SouthState goes big in Atlanta with deal for Atlantic Capital

SouthState goes big in Atlanta with deal for Atlantic Capital

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SouthState goes big in Atlanta with deal for Atlantic Capital

In a move aimed at bolstering its presence in Atlanta’s competitive banking market, SouthState Corp. in Winter Haven, Florida, has struck a deal to acquire the Atlantic Capital Bancshares for $ 542 million in stock.

The deal, announced Friday, would help fill a void in SouthState’s footprint, which stretches from Virginia to South Florida. It would more than double the company’s deposits in metropolitan Atlanta and vault the $ 40.4 billion-asset SouthState into the ranks of the region’s top 10 banks. Atlanta would also become SouthState’s largest banking market once the deal closes in early 2022.

SouthState CEO John Corbett said he had been eyeing opportunities in Atlanta for some time and said the $ 3.8 billion-asset Atlantic Capital proved to be the best fit. He spoke highly of CEO Doug Williams, who co-founded Atlantic Capital in 2007 and has built it into one of the market’s most consistently profitable banking companies in recent years.

“I met Doug three years ago,” Corbett said on a conference call with analysts Friday. “I’ve watched and admired the franchise he’s been building in Atlanta.”

Williams would serve as Atlanta market president and as head of corporate banking for SouthState.

Atlantic Capital has been growing loans at a rate of about 9% a year since 2016 and has developed a lucrative niche banking fintech and payments companies. That business accounts for nearly a third of the company’s $ 3.3 billion of deposits and is expected to generate approximately $ 5.2 million of revenue in 2021.

Williams said his leadership team began weighing the benefits of combining with a larger bank to help expand the fintech-payments niche and offer larger loans and a wider array of services to clients, as well as creating more opportunities for employees.

The deal with SouthState was struck “after careful consideration of prospective partners,” Williams said on the conference call. “We believe SouthState is the next great Southeastern regional banking company.”

SouthState is itself the product of a $ 3.2 billion merger between Winter Haven-based CenterState Bank and South State Corp. in Columbia, South Carolina, that closed in July 2020. Corbett, who had been CenterState’s top executive, was named CEO, though the combined company opted to retain the SouthState brand.

SouthState completed the systems conversion in the second quarter, which opened the door for it to seriously consider strategic opportunities, Corbett said. The Atlantic Capital deal was a natural first step, given SouthState’s focus on the Southeastern region – especially the corridor linking Atlanta and Charlotte.

“I’ve talked about the importance of the Interstate-85 corridor and our preference to look at in-market opportunities that build density in our core growth markets,” Corbett said.

Corbett characterized the merger with Atlantic Capital as “low-risk,” given SouthState’s existing Atlanta presence and the fact the two banks share the same core processor and treasury management system.

SouthState joins a growing list of banks entering or expanding in Atlanta in recent years. In April, the $ 1.7 billion-asset Colony Bancorp in Fitzgerald, Georgia, announced it would acquire the $ 715 million-asset SouthCrest Financial Group for $ 84 million in cash and stock.

Before the coronavirus pandemic, in December 2019, the $ 35.4 million-asset Pinnacle Financial Partners in Nashville said it planned to hire at least 50 bankers in Atlanta by 2025. JPMorgan Chase and the $ 26.6 billion-asset Bank Ozk in Little Rock, Arkansas, have also announced Atlanta expansion plans in recent years.

On closing the Atlantic Capital deal SouthState would have assets of $ 44 billion, including $ 5 billion in Atlanta. Pro forma deposits of $ 4.3 billion would make it Atlanta’s eighth-largest bank, with 2.3% of the market’s deposits. It now ranks No. 15, with a 1.03% deposit share.

SouthState is projecting cost savings equal to 33% of Atlantic Capital’s noninterest expense base, which totaled $ 52.7 million in 2020. Tangible book value dilution should be less than 30 cents per share with an earn-back period of two years, according to SouthState.

SouthState reported tangible book value of $ 43.07 per share as of June 30.