First Citizens Bank buys SC-based bank

June 11--Raleigh-based First Citizens Bank will become the sixth-largest bank headquartered in the Southeast with its acquisition of a 176-branch bank based in South Carolina with a similar name -- First Citizens Bank and Trust -- and a family connection.

The deal to purchase the South Carolina bank, technically a merger, was announced Tuesday evening and is valued, at a minimum, at $636.9 million. When completed, Raleigh-based First Citizens will have more than 575 branches in 18 states and the District of Columbia.

The combination will create the nation's largest family-controlled bank. It will boast $30.7 billion in total assets, $26.1 billion in deposits and $18 billion in loans.

Raleigh's First Citizens is a publicly traded bank, but the Holding family owns a controlling interest. Chairman and CEO Frank Holding Jr. is the third generation of the Holding family to lead the company.

The Holding family also owns a controlling interest in the financial institution the Raleigh bank is acquiring, First Citizens Bank and Trust Co., which is based in Columbia and has branches in South Carolina and Georgia. According to that bank's website, three Holding brothers acquired control of the bank in 1964, when it had just a single branch.

Frank Holding Jr., chairman and CEO of the Raleigh-based bank, will lead the combined business. The chairman and CEO of the South Carolina bank, Jim Apple, intends to retire when the deal is completed.

The initial reaction to the deal from investors in the Raleigh-based bank was upbeat. Investors in the South Carolina-based bank were jubilant.

Shares of Raleigh-based First Citizens were trading at $249.50, up 6 percent, early Tuesday afternoon. Shares of South Carolina-based First Citizens, an over-the-counter stock that is thinly traded, were trading at $990, up 40 percent.

The deal will give Raleigh-based First Citizens entree into the South Carolina market, where the South Carolina-based bank has more than 150 branches -- more than any other bank in the state. However, the South Carolina bank ranks fourth in deposits in the state, according to the Federal Deposit Insurance Corp.

The leadership team of the combined bank, which will be announced later, will include executives from both organizations, the banks said in a joint announcement.

"Our similar cultures, values and business philosophies make this transaction a natural fit," Holding said in a prepared statement. "We see great opportunity in combining to create one bank with enormous potential for future success for our stockholders, customers, associates and communities."

The South Carolina bank posted net income of $51.9 million last year, compared to $61.5 million

The deal was forged by a special committee of independent directors of each board and has been approved by each company's board of directors.

To be precise, First Citizens Bancorporation, the parent of South Carolina-based First Citizens Bank and Trust, will merge into Raleigh'sFirst Citizens BancShares, the corporate parent of First Citizens Bank.

The deal calls for shareholders of South Carolina'sFirst Citizens Bancorporation to receive 4 shares of Raleigh's First Citizens BancShares Class A common stock and $50 in cash. Alternatively, shareholders can elect to receive 3.58 shares of Class A stock and 0.42 shares of Class B stock.

The ultimate total value of the deal will range between $636.9 million and $676.4 million, depending on the options chosen by shareholders.

The Holding family also owns controlling interests in Fidelity Bank of Fuquay-Varina, which has 62 branches in North Carolina and southern Virginia; and Southern Bank of Mount Olive, which has 70 branches in North Carolina and Virginia.

In a 2009 interview with The News & Observer, Frank Holding Jr. said of the family's ownership stakes in other banks: "It's evolved over a long period of time. They are separate institutions with separate shareholders and separate management. It's just different stories behind each of them, I'm sure."

The Holding family's influence also extends into the political arena. The family tree includes U.S. Rep. George Holding, a Raleigh Republican who previously was U.S. attorney for eastern North Carolina.

Ranii: 919-829-4877

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