SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
September 5, 2006
September 5, 2006
United Community Banks, Inc.
(Exact name of registrant as specified in its charter)
| Georgia | No. 0-21656 | No. 58-180-7304 | ||
| (State or other jurisdiction of | (Commission File Number) | (IRS Employer | ||
| incorporation) | Identification No.) |
63 Highway 515, P.O. Box 398
Blairsville, Georgia 30512
Blairsville, Georgia 30512
(Address of principal executive offices)
Registrant’s telephone number, including area code:
(706) 781-2265
(706) 781-2265
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c)) |
Item 8.01 Other Events.
(a) On September 5, 2006, United Community Banks, Inc., (the
“Company”) entered into an Agreement and Plan of Reorganization
(the “Acquisition Agreement”) by and among the Company, Southern
Bancorp, Inc., a Georgia corporation (“SBI”), and Southern
National Bank, a national bank and a wholly-owned subsidiary of
SBI (“SNB”), pursuant to which SBI will merge with and into the
Company (the “Merger”) for $66.5 million of common stock of the
Company, subject to adjustment under the terms and conditions of
the Acquisition Agreement.
The Merger has been approved by the Company’s and SBI’s Boards
of Directors. The Merger is conditioned on, among other things,
the approval of the Acquisition Agreement by the shareholders of
SBI and the receipt of all required regulatory approvals.
Also on September 5, 2006, the Company issued a press release
announcing that it had entered into the Acquisition Agreement, a
copy of which is attached hereto as Exhibit 99.1.
(b) Attached hereto as Exhibit 99.2 is a SBI balance sheet
summary, a SBI tax equivalent net income summary and an analysis
of the purchase price to be paid by the Company as a multiple of
book value and earnings of SBI. SBI is an S corporation, and
its regulatory reports are prepared on that basis. The attached
tax equivalent summaries convert reported data to approximate
equivalent values as if SBI were a taxable C corporation.
The Company is providing this information for the benefit of
analysts and others who routinely report transaction prices as a
multiple of book value or earnings because available public
information does not permit an accurate, comparable computation
of these multiples. The Company does not believe that a
transaction’s book value multiple is necessarily indicative of
the relative merits of a particular transaction or an
appropriate ratio to use in comparing different transactions
either by acquirers or sellers. The Company believes a
transaction’s earnings multiple is a more relevant measure when
evaluating the merits of a transaction.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits:
99.1
|
Press Release, dated September 5, 2006 | |
99.2
|
Financial Summary for Southern Bancorp, Inc. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
| /s/ Rex S. Schuette | ||||
| Rex S. Schuette | ||||
| Executive Vice President and Chief Financial Officer |
||||
September 6, 2006
EXHIBIT 99.1
For Immediate Release
September 5, 2006
For more information:
Rex S. Schuette
Chief Financial Officer
706-781-2265
rex_schuette@ucbi.com
Rex S. Schuette
Chief Financial Officer
706-781-2265
rex_schuette@ucbi.com
UNITED COMMUNITY BANKS, INC. TO
ACQUIRE SOUTHERN BANCORP, INC.
ACQUIRE SOUTHERN BANCORP, INC.
—Strengthens Presence in Strategically Important Atlanta Markets—
BLAIRSVILLE, GA, September 5, 2006 — United Community Banks, Inc. (Nasdaq: UCBI) today announced a
definitive agreement to acquire Southern Bancorp, Inc., and its wholly owned subsidiary Southern
National Bank (“Southern National”), with $329 million in assets. Southern National has banking
offices in Canton and Marietta, located in Cherokee County and Cobb County, Georgia and had
deposits of approximately $94 million and $199 million, respectively, as of June 30, 2006.
Under terms of the agreement, Southern Bancorp’s shareholders will receive 100 percent United
Community Banks common stock with a total value of approximately $66.5 million. The transaction
has been approved by the boards of directors of both companies and is subject to the approval of
Southern Bancorp’s shareholders, regulatory agencies, and other customary conditions of closing.
The transaction is expected to close by the end of 2006 and will be slightly accretive to earnings
in 2007.
“Southern National will significantly strengthen our existing north metro Atlanta franchise by
adding experienced bankers and two key locations,” said Jimmy Tallent, president and chief
executive officer of United Community Banks. “Southern National’s Canton banking office will
provide us with a second location and a significant opportunity to expand in Cherokee County as
well as improve our deposit market share ranking from 15th to 9th. We will
also add our first location in historic downtown Marietta, complementing four other United
locations in Cobb County and improving our deposit market share ranking from 13th to
7th.”
Located along the Interstate-575 corridor in northern metro Atlanta, Cherokee County has a
population of approximately 200,000. From 2000 to 2006, Cherokee County’s 44 percent growth made
it the seventh fastest-growing large county in the United States among those with populations of
greater than 100,000. Growth in Cherokee County is projected to grow by 34 percent over the next
five years, approximately five times the projected national average.
With a population of approximately 690,000, Cobb County is the fourth largest of 28 counties in the
Atlanta Metropolitan Statistical Area (MSA). From 2000 to 2006, Cobb County’s population growth of
approximately 85,000 placed it among the top 50 fastest growing counties in the United States.
Over 100 Fortune 500 companies have a presence in Cobb County and three are headquartered in the
county. Marietta, the county seat, is near Interstate-75 and about 10 miles northwest of
Interstate-285, Atlanta’s perimeter highway.
When the transaction is completed Steve Holcomb, president and chief executive officer of Southern
National, will become chairman of United’s local bank in Cobb and Cherokee counties. Bob Walsh,
president of this bank, will retain his current position with an expanded focus and
responsibilities of a larger bank.
“We could not be more excited about welcoming Southern National into our United family,” stated
Tallent. “Expanding in metro Atlanta is an important part of our balanced growth strategy. But
the real key, always, is finding the right bankers. Southern National is a textbook example of
this strategy at work. Steve Holcomb and his team know and care about their communities and they
share our passion for community banking. A Cherokee native, Steve Holcomb has spent his 32-year
community banking career primarily in the county. Members of
his Southern National team have worked together for many years and have grown deposits in Cherokee
County to over $90 million in three years.”
“A community bank with larger resources can be the market leader in Cherokee County, and that
is our intention,” Holcomb said. “Our customers appreciate genuine caring service, including the
little things like being remembered by their names and thanked for their business. This kind of
service is common to Southern National and United Community Banks. Together, backed by United’s
resources, we have a very exciting opportunity and future.”
Added Jimmy Tallent, “Steve Holcomb and his bankers will be great additions to our team. He and
Bob Walsh are highly capable of leading our bank’s growth in Cherokee and Cobb counties, two
strategically important markets. Expanding in Cobb and Cherokee counties has been a strategic
priority for United. We will now be in the vibrant and fast-growing commercial area of downtown
Marietta, as well as have a significantly enhanced presence and opportunity to expand in Cherokee
County.”
Tallent continued, “We expect to realize some operating efficiencies in this merger; however, the
real value of this opportunity comes from combining our banking teams. Together, they can expand
and deepen customer relationships and increase deposit market share. Interestingly, there is
almost no overlap of existing customers or calling efforts between our banks. Southern National is
a great fit and their team of bankers bring over 600 years of service in Cobb County and over 300
years of service in Cherokee County markets. We should have strong momentum from the start.”
“When the transaction is completed, United Community Banks will have eight banks and 34 banking
offices in metro Atlanta with assets of approximately $2.1 billion, including two in Cherokee
County and five in Cobb County, which will improve our position as the largest community bank in
the Atlanta MSA” Tallent concluded.
About United Community Banks, Inc.
Headquartered in Blairsville, United Community Banks is the third-largest bank holding company in Georgia. United Community Banks has assets of $6.3 billion and operates 25 community banks with 95 banking offices located throughout north Georgia, metro Atlanta, coastal Georgia, western North Carolina and east Tennessee. The company specializes in providing personalized community banking services to individuals and small to mid-size businesses. United Community Banks also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United Community Banks common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at the company’s web site at www.ucbi.com.
Headquartered in Blairsville, United Community Banks is the third-largest bank holding company in Georgia. United Community Banks has assets of $6.3 billion and operates 25 community banks with 95 banking offices located throughout north Georgia, metro Atlanta, coastal Georgia, western North Carolina and east Tennessee. The company specializes in providing personalized community banking services to individuals and small to mid-size businesses. United Community Banks also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United Community Banks common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at the company’s web site at www.ucbi.com.
Safe Harbor
This news release contains forward-looking statements as defined by Federal Securities Laws including statements about financial outlook and business environment. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled “Forward Looking Statements” on page 4 of United Community Banks, Inc.’s annual report filed on Form 10-K with the Securities and Exchange Commission.
This news release contains forward-looking statements as defined by Federal Securities Laws including statements about financial outlook and business environment. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled “Forward Looking Statements” on page 4 of United Community Banks, Inc.’s annual report filed on Form 10-K with the Securities and Exchange Commission.
####
EXHIBIT 99.2
UNITED COMMUNITY BANKS, INC.
FINANCIAL SUMMARY FOR SOUTHERN BANCORP, INC.
($ in 000s)
FINANCIAL SUMMARY FOR SOUTHERN BANCORP, INC.
($ in 000s)
Condensed Balance Sheet (unaudited)
| As of June 30, 2006 | ||||
Cash |
$ | 9,272 | ||
Investment Securities |
64,876 | |||
Net Loans |
241,673 | |||
Fixed Assets |
6,257 | |||
Other Assets |
6,741 | |||
Total Assets |
$ | 328,818 | ||
Deposits |
$ | 293,442 | ||
Other Liabilities |
16,662 | |||
Total Liabilities |
310,105 | |||
Shareholders Equity |
18,713 | |||
Total Liabilities and Shareholders Equity |
$ | 328,818 | ||
Transaction
value |
$ | 66,500 | ||
Transaction
value as a multiple of S corporation shareholders equity |
3.55 | x | ||
Adjusted
Shareholders Equity (1) |
$ | 23,367 | ||
Transaction
value as a multiple of adjusted stockholders equity (1) |
2.85 | x | ||
Tax Equivalent Net Income Summary (unaudited)
| 2005 | 2006 | |||||||||||||||||||
| Third Quarter | Fourth Quarter | First Quarter | Second Quarter | Last Four Quarters | ||||||||||||||||
Income Before Income Taxes |
$ | 1,148 | $ | 1,259 | $ | 857 | $ | 1,854 | $ | 5,118 | ||||||||||
Income Taxes (2) |
402 | 441 | 300 | 649 | 1,791 | |||||||||||||||
Net Income |
$ | 746 | $ | 818 | $ | 557 | $ | 1,205 | $ | 3,327 | ||||||||||
Transaction
value as a multiple of tax equivalent earnings for last four quarters |
19.99 | x |
Notes
(1) Southern Bancorp, Inc. is a subchapter S corporation and is therefore not directly subject
to income taxes. Immediately upon acquisition by United Community Banks, Inc., Southern
Bancorp, Inc. will recognize a $2,061,000 deferred tax asset for differences between its book
and tax basis for certain assets and liabilities, primarily the allowance for loan losses,
reserve for unfunded commitments and the mark to market on securities outstanding. This
schedule is provided to present the transaction value as a multiple of book value on a
consistent basis as if Southern Bancorp, Inc. had been a taxable C corporation (assuming a 35%
tax rate). Thus, the stockholders equity has been adjusted to assume the recognition of this
deferred tax asset and assumes the exercise of 185,000 currently outstanding warrants and
45,000 currently outstanding options to purchase Southern Bancorp common stock, which is
required prior to our simultaneous with the closing of the transaction.
(2) The rate used was 35%.