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After announcing its buyout this week of cross-town bank United Bank and Trust Co., Alden McDonald Jr., president of New Orleans-based Liberty Bank and Trust Co. (No. 8 on the 2008 B.E. Banks list) is prepared to buy more black-owned banks in the Southeast, Southwest, and Midwest.
McDonald says Liberty will continue to look for more deals in those regions. “We’re interested in those areas because there’s a continuing need to service small and midsized customers wanting banking services in those areas,” he says.
The United Bank acquisition continues Liberty’s long-term growth strategy of acquiring financial institutions that allows it to expand into new markets, McDonald says. Liberty is acquiring United Bank for an undisclosed cash amount, allowing it to pick up branches in Louisiana, including Harvey, Jefferson, and Opelousas, all new markets.
Liberty also acquired a United Bank branch in New Orleans.
The United Bank deal will allow Liberty to obtain an additional $25 million in assets, nearly $23 million more in deposits, and several ATMs, McDonald says. The merger has been approved by United Bank’s shareholders, but must still be approved by banking regulators, he says. The deal is expected to be completed by late March.
Joe Gladue, an equity analyst specializing in banking at B. Riley & Co. in Philadelphia, predicts that with the slow economy there will be a lot of merger and acquisition activity in the banking industry within the next year.
“Consolidation activity this year and next year will likely remain high because the economy is showing no signs of getting better,” Gladue says.
He says banks that haven’t been approved for capital injection as part of the U.S. Department of Treasury’s Troubled Asset Relief Program (TARP) and may be struggling because of the weak economy, likely will be forced to look for buyers. Gladue adds that some banks are being forced to sell before being taken over by regulators because their capital levels are getting too weak.
Liberty, now with assets of about $375 million, will become a roughly $400 million bank with 17 branches, making it one of the nation’s five largest black-owned banks.
McDonald says Liberty has been discussing the possibility of acquiring United Bank for the past five years. He says United Bank felt now was the right time to sell, but says it was not driven to do so because of the weak economy.
He adds that Liberty’s purchase will allow it to provide United Bank customers additional services, including a larger bank network, larger loan limits for individuals and business, as well as expanded mortgage services.
United Bank CEO Howard Brooks says the bank decided to sell because both banks have synergies that complement each other, including banking networks, personnel, and their focus on satisfying their customer base.
The merger will also give United Bank customers access to a larger Internet banking network, Brooks says. “We will be able to provide more services for the customer base that we have served the past 19 years,” he