8-K: Carter Bankshares to Acquire Two North Carolina Branches from First Reliance Bank

Carter Bankshares will acquire two North Carolina branches from First Reliance Bank, including approximately $56 million in deposits, for a 4.6% deposit premium.

Summary

• Carter Bankshares, Inc. has announced an agreement to acquire two branch locations in North Carolina from First Reliance Bank.
• The acquisition includes branches in Mooresville and Winston-Salem, North Carolina.
• Carter Bank will assume approximately $56 million in deposits from these two locations.
• A 4.6% deposit premium will be paid on the average closing balance of certain deposit accounts.
• The transaction does not include the acquisition of any loans.
• The Mooresville deposits will be transferred to an existing Carter Bank branch in Mooresville.
• The deal is expected to close in the first half of 2025, pending regulatory approvals.
• Carter Bank will operate 66 locations in its branch network after the transaction.

Sentiment

Score: 8

Explanation: The document conveys a positive outlook on the acquisition, with both companies expressing confidence in the benefits of the transaction. The deal is expected to enhance Carter Bank's growth and profitability, and allow First Reliance Bank to focus on its core market. The sentiment is positive and forward-looking.

Positives

• The acquisition will enhance Carter Bank's overall growth and strengthen its presence in North Carolina.
• The transaction will deepen Carter Bank's commitment to the North Carolina market.
• The acquisition will expand Carter Bank's network between Greensboro and Charlotte.
• The deal provides Carter Bank with an immediate presence in the Winston-Salem market.
• The transaction is expected to improve Carter Bank's profitability and deliver returns to shareholders.
• First Reliance Bank will be able to focus on its core South Carolina market.

Negatives

• The actual amount of deposits acquired may change prior to closing.
• Targeted financial benefits are subject to significant uncertainty.
• The expected benefits of the transaction may be affected by other conditions related to Carter Bank's operation.

Risks

• The transaction is subject to regulatory approval and other conditions.
• The actual amount of deposits acquired may change before the deal closes.
• The anticipated financial benefits are not guaranteed and are subject to uncertainty.
• Carter Bank's expected benefits may be offset by other operational conditions.
• There are inherent uncertainties and contingencies that could impact the transaction.

Future Outlook

The transaction is expected to close in the first half of 2025, subject to regulatory approvals. Carter Bank anticipates improved profitability and returns to shareholders as a result of the acquisition.

Management Comments

• Litz H. Van Dyke, CEO of Carter Bank, stated the acquisition will enhance growth, strengthen their presence in North Carolina, and expand their network.
• Litz H. Van Dyke believes the transaction will improve profitability and deliver exceptional returns to shareholders.
• Rick Saunders, CEO of First Reliance Bank, believes the agreement will benefit all parties involved and allow them to focus on their core South Carolina market.

Industry Context

This acquisition reflects a trend of community banks optimizing their branch networks and focusing on core markets. It is also an example of consolidation within the banking sector, where larger banks acquire smaller branches to expand their reach and market share.

Comparison to Industry Standards

• The acquisition of branches with a deposit premium is a common strategy in the banking industry for growth.
• The 4.6% deposit premium is within the typical range for such transactions, but the specific premium can vary based on the quality of the deposits and the competitive landscape.
• Other banks such as Truist and PNC have also been active in branch acquisitions and divestitures to optimize their networks.
• The focus on core markets by First Reliance Bank is a common strategy to improve efficiency and profitability, similar to moves by other regional banks.

Stakeholder Impact

• Shareholders of Carter Bank are expected to benefit from improved profitability and returns.
• Customers of the acquired branches will become Carter Bank customers.
• Employees of the acquired branches are expected to join Carter Bank.
• First Reliance Bank's shareholders are expected to benefit from improved efficiencies.

Next Steps

• The transaction is subject to regulatory approvals.
• The deal is expected to close in the first half of 2025.
• Customers of the acquired branches will receive additional information in the coming months.

Key Dates

Keywords

bank acquisition, branch acquisition, deposit acquisition, Carter Bankshares, First Reliance Bank, North Carolina, bank merger, financial transaction