Merger Heat Hits South Carolina's No. 2 Bank Firm: Tale of Two Banks May Yet Result in Historical Buyout Repeating Itself
COLUMBIA, S.C. -- In 1928, Georgia banker Mills B. Lane Sr. reached 100 miles up the Atlantic coast to buy a pair of small banks in Charleston, S.C. He added them to his Savannah-based Citizens and Southern Holding Co. and renamed them Citizens and Southern Bank of South Carolina.
Could history repeat itself?
Today there are two C&Ss, thanks to Mr. Lane's decision in 1940 to sell the South Carolina bank to investors.
But in the new era of regional interstate banking, South Carolina's four largest banks -- C&S Corp. of South Carolina is No. 2 -- are acquisition targets. Major banks in North Carolina and Georgia, including C&S Georgia Corp., are the likely buyers.
Analysts believe combinations between the groups are inevitable.
While there's no compelling reason to assume the two C&Ss will combine, Citizens and Southern Georgia Corp. still owns nearly 5% of its neighbor's stock. That interest probably means C&S Georgia wouldn't have to pay as much as other banks would. On the other hand, if another bank turns out to be the buyer, C&S Georgia stands to make a nifty capital gain on the stock.
Hugh M. Chapman, chairman of C&S South Carolina, said he doesn't have any idea how it will all turn out.
Mr. Chapman went to the University of North Carolina with the chairmen of that state's most powerful banks, NCNB Corp. and Wachovia Corp. He went to high school with the president of First Atlanta Corp. and once lived down the street in Greenville, S.C., from its chairman. He's also good friends with the top managers at C&S Georgia and Trust Company of Georgia.
Mr. Chapman is philosophical about the fact that circumstances could link his bank with any of them.
"The whole idea of planning is to be flexible enough to change with the bounce of the ball," Mr. Chapman said last week. "In one year, all the major players in Atlanta have been taken. You know there were a lot of long-range plans that are no longer valid."
Mr. Chapman's bank now serves 26 of South Carolina's 46 countries, markets with 80% of the state's population and more than 90% of its $10 billion in deposits.
The bank has a 20% share of the state market and is first or second largest in Columbia, Spartanburg, Myrtle Beach, Hilton Head, Rock Hill, and Aiken. It is particularly strong in the spillover counties adjacent to cities in North Carolina and Georgia.
Briefly South Carolina's Largest
C&S South Carolina, which is based in Columbia, has assets of $2.5 billion. It was the state's largest bank briefly before South Carolina National Corp. acquired First Bancshares Corp. of South Carolina last year and jumped to $3.8 billion.
Bankers Trust of South Carolina, which has agreed to be acquired by NCNB, is the state's third largest bank, with assets of $2.1 billion. Southern Bancorp., which is based in Greenville, is fourth largest, with assets of $1 billion.
C&S South Carolina has been an exceptionally steady and profitable company. In a Keefe, Bruyette & Woods Inc. study of 184 major U.S. banks, it ranked No. 5 in compound annual growth in earnings per share over the past 10 years, at 15.7%.
Despite problems in parts of the textile industry, South Carolina's traditional business base, the bank earned $23. …