After shareholders approved the merger of First Community Bank and Savannah River Banking Co., it took a weekend to rebrand the branches.
Although there were a high number of bank failures as a consequence of the recession and many FDIC-assisted mergers nationwide, there were relatively few affecting the Augusta metro area. Two bank changes that affected the area were the combination of Wells Fargo and Wachovia in 2008 and then TD Bank’s purchase of the parent company of Carolina First Bank in 2010.
First Community’s buying Savannah River Banking Co. has nothing to do with the aftermath of the financial crisis, however.
“We’re not doing this because we couldn’t keep doing what we were doing. We just felt, for our shareholders, that we have a better chance coming together and growing the bank together,” said Paul Simon, who was the chairman of the board for Savannah River Banking. “This is the thing to do to benefit our shareholders and employees as well.”
For First Community, a Lexington, S.C.-based bank that has been growing through acquisition since 2004, this is a chance to expand into a new market, said President and CEO Mike Crapps.
With the merger, First Community now has more than 15,000 customers and 13 branches, with a direct line into the Augusta market through Savannah River’s branches in Aiken and west Augusta.
“It is a fairly natural expansion of where we’ve been operating in the four counties in the middle of South Carolina,” Crapps said.
He said there is also a fit between Columbia and Augusta, which have similar cultures and military and medical influences. The cultures within the two banks were also similar, officials noted.
“Our strategy and Savannah River’s strategy has been serving that local businessperson,” Crapps said.
The growth in retail and industry in Augusta helped make the decision easier to expand westward from South Carolina’s capital city. Crapps said the officials at Starbucks and Cabela’s are smart people.
“They’re going to locate in growing communities that are successful,” he said. “It was easy for us to look at that and say there’s something going on in Augusta. And that was before the big announcement at Fort Gordon.”
Birth of a merger
Simon said he was having a conversation with his chief executive officer, Randy Potter, about the growth of the bank, which led to “looking around” to see whether there were banks to acquire. Savannah River had not been in business long enough, however, for the Federal Deposit Insurance Corp. to consider it eligible to acquire failed banks; the bank started in 2007.
“Randy has a lot of banking experience. He knows a lot of people,” Simon said. “He made some inquiries and we talked to Mike and we talked to another bank out of Atlanta. They were tied up with a failed bank and put us on hold.”
In the meantime, Potter and Crapps were discussing a merger, and it turned out that the bank hoping to buy would allow itself to be sold.
Crapps knew Potter for a long time and considered him one of his industry confidants.
“When he called about this idea, to just sit down and chat and see whether there was any mutual interest, I was glad to do that,” Crapps said.
Mergers usually start this way, Crapps explained, as conversations among people who know one another. Banking is a tight community.
Crapps, who started his banking career in Aiken in the 1980s, knew Savannah River President Jeff Spears from then, too.
Executives for the two banks started more detailed discussions over the summer of 2013 until the official merger announcement in August.
Potter and Simon are now members of the board of directors for First Community. Spears and Augusta Market President Phil Wahl will continue in their roles in Augusta.
Crapps said First Community did $140 million in mortgage originations in 2012 and $120 million in 2013. The bank plans to expand its mortgage business in the Augusta area.
He also said there would likely be some hiring to expand the financial planning and investment advising business, which the bank started in 2008 after clients suggested the business line. First Community bought two financial planning firms that year.
“We will introduce that to the client base here (in Augusta),” Crapps said.
In the Columbia market, the bank added six staffers last year for planning, mortgages and commercial loans. According to the FDIC report on the bank, it had 166 full-time employees as of September. The federal agency said Savannah River has 29 employees.
In talking about the future of the new bank, officials were intent on examining Columbia County.
“The growth in Columbia County and Evans is real attractive to us. That feels like a market we can get excited about expanding into,” Crapps said. “We don’t do anything spontaneously.”
Before the merger with Savannah River, First Community acquired a mortgage company in 2011, two financial planning practices in 2008, Bank of Camden in 2006 and Newberry Federal in 2004.
“As we look out into the horizon, there are other banks that might want to partner with us,” Crapps said. “If we expand that way, we’ll do so in a way that is friendly to our shareholders. And we’ll do it in markets with similarities.”
Little red tape
Spears said a conversion kit was sent to customers explaining what to expect with their debit cards and online banking when they became part of First Community’s network.
“I’ve been through a number of bank mergers in my career of 33 years, and this one has been pretty smooth,” he said.
Officials gauged the reaction after the merger announcement in August, and there wasn’t much.
“It has been a nonevent. I think that speaks to the general population (being) used to companies merging in all industries,” Spears said. “There’s been a lot of consolidation in banking because of bad banks joining up with a stronger bank.”
Crapps said the speed and ease of getting bank regulatory approval for the merger was the fact that neither bank is troubled.
“Because it was a combination of two healthy banks, ours went through pretty quickly. The FDIC even commented to me that they rarely get the opportunity to see two healthy banks coming together. Usually it is one good bank and one bad bank,” Crapps said.
The most nervous portion of the merger was the Sunday before the announcement of the completed sale. The connection between the two bank’s systems was supposed to be at 1 p.m. It occurred later in the day, but the banks’ computers could talk to one another.
“Want to make sure it is working because that creates the first impression to the customer,” Crapps said. “If there is a system glitch, then that is the first experience they have with this new entity. You want every interaction to be positive, but especially that first one.”
Spears said the merger will be good for Savannah River’s client because of the new offerings and more capacity to lend money. It is good for the shareholders to have publicly traded equity. And it will be good for employees, he said, because of the opportunities for advancement.
“We had limited career opportunities with Savannah River bank because of its size. With First Community, we have more career opportunities,” Spears said. “Most important, it was good for shareholders. Shareholders are important to any company.”