United Community Banks Merges with Reliant Bancorp, Transaction Valued at $517MM

United Community Banks and Reliant Bancorp executed a definitive merger agreement pursuant to which United will acquire Reliant and its wholly-owned subsidiary, Reliant Bank, 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, TN, a suburb of Nashville, TN, and led by DeVan Ard, Jr., who serves as chairman and CEO and who founded Reliant Bank in 2006. Reliant has a 25-branch network in Tennessee, located primarily in the Nashville area. It operates four branches in Clarksville, TN, one branch in Chattanooga, TN, and has a manufactured housing finance group based in Knoxville, TN. 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, United Community Banks projects the combined company 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,” Lynn Harton, chairman and CEO of United Community Banks, said. “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.”

“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,” Ard Jr. said. “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 boards of directors of each company unanimously approved the merger agreement. The merger is expected to be completed in Q1/22 and is subject to customary conditions, including regulatory approval and the approval of Reliant’s shareholders.

Both United and Reliant plan to release second quarter earnings results after the market closes on July 20, 2021. Both companies expect to report results above 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 second quarter loan growth, with United reporting at 5% annualized and Reliant reporting at 13% annualized (both growth rates exclude Paycheck Protection Program loans). Further, United expects to report a $13 million to $14 million negative loan loss provision and Reliant’s earnings release will include no provision in the quarter.

D.A. Davidson, Morgan Stanley and Piper Sandler acted as financial advisors to United, and Nelson Mullins Riley & Scarborough served as United’s legal advisor. Raymond James and Credit Suisse Securities served as financial advisors to Reliant, and K&L Gates served as Reliant’s legal advisor.

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