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Following deal, Charter Financial looking for more M&A to deploy capital


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Following deal, Charter Financial looking for more M&A to deploy capital

Deploying capital and expanding in the Atlanta market were top of mind for Charter Financial Corp. executives leading up to the announced acquisition of Tucker, Ga.-based Resurgens Bancorp

The deal uses capital the company raised through a mutual stock conversion in 2013, Curtis Kollar, senior vice president and CFO of West Point, Ga.-based Charter Financial, said in an interview. In April 2013, the company closed the sale of 14,289,429 shares of common stock at $10.00 per share, leading to gross proceeds of $142.9 million.

"We had a lot of excess capital, and we've been working to get that deployed," Kollar said. "This is another nice little chunk. The particular [bank] looks good … nice clean assets, [and] a beautiful location inside I-285 in Atlanta."

The all-cash deal, valued at roughly $26.3 million, will add two branch locations and approximately $167 million in assets, $138 million in deposits and $135 million in loans. Resurgens President and CEO Charles DeWitt III will join the company as the DeKalb County President of CharterBank and will be a "key player in our Atlanta market going forward," Kollar said.

Kollar said the Resurgens branches are "pretty much adjacent to where we're at, but not duplicative."

Between the two companies, 54% of Charter Financial's loans and deposits will be within the Atlanta metropolitan statistical area, where the company will rank eighth in deposit share among community banks with less than $10 billion in assets.

"We still have excess capital, and we don't want to be overly aggressive through organic lending right now," Kollar said. "It's possible the economy may slow down some here, and we're a little bit nervous in areas like retail and commercial real estate."

Kollar said remaining capital is also intended for acquisition purposes. While Charter Financial hopes to find additional opportunities in the Atlanta MSA, Kollar said he isn't opposed to expanding in Alabama or the Florida panhandle, where the company also has branch locations.

"We like the Atlanta market," he said. "We would prefer a little bit larger than what we got on this one, but there are not a lot of ideal candidates out there, so we may have to go smaller or we may have to expand geographically. ... Unless it's a really significant size, we would want to be in or adding on to one of our current markets."

"I think a lot of Atlanta, and some of the areas that might be adjacent to the Atlanta MSA, particularly on the north side, have good growth," he added. "I think that's the best area. If we go outside of there, we may be looking a little bit less for growth, and a lot more just for our current earnings."

The company completed its acquisition of CBS Financial Corporation, valued at $58.7 million, in April 2016.

"The primary method for deploying [the capital] is through acquisitions," Kollar said, adding that the company has started the process of looking for new deal opportunities.