Another week, another deal for United Community Banks

United Community Banks Inc. is accelerating its growth initiatives with two acquisitions in two weeks, and company leaders won't rule out doing another before the year is done.

After announcing its acquisition of investment advisory firm FinTrust Capital Partners LLC on May 13, the Blairsville, Ga.-based bank also announced plans to acquire Cornelius, N.C.-based Aquesta Financial Holdings Inc. With the two deals, United Community Banks is working toward its goals of expanding its asset management business and moving into lucrative North Carolina markets, Chairman, President and CEO Lynn Harton and CFO Jefferson Harralson said in an interview.

"This really fits in with what we're doing and advances our existing strategy by a number of years. Being able to partner with the high-quality bank like Aquesta gives us two to three years of fast-forward on our strategy," Harralson said.

United Community Banks was eyeing a branch expansion into Charlotte and Wilmington for some time, Harton said.

The deal marks United Community Banks' eighth whole-bank deal announcement since 2015. The company tends to do about one deal per year, but it could have capacity for another one in 2021, the executives said.

"We like smaller community banks in great markets with a great cultural fit," Harton said. "So we certainly would have the capacity to consider one more this year if it's the right company at the right price, but we're going to be very selective because we feel like we've got a great footprint and franchise without M&A."

Targets could be aplenty given that the tough operating environment, with low rates and scant loan growth, is pushing community banks like Aquesta to sell. Years of concerns about increasing technology spend and operating in a high-growth market like Charlotte pushed the bank to begin looking at strategic alternatives, Jim Engel Jr., president and CEO of Aquesta, said in an interview.

"Technology is definitely a demand on a bank's capital. ... That's something that's been a concern for a number of years," he said. "We're in a great area that is growing very rapidly, but we're finding some of our customers grow even faster. And so what happens is their loan appetite can exceed your legal lending limit."

United Community Banks will immediately expand those relationships, Harton said. The bank is eager to bring its specialty businesses — such as solar finance, builder finance and mortgage lending — to the new markets, he said.

While investors may gripe at the price, which values Aquesta around 2.17x tangible book value, several analysts applauded the deal. Christopher Marinac, director of research at Janney Montgomery Scott, wrote in a May 27 note that the deal presents long-term strategic benefit, allowing United Community Banks to play defense in a fast-growing, competitive market.

"It was definitely a premium, no matter how you look at," Marinac said in an interview. "[But] you have to look at the bigger picture in Charlotte. It's a very important town for what [United Community Banks] is trying to do the next five years ... What they really want to do is have more of a presence, and I think this deal probably helps them attract more borrowers, and also more bankers."

Brad Milsaps, a managing director for Piper Sandler, commended the company for using excess liquidity to enter Charlotte, a market that will drive above-average growth, he said in a report.

According to data gathered by Nielsen, the Charlotte-Concord-Gastonia, NC-SC MSA is expected to grow its population by 6.6% from 2021 to 2026, well above the national rate of 2.9%. Median household income in the metropolitan area is projected to grow by 11.8% during the same time period, compared to the national rate of 9.0%.

The opportunity to cross-sell several fee businesses, as well as deal-related cost cuts, could drive up the company's pre-tax, pre-provision income during the ongoing low interest rate environment, Michael Rose, an analyst with Raymond James, said in a May 27 report.

The wealth management business offers fee revenue opportunities, and the FinTrust Capital deal isn't the first time United Community Banks tried to beef up that line through an acquisition. The company previously used a deal to add wealth management experience when it acquired Three Shores Bancorp. Inc. and subsidiary Seaside National Bank & Trust in a transaction completed July 1, 2020. After the deal closed, the company said Seaside had $963 million in assets under administration, and in April, United Community Banks reported having total AUA of $2.4 billion.

Leaders of United Community Banks expect to significantly add to the AUA with the addition of FinTrust, which had $2.0 billion under management across its advisory, retirement planning and brokerage businesses as of March 31, according to the merger news release. FinTrust is based in Greenville, S.C., and has additional locations in Anderson, S.C., along with Athens and Macon, Ga. The executives believe that leveraging the Seaside and FinTrust deals can help the wealth management business access new and fast-growing markets.

"Our plan was to overlay Seaside's model onto our Carolina, Georgia and Tennessee footprint. Buying FinTrust, similar to Aquesta, fast forwards that strategy by a couple of years," Harralson said. "[The FinTrust acquisition] allows us to be much faster in bringing those types of services to our customers in our legacy footprint."