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Updated: 6:02 p.m. Monday, April 28, 2014 | Posted: 9:50 a.m. Monday, April 28, 2014

State Bank acquiring Bank of Atlanta $25M

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By Christopher Seward

The Atlanta Journal-Constitution

State Bank Financial Corp. will acquire Bank of Atlanta branches for $25 million in cash, combining two Atlanta-based financial institutions and signaling more consolidation among healthy community banks in the state.

The acquisition is the first by State Bank of a healthy Georgia financial institution after gobbling up a dozen failed banks over the past several years. It is also an indication that more Georgia community banks have healthier assets, deposits and loan portfolios, and that there are fewer troubled banks that are potential takeover targets.

Christopher Marinac, director of research at FIG Partners, a broker/dealer specializing in financial institutions, said more consolidation is on the way.

Hours after State Financial announced its deal, First Landmark Bank said it will acquire Midtown Bank & Trust Co., both based in metro Atlanta. While financial terms of the “merger of equals” were not disclosed the deal creates banks under three brands: First Landmark Bank, Midtown Bank and Bank of Sandy Springs, the companies said.

“This is certainly the beginning of a trend,” Marinac told The Atlanta Journal-Constitution on Monday. “This would be the fourth community bank acquisition [in metro Atlanta] that has taken place in the last six months.”

Marinac said banks are making money, which suggests they will become more attractive to potential suitors. “We’ve not seen the full profit figures for the first quarter, but I think in general we are clearly seeing more banks make money,” he said.

State Bank Chairman and Chief Executive Officer Joe Evans said the deal with Atlanta Bancorporation, parent of Bank of Atlanta, will give his company a larger presence in Midtown and in Gwinnett County. Atlanta Bancorporation has about $198 million in assets. In addition to a location in Midtown, there is a Bank of Atlanta branch in Duluth.

State Bank is the parent of State Bank & Trust Co, which has 19 locations - five in metro Atlanta and 14 in middle Georgia - and about $2.6 billion in assets.

Evans told the AJC State Bank was not launched in 2009 to be solely an acquirer of failed banks.

“We had a banking franchise in mind that we wanted to build, and in 2009, 2010 and 2011 there were quite a number of failed bank transactions that fit that strategic goal and that’s where we put our emphasis,” he said.

There were 87 bank failures in the state in the past six years, putting Georgia at or near the top in failures in the nation during the housing bust, which left many community banks saddled with problem loans.

The Federal Deposit Insurance Corp. is seeking to recover millions of dollars lost to those failures by filing lawsuits against the directors and officers of two dozen closed Georgia banks. (See this exclusive report on MYAJC.com).

Evans engineered the purchase of a dozen of those failed banks from the FDIC and has set out to turn them into thriving State Bank branches. (See this MYAJC.com Q&A with Evans). A snapshot of how successful the company has been will come Wednesday when State Bank reports its first-quarter financial results.

“As the failures have thankfully slowed and we look to complete the build-out of the franchise that we had in mind from Day One, our future is going to be much more in partnering with healthy banks with good management teams that make us a better bank after the transaction and not just a larger bank,” Evans said Monday.

Evans would not comment on whether State Bank is interested in partnering with a larger competitor or whether a larger bank has expressed an interest in being a possible suitor. “Those are things we just don’t talk about,” he said.

“I don’t think there is a publicly traded bank in the United States that is not cognizant of the forces of consolidation and seeks to do what is in the best interest of its shareholders, its customers and its employees,” Evans added. “The process of consolidation in the banking industry is just a very real part of the industry.”

Evans said State Bank will “continuously be on the lookout” for potential acquisitions that fit both strategically and culturally, at prices that make sense.

The deal with Atlanta Bankcorporation is expected to be completed in the fourth quarter.

In midday trading on Wall Street, State Banks shares were up 2 cents at $16.78 after trading as high as $16.88.

State Bank Financial acquisitions

July 2009 - Security Bank (six charters)

December 2009 - Buckhead Community Bank

December 2009 - First Security National Bank

July 2010 - NorthWest Bank & Trust

December 2010 - United Americas Bank

October 2011 – Piedmont Community Bank

October 2011 Community Capital Bank

Source: State Bank Financial Corp.

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