United Community Banks in Greenville, S.C., will enter central Tennessee with an agreement to buy Reliant Bancorp in Brentwood.
The $18.6 billion-asset United said in a press release Wednesday that it will pay $517 million in stock for the $3.1 billion-asset Reliant. The deal, which is expected to close in the first quarter, priced Reliant at 194.1% of its tangible book value.
Reliant, based just outside of Nashville, has 25 branches, $2.4 billion of loans and $2.6 billion of deposits.
United agreed in May to buy Aquesta Financial Holdings to bulk up around Charlotte, N.C.
“Partnering with Reliant is consistent with our strategy to expand into high-growth southeastern markets with companies that share our focus on employee experience, customer service, and community engagement,” Lynn Harton, United’s chairman and CEO, said in the release.
“We have had a strong interest in strengthening our Tennessee franchise for several years and are excited to enter the state’s best market,” Harton added. “This merger positions us well for future growth in the state.”
DeVan Ard Jr., Reliant’s chairman and CEO, will become United’s Tennessee state president.
The acquisition is expected to be 6.1% accretive to United’s 2022 earnings per share and 8.5% accretive the next year. It should take three years for United to earn back any dilution to its tangible book value.
United plans to cut about 31% of Reliant’s annual noninterest expenses. The company expects to incur $34 million of merger-related expenses.
“While there will likely be some additional risks working through the two deals, United does have a long history of M&A suggesting to us the associated risks should be manageable,” Brett Rabatin, an analyst at Hovde Group, wrote in a note to clients.
Rabatin said the pricing was “reasonable given the quality of the Reliant franchise.”
D.A. Davidson, Morgan Stanley, Piper Sandler and Nelson Mullins Riley & Scarborough advised United. Raymond James, Credit Suisse Securities, and K&L Gates advised Reliant.