United Community Banks Inc. moved to acquire Progress Financial Corp. with an eye toward expanding into high-growth markets in the U.S. Southeast, executives said in interviews.
The transaction will give United Community a top-10 market share presence in eight of the 10 highest-growing major markets in the region, Hovde Group analysts David Bishop and Taylor Brodarick wrote in a May 5 note. The bank also will enter into the two highest-growth midsize markets in the region in Daphne and Huntsville, Ala.
Progress's presence in Huntsville, a fast-growing market and a hub for engineering, manufacturing, aerospace, and military contracting, made the company an attractive acquisition target, United Community Chairman, President and CEO Lynn Harton said. United Community already has some employees based in Birmingham, Ala., and was interested in making an acquisition in the region near its existing footprint, including in Huntsville and the Florida panhandle, he added.
"We do very well in these kind of smaller metropolitan markets that are fast-growing and so that was a real attraction to us," he said. The panhandle, he said, has more business opportunities than its reputation as a vacation destination might suggest.
"I would compare it to our Myrtle Beach presence," Harton said. "People think of it as one thing, but when you really look under the covers it's a really high business area as well."
The deal is United Community's second of the year, and the third-largest U.S. Bank M&A transaction so far in 2022, according to S&P Global Market Intelligence data.
United Community and Progress share similar portfolios in commercial real estate and banking, and Progress has an unusually large wealth management division for its size with $1.2 billion in assets under management, Harton said.
Progress is the only bank that its President and CEO, David Nast, has ever started, and Nast said in an interview that the lack of market overlap was important to him because it would minimize disruptions for his existing base of employees.
United Community's scale will give Progress opportunities to grow its loan base and offer larger credits to its existing clients, Nast said. The larger bank also has lines of business in senior care and Small Business Administration lending that Progress did not have the resources to pursue, and that will give the combined bank opportunities to expand in Progress markets, he said.
United Community plans to focus on integrating its acquisitions of Reliant Bancorp Inc. and Progress, and is unlikely to announce another deal before the end of 2022, Harton said.
