The merger will mean the three Cherokee Bank locations in Woodstock and Canton will begin operations under the name Hamilton State Bank once the deal is completed, which is expected to be in early 2014.
Hamilton has agreed to pay $4 per share in cash for Cherokee’s 2.13 million shares of common stock, a release about the merger said. Pending receipt of all necessary regulatory and other approvals, including the approval of Cherokee Banking Company’s shareholders, and customary closing conditions, the transaction is expected to be completed in the first quarter of 2014.
Cherokee Bank had $168 million in total assets and $150 million in deposits at the time of the merger agreement.
“We are very excited about the merger with Cherokee Bank which will provide Hamilton the opportunity to expand into a new community with a well-established and highly regarded partner,” said Bob Oliver, Hamilton State chairman and CEO.
The local bank opened its doors in 1999 under the leadership of President Dennis Burnette, who said Tuesday that despite the recovering local economy it would be tough for the local financial institute to weather the next few years.
“We are not in a position to be rewarded by the economy improving. We do not have the financial ability to make all the new loans that need to be made as the economy improves,” Burnette said. “This merger with Hamilton State Bank will allow our team to be unleashed because we will not be hampered by a lack of capital.”
Burnette pointed out that many banks have closed their doors and been taken over rather than voluntarily merging with another bank since the Great Recession began to impact the economy in 2008.
“For the past several years there has not been a merger or acquisition of an open bank in the metropolitan area,” Burnette said. “This past fall, our investment advisor said he thought the market was changing, and not as many banks were failing. Since we were the last man standing, if you wanted to come into Cherokee, you would have to buy, and we are the only open bank still open.”
The deal, which is still subject to shareholder and regulatory approval, would mean the stock would sell at a higher cost per share than book value, he said.
“I am proud of our bank that we made it through the recession and were marginally profitable last year and the early part of this year. Our asset quality has continued to improve,” Burnette said.
Burnette will stay on with the bank for the foreseeable future, he said, and he could remain at the helm for a couple more years. Executive Vice President John Moreau is in the line of succession to follow Burnette in the future.
Burnette said he expected a shareholder’s meeting to be the first week in November and that regulators would take about 90 days to approve the merger. After that, the name will change.