Southern Pines, N.C.-based First Bancorp, the parent company of First Bank, signed an agreement to acquire Greenville, S.C.-based GrandSouth Bancorp., the parent company of GrandSouth Bank. The all-stock transaction has a total current value of $181.1 million, or $31.43 per share, based on First Bancorp's stock price as of June 17.
At announcement, S&P Global Market Intelligence calculates the deal value to be 187.80% of common equity, 189.24% of tangible common equity, 16.33% of deposits, 14.45% of assets and 10.65x earnings. The tangible book premium to deposits ratio is 7.70%.
Market Intelligence valuations for bank and thrift targets in the Southeast region between June 21, 2021, and June 21, 2022, averaged 147.09% of book and 159.19% of tangible book and had a median of 13.67x last-12-months earnings, on an aggregate basis. On a per-share basis, valuations averaged 149.09% of book and 174.41% of tangible book and had a median of 13.45x LTM earnings.
The boards of First Bancorp and GrandSouth Bancorp. unanimously approved the merger agreement. The deal is expected to close in the late fourth quarter of 2022 or early first quarter of 2023, subject to customary conditions, including GrandSouth Bancorp. shareholder approval and regulatory approval.
At closing, GrandSouth Bancorp. shareholders will receive 0.910 share of First Bancorp common stock for each share of GrandSouth Bancorp.'s common and preferred stock, according to a news release. GrandSouth Bancorp. will merge with and into First Bancorp, and GrandSouth Bank will merge with and into First Bank.
GrandSouth Bank operates eight branches in South Carolina, including in Greenville, Fountain Inn, Anderson, Greer, Columbia, Orangeburg and Charleston. The deal represents an opportunity to accelerate First Bank's expansion in South Carolina, according to the news release.
Based on Market Intelligence data, with the completion of the deal, First Bancorp will expand in South Carolina by eight branches to be ranked No. 13 with a 1.12% share of roughly $117.93 billion in total market deposits.
Upon completion of the deal, the combined company is expected to have over $12 billion in assets, $7 billion in loans and $10 billion in deposits.
Two members of GrandSouth Bancorp.'s board will be appointed to the boards of First Bancorp and First Bank at the closing of the merger.
If the deal is terminated under certain circumstances, GrandSouth Bancorp. may be required to pay First Bancorp a termination fee of $7.2 million.
Keefe Bruyette & Woods Inc. was financial adviser to First Bancorp, and Brooks Pierce McLendon Humphrey & Leonard LLP provided legal counsel. Piper Sandler & Co. was financial adviser to GrandSouth Bancorp., and Nelson Mullins Riley & Scarborough LLP was it legal counsel.
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