Sale of Charleston’s oldest, biggest bank goes to shareholders this week
Wednesday is Election Day, Wall Street-style.
Much of the attention July 24 will be fixed on the goings-on in Texas, where Dell Inc. shareholders will vote to approve or reject the teetering $24.4 billion offer by founding CEO Michael Dell and his backers to purchase all of the ailing personal computer-maker’s stock. That is, unless the matter is scrubbed again, as it was last week to give Dell time to drum up more support for his proposal.
In South Carolina, investors will be casting ballots on a much smaller deal. They’ll be deciding whether to close one chapter and open another for the Charleston region’s largest and oldest financial institution.
The action will take place at overlapping meetings in North Charleston and Columbia, where shareholders of First Federal Bank owner First Financial Holdings Inc. and SCBT Financial Corp. will convene to approve their plans to merge.
This pivotal moment comes five months after First Federal announced it had agreed to a sale by exchanging its shares with SCBT. Few saw it coming.
The companies hope to complete the stock swap this quarter. It will create the fifth-largest lender in South Carolina based on deposits. Columbia-based SCBT, a growth-minded company that has expanded into North Carolina and Georgia in recent years, is the buyer.
The deal is noteworthy locally on several levels. First Financial traces its roots to the Great Depression. Its stock is widely held among local investors.
Its main business, First Federal, has remained independent for nearly eight decades. And over that time, the bank grew to become the largest and oldest lender headquartered in the Charleston region.
Now it’s about to embark on a new phase under the ownership of an acquisitive Midlands company that’s also been around since the early 1930s.
‘Building a platform’
Robert R. Hill Jr., a Citadel graduate who’s chief executive officer of SCBT, made the business case the day the deal was announced. He said the pairing will enable the merged banks to accelerate growth, cut costs and further expand their reach through acquisitions.
“It’s really about building a platform that puts us in place to build a dominant Southeastern bank in a changing banking landscape,” he said.
It wasn’t a hasty decision. The seed was planted in 2009, soon after Wayne Hall was promoted to CEO of First Federal and its parent company. Hall then got to work mopping up the post-recession mess while at the same time transforming First Federal from a sleepy savings and loan institution with limited lending capabilities into a full-fledged commercial bank that could work with larger business borrowers.
But the stars didn’t align quite right with SCBT until January 2013, when Hill and Hall determined the time was right to do business together. Hill has called the deal a “natural fit” and “a low-risk transaction” between “two like-minded companies.”
“We’ve basically been neighbors for about 80 years,” he said. “We’ve operated in each other’s backyards for years. We know each other’s customers. We know each other’s companies and styles. That alone gives us great comfort.”
It will bring together a pair of community banks that opened their doors in the early 1930s.
Hill has called First Federal “the gold standard of banking in Charleston and the other communities” it has served since opening its doors on Broad Street 79 years ago. SCBT’s predecessor started around the same time in Orangeburg, and it expanded in 2006 to the Charleston region, where it has opened five branches.
Hill, who will remain CEO after the merger, stressed that the companies share some overlapping operations, but for the most part they bring unique strengths to the table. For example, SCBT is an established bank along the bustling Interstate 85 corridor between Charlotte and Atlanta, while First Federal is more dominant along the coast and has a more robust mortgage business.
Putting banks together has been a hallmark of Hill, whose stated goal had been to complete two deals a year and who has been positioning SCBT as a “consolidator” in the Carolinas as lenders look to team up. The First Financial acquisition is different from his previous acquisitions, which in recent years have involved mostly small or troubled lenders.
It went without saying that SCBT would one day make an acquisition in the Charleston area to expand its footprint. When it finally did, it went big.
This week, shareholders will have their say, without any of the Dell drama.
Contact John McDermott at 937-5572