 billion. About 55% of those deposits would come from South Florida.
"We are extremely pleased to join forces with the First National Bank of South Miami to expand our presence in Miami," United Community Chairman and CEO Lynn Harton said in a press release Monday. "I know firsthand the strength and vibrancy of the Miami market from my past career experience."
Beyond compelling geography, United Community was attracted by First Miami's strong credit quality and solid core deposit base, Harton said. As of December 31, First Miami, which operates three branches, reported $867 million of deposits against loans of $594 million. Nonperforming assets represented 0.31% of total assets, while the company reported net recoveries in three of the past four years, including 2022.
The deal's $115.9 billion price tag amounts to 162% of First Miami's tangible book value. United Community is estimating cost savings of $7 million, equal to about 30% of First Miami's noninterest expense base. The deal should be 3% accretive to United Community's earnings in 2024.
According to Compass Point Analyst Laurie Havener Hunsicker, the price-to-tangible-book-value United Community is paying for First Miami is slightly higher than the 154% average buyers paid in both 2021 and 2020. The variance could be explained by the attractiveness of the Miami market, which holds $352 billion of deposits, according to United Community. The region's median household income of $66,700 is projected to grow by 11% over the next five years, the bank added.
United Community's deal for First Miami comes amid a challenging environment for bank merger-and-acquisition activity. According to Hunsicker, there were 168 bank and thrift deals announced in 2022, down from 206 in 2021. The 2022 deals were mostly smaller, with a cumulative value of $22.7 billion, down from $77 billion the year before. Prior to Monday, only a handful of "very small bank deals" had been announced, as 2023 merger-and-acquisition activity has gotten off to an "incredibly slow start," Hunsicker wrote in a research note last week.
At the same time, the Office of Comptroller of the Currency, Federal Reserve, Federal Deposit Insurance Corp. and Justice Department are reviewing their bank merger protocols, and officials have voiced differing views on issues surrounding merger reviews. Federal Reserve Board Gov. Michelle Bowman expressed concern Monday that regulatory
United Community anticipates issuing 3.5 million shares as part of the acquisition of First Miami. Most of those will go to the Wirtz family, First Miami's majority owner. The family will own about 2.4% of the pro forma company, according to United Community.
"The success of the bank since its founding over 70 years ago has far exceeded our expectations," First Miami Chairman and President W. Rockwell Wirtz said in the press release. "We are extremely proud of the company we have built together and believe that a partnership with United represents an excellent opportunity for us to continue to serve our customers at the highest level."
