Charlotte’s Park Sterling Bank said it plans to merge with South State Corp. of Columbia, S.C. – a deal expected to result in Park Sterling branches switching to the South State brand and the combined company being headquartered in Columbia.
The merger, which was announced Thursday but still requires regulatory and shareholder approval, adds to the names of Charlotte-based banks vanishing through similar combinations. Although the combined company won’t be based in Charlotte, South State expects to keep adding jobs in the region, South State CEO Robert Hill told the Observer.
“Charlotte today, for our company, is the fastest growing part of South State,” said Hill, who began his banking career in Charlotte as a teller in the 1980s for what was then Winston-Salem-based Wachovia.
Hill didn’t rule out job cuts in Charlotte from the merger. Such cuts are typical in bank mergers as duplicate roles are eliminated. But Hill noted there’s not much branch overlap between both companies, and that tapping into the Charlotte region’s banking talent helped make the deal attractive to South State.
South State has 90 employees in the Charlotte region; Park Sterling, 242.
“There are always some efficiencies that come out of a merger,” Hill said. “Yes, there will be some backroom jobs that will be eliminated,” but over time the company expects a net increase in Charlotte jobs – “without question.”
Executives said the merger will form a regional bank with $14.5 billion in assets and a footprint spanning the Carolinas, Virginia and Georgia. The deal comes with Park Sterling’s $3.3 billion in assets and expands South State into the Raleigh and Richmond, Va., areas.
The merger is also expected to give South State a bigger presence in Charlotte, expanding its eight branches in the area to 27, Hill said. According to a securities filing, South State will become sixth in the Charlotte region in market share based on deposits, from 12th place currently. That would put it ahead of Atlanta-based SunTrust Banks and immediately behind Raleigh’s First Citizens Bank & Trust Co., the filing shows.
Bank of America and Wells Fargo remain the dominant players in the Charlotte area, holding the No. 1 and No. 2 positions, respectively.
“This is really transformational for us in Charlotte,” Hill told analysts during a conference call Thursday.
But for Charlotte it also marks the loss of the brand of another locally owned bank, as the number of banks nationwide continues a decades-long streak of shrinking in part through consolidations.
CommunityOne, Bank of Commerce and Citizens South Bank are among local names that have disappeared just over the past four years. Park Sterling bought Citizens South, which was based in Gastonia, in October 2012.
Hill said that as banks expand it becomes easier for them to afford expensive technology, such as mobile banking, that customers expect. It’s also more challenging for smaller banks to absorb rising regulatory costs, he said, adding he doesn’t expect factors driving industry consolidation to go away anytime soon.
Park Sterling, headquartered just west of uptown on East Morehead Street, has expanded since its founding in 2006 by former Regions Bank executive Bryan Kennedy. It grew from a community bank with just one branch to a regional firm with more than 50 branches across four states, thanks in large part to combinations.
Hill said Kennedy, Park Sterling’s president, will remain with the combined company, continuing to run commercial banking in North Carolina and Virginia. Donald Truslow, Park Sterling chief financial officer, will join South State’s executive management team and help integrate the companies. Both will remain in Charlotte.
Park Sterling CEO Jim Cherry will join South State’s board. Cherry, a former Wachovia executive, became Park Sterling’s CEO in 2010, after it went public that year, and went on to oversee a string of consolidation deals and expansion into new businesses, like capital markets. Cherry said Thursday’s deal, for which talks started about 18 months ago, positions South State “to be able to be the preferred financial services provider in the markets that we’re in.”
Closing of the deal is expected in the fourth quarter of this year.