Wednesday, May 29, 2024

Dogwood acquires upstate S.C. bank, will top $2B in assets

Raleigh-based Dogwood State Bank agreed to buy a Seneca, South Carolina-based bank for about $70 million, which would push its asset size past $2 billion.

Community First Bancorporation has assets of $685 million and seven offices in upstate South Carolina, three in North Carolina and two in Tennessee.

Dogwood was formed in 2019 through the recapitalization of Morehead City-based Sound Bank, moving the headquarters to Raleigh. At the time, Dogwood raised $70 million in 2019 from three investment firms, plus $30 million from individuals and families. It added another $28 million in capital in 2021 and $16 million last year.

Dogwood now has assets of $1.4 billion and offices in the Raleigh, Charlotte and Triad markets, along with Fayetteville, Greenville, Morehead City, Sanford and Wilmington.

The all-stock transaction implies Dogwood will pay $11.75 per share for Community First common shares, or about $70 million. Community First’s Dec. 31 balance sheet listed $49.4 million in equity capital. Regulatory approval is pending.

“With this transaction, we will have a meaningful presence in the largest major growth markets in the Carolinas,” Dogwood CEO Steve Jones said in a release.

Jones says he met Community First CEO Richard Burleson when Burleson was an industry consultant. Since taking the CEO job, the South Carolina bank’s performance has improved markedly. “They’ve created a neat franchise,” with most of the offices in the Greenville, South Carolina suburban market. It also has North Carolina branches in Charlotte, Franklin and Gastonia.

Dogwood is growing because of “amazing support from small business owners who want to support community banks,” Jones adds. The bank’s loan portfolio is performing well with limited exposure to the center-city office buildings that are under the most pressure as vacancies increase, he says. “We’re not seeing much stress in our commercial real estate book.”

Community First opened in 1990 in Oconee County, South Carolina. It reported a profit of $4.1 million last year, compared with $6.4 million in 2022, when it had a gain from selling a mortgage subsidiary.

Dogwood earned $10.6 million in 2022, more than double the previous year. During the first three quarters of 2023, it reported net income of about $7.7 million, according to the Wall Street Journal.

The combined bank will have about $2.2 billion in assets and $1.7 billion in loans, making it among the 10 largest banks based in North Carolina. Shares of the thinly traded company have ranged between $14.35 and $19.50 over the past year and closed Wednesday at $16.60. The market cap is about $244 million.

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