First Citizens raises pressure on small-town N.C. bank
The Holding family is still pressing KS Bancorp Chief Executive Officer Harold Keen to sell his bank based in Smithfield in Johnston County.
We wrote this summer on the Raleigh-based banking family’s desire to buy KS for $35 a share, or about $46 million. KS said it wasn’t interested in the bid, which was 50% higher than KS’ previous share price.
On Aug. 21, the Holdings’ First Citizens Bancshares made a filing with the Federal Reserve System applying for the ability to acquire up to 80% of KS shares. That information was not included in the third quarter earnings report issued by KS on Oct. 25.
KS, which stands for Kenly Savings, has about $360 million in assets, while First Citizens is the nation’s largest family-owned bank with $34 billion in assets.
Calls to Keen weren’t immediately returned. In July, the bank issued a statement criticizing First Citizens’ bid, noting the bigger bank’s “corporate culture is not in line with KS Bank’s community banking values.”
First Citizens, Mount Olive-based Southern BancShares and Fuquay-Varina-based Fidelity Bank — all controlled by the Holdings — now own a combined 4.3% of KS. The Fed filing says they want to buy 992,000 more shares at $35 per share.
First Citizens believes combining operations would increase shareholder value and provide more customer benefits, spokeswoman Barbara Thompson said Wednesday. “This application is a necessary step in any merger, and approval can take several months, so we felt it best to begin the process now.”
Keen owns about 10% of KS shares, worth more than $4 million. The Holdings’ family stake in their banks exceeds $600 million.
The Holding family is originally from Johnston County, which is experiencing explosive growth in its northern region that abuts Wake County. Kenly Savings was formed in 1924 and now has 10 offices.
The Holdings’ offers followed a proposal by KS this summer to convert from a C corporation to an S corporation, eliminating federal and state corporate taxes. To qualify as an S Corp, KS would need to have fewer than 100 shareholders. At the time, the bank was trading for about $22 a share.
KS’ recent earnings report noted the company is no longer pursuing a conversion. Its shares closed Wednesday at $31.25.