High Point Bank in High Point, N.C., faced a decision all too familiar to other community banks: go big or go home.
The $851 million-asset privately held company chose the latter, agreeing in November to
The decision wasn't easy, though.
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BNC Bancorp in High Point, N.C., has agreed to buy a local rival, High Point Bank Corp., for $141.3 million.
November 16 -
Yadkin Financial revealed in a regulatory filing that merger talk is running rampant across the state. Yadkin agreed to merge with VantageSouth in January to create North Carolina's biggest community bank.
March 27 -
Swope Montgomery, the longtime CEO of BNC Bancorp in High Point, N.C., details his growth strategies, cautions on deals and the risks and rewards of private equity.
August 31
High Point Bank, which resisted an overture from the $5.7 billion-asset BNC as recently as late summer 2014, took a serious look at aggressively building scale to stay independent before it started seeking out buyers, based on disclosures in a
The company had been slowly expanding in prior years by opening branches in nearby cities. Still, the size of its loan book decreased by 5% between 2011 and 2015, totaling $507 million at Dec. 31, according to data from the Federal Deposit Insurance Corp. It also lost market share in High Point over that time, though it remained the city's biggest bank in mid-2015 with nearly 27% of deposits.
Despite those challenges, High Point Bank's management and board determined last July that they could develop a "favorable" plan to get as big as many other banks in its market, but doing so would have involved "significant expense and risks," the proxy said. The review came after an unnamed bank approached the company about a merger of equals before eventually backing off.
By early September, however, management become more pessimistic about going it alone, expressing "increasing concerns about higher costs and slower growth in the markets where [the bank] competed," the filing said. An aggressive growth plan would have required "substantial capital investments" from a company that had a very small base of existing shareholders, "with no assurance of favorable results."
Roughly 55% of High Point Bank's stock is held by a series of trusts controlled by three members of the McInnis family, including Matthew McInnis, the bank's chief strategy officer. That stake is valued at more than $78 million based on the terms of the bank's sale.
High Point Bank in mid-September authorized its investment bank to contact three institutions. Two companies, including BNC, conducted due diligence before providing proposals in late October.
BNC proposed paying $300 a share, noting that it would not increase the value of its offer. The other bank "presented a range of values … that was materially lower" than BNC's proposal, the filing said.
BNC
