United Community Banks, Inc. (NASDAQGS: UCBI) (“United”) and Reliant Bancorp, Inc. (NASDAQCM: RBNC) (“Reliant”) announced today the execution of a definitive merger agreement pursuant to which United will acquire Reliant, and its wholly-owned subsidiary, Reliant Bank (the “Merger”), in an all-stock transaction with an aggregate value of approximately $517 million, or $30.58 per share of Reliant common stock, based on United’s closing stock price of $31.07 on July 13, 2021.
Reliant is headquartered in Brentwood, Tennessee, a fast-growing suburb of Nashville, Tennessee. It is a highly-valued franchise with an experienced management team led by Chairman and Chief Executive Officer DeVan Ard, Jr., who founded Reliant Bank in 2006. Reliant provides outstanding customer service, and develops deep and long-lasting relationships through its 25 branch network in Tennessee, located primarily in the Nashville area’s most attractive markets. Reliant operates four branches in Clarksville, one branch in Chattanooga, and has a manufactured housing finance group based in Knoxville. As of March 31, 2021, Reliant reported total assets of $3.1 billion, total loans of $2.4 billion, and total deposits of $2.6 billion. Following the closing of the Merger, we project United will be ranked 10th in Tennessee for deposit market share.
“Partnering with Reliant is consistent with our strategy to expand into high-growth southeastern markets with companies that share our focus on employee experience, customer service, and community engagement” said Lynn Harton, Chairman and Chief Executive Officer of United. “We have had a strong interest in strengthening our Tennessee franchise for several years and are excited to enter the state’s best market with Newsweek’s 2021 “Best Small Bank in Tennessee”. Reliant is a highly regarded, high-performing bank. This merger positions us well for future growth in the state. We are very pleased that DeVan will continue his leadership role as United’s Tennessee State President.”
DeVan Ard, Jr., Chairman and Chief Executive Officer of Reliant, stated, “Our mission has been to build a business model that is shaped by the delivery of outstanding customer experiences and supported by a diverse and experienced team who are positioned in some of the most attractive and fastest-growing markets in the Southeast—specifically Nashville and other key markets in Tennessee. By joining forces with United, we recognize an opportunity to align ourselves with a partner that shares our passion for providing high-quality customer service, and to leverage their larger balance sheet and a broader set of products and services for our customers. Becoming part of United’s team-oriented, high-performance culture presents a unique opportunity for Reliant, and we consider it a privilege.”
Under the terms of the merger agreement, Reliant shareholders will receive 0.9842 shares of United common stock for each share of Reliant common stock outstanding. The Merger is expected to be accretive to United’s earnings per share, excluding transaction costs, by approximately $0.15 per share (6.1%) in 2022 and $0.22 per share (8.5%) in 2023. The estimated transaction returns are consistent with United’s stated acquisition criteria pertaining to tangible book value and targeted internal rates of return. The merger agreement was unanimously approved by the boards of directors of Reliant and United. The Merger is expected to be completed in the first quarter of 2022 and is subject to customary conditions, including regulatory approval as well as the approval of Reliant’s shareholders.
Both United and Reliant plan to release second quarter earnings results after the market close on July 20, 2021. Both companies expect to report results above the consensus estimates with United expecting to be in the $0.77 to $0.80 diluted EPS range and Reliant in the $0.76 to $0.79 diluted EPS range. Both companies will also report solid second quarter loan growth with United at 5% annualized and Reliant at 13% annualized (both growth rates exclude PPP loans). Further, United expects to report a $13.0 million to $14.0 million negative loan loss provision and Reliant’s earnings release includes no provision in the quarter. Additional earnings details will follow on July 21, 2021.
D.A. Davidson & Co., Morgan Stanley & Co. LLC and Piper Sandler & Co. acted as financial advisors to United, and Nelson Mullins Riley & Scarborough LLP served as United’s legal advisor. Raymond James & Associates, Inc. and Credit Suisse Securities (USA) LLC served as financial advisors to Reliant, and K&L Gates LLP served as Reliant’s legal advisor.