BNC Bancorp to Acquire Harbor Bank Group


Share price of BNC Bancorp (BNCN) increased 3.6% as the company announced a definite agreement to acquire Harbor Bank Group, Inc. on Thursday. The latter is the parent company of Harbor National Bank and is based in Charleston, SC.

As per the stock deal, shareholders of Harbor Bank Group, in return of each of their existing shares will receive 0.950 share of BNC Bancorp. Considering the closing price of BNC Bancorp on Jun 4, the deal is worth nearly $50.6 million.

The deal is expected to close by fourth-quarter 2014. However, it is subject to regulatory approval and consent of Harbor Bank Group’s shareholders.

BNC Bancorp’s positive stock price movement following the news release indicates the bullish stance of investors. Let’s see how the deal is beneficial for the acquirer.

As of Mar 31, 2014, Harbor Bank Group has assets worth $306 million, while loans and deposits stand at $253 million and $250 million, respectively. The acquisition will thus, further strengthen the balance sheet position of BNC Bancorp. According to Rick Callicutt, President and Chief Executive Officer of BNC Bancorp, after the completion of the deal, the company will feature in top ten of the Charleston region in terms of total deposit market share.

Moreover, South Carolina is witnessing steady recovery with a faster declining pace of unemployment than the overall nation. Increasing demand for loans in this region reflect investors’ confidence. Further, growth in consumer spending testifies to overall improvement.

Therefore, the latest deal will enable BNC Bancorp to expand in the lucrative Charleston market of South Carolina. Moreover, the company intends to capitalize on the local expertise of Harbor Bank Group, operating in the Charleston market since 2005.

BNC Bancorp is an active acquirer and synergies from meaningful acquisitions have supported its top line growth in the past. Earlier this month, BNC Bancorp acquired Community First Financial Group, Inc. Also in April, the company acquired South Street Financial Corp. Both the acquired units serve to enhance the company’s presence in North Carolina.

Additionally, the company has delivered positive earnings surprise in the trailing three out of four quarters while maintaining an average surprise of 13.7%. Moreover, as of Mar 31, 2014, BNC Bancorp’s capital ratios were well above the minimum regulatory requirements. Therefore, given its healthy earnings power and a strong capital position we foresee meaningful investments in the quarters to follow.

BNC Bancorp currently carries a Zacks Rank #3 (Hold). Better-ranked South-East banks include Capital City Bank Group Inc. (CCBG), Customers Bancorp, Inc. (CUBI) and Middleburg Financial Corporation (MBRG). All these stocks sport a Zacks Rank #1 (Strong Buy).

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