Sold

By Dick Hughes  

OCTOBER 6, 2010 11:14 a.m. (0)

With shareholder approval of the sale to TD Bank, Greenville’s homegrown but troubled Carolina First Bank sees new life as regional headquarters for TD in a merger that even revives possible use of Carolina First’s mostly unused $90-million campus off Interstate 85.

At a sparsely attended and brief shareholder meeting at Poinsett Plaza headquarters, The South Financial Group, the parent company, announced shareholder approval of the sale with 66 percent of the vote, all by proxy in advance.

With TD controlling more than 40 percent of the outstanding shares through a preferred share purchase with voting rights and purchases in the open market, approval was a foregone conclusion.

It was an anticlimactic penultimate ending to TSFG’s nearly three-year struggle to survive, winning finally a suitor in Canada’s Toronto Dominion Bank.

The sale is to close Friday and by the end of the day Carolina First and its Florida operation, Mercantile Bank, will become part of TD Bank’s U.S. subsidiary, though not operating under the TD brand until conversion can be completed in mid-2011.

H. Lynn Harton, who became chief executive officer two years ago after bank founder Mack I. Whittle Jr. was forced into retirement, said he could not overstate the excitement of merging with “what I believe is the strongest bank in North America.”

In a news conference following the shareholder meeting, Harton said Greenville “will become a regional hub for TD” and he will remain here as director of regional commercial banking, south, with expanded responsibility beyond the Carolinas and Florida to Maryland and the District of Columbia.

Harton said personnel will be added to branch operations, and he hinted that support functions will be expanded, saying the company is working with the state to seek incentives from the state and was optimistic of success.

While Harton did not say so, this suggests the companies are seeking to transfer tax credits to TD that TSFG received from the state to build the Interstate 85 campus, but have not been used because the buildings largely are unoccupied and the 600 additional jobs promised in 2006 did not materialize.

The county offered a property tax reduction of 35-40 percent, which, too, is in limbo.

Harton said marketing of the three-building complex built by TSFG near Hubbell Lighting Co. in The Point mixed-use development on I-85 is on hold after a year of trying to sell it.

“We continue to evaluate what we going to do with the buildings,” Harton said. “There’s a new owner. The right thing for them to do would be to just take a breather and sit back and say, what should we do with this?”

When the economy collapsed and with it TSFG’s finances, the TSFG board decided not to occupy the complex’s two four-story office buildings with 200,000 square feet of space, plus a conference center in the middle with 40,000 square feet. There is additional space for more buildings.

While it has been on the market, TSFG has been using two floors of one of the buildings for approximately 140 workers moved from other Greenville locations.

“From TD’s perspective and now from ours, this is a growth story,” said Harton. “The reason they were so interested in this company is that it fits so well with their franchise, and the South is their designated growth area and, they have said this, they like this management team.”

He said customers and employees of Carolina First and Mercantile Bank “will be associated with one of the few Triple A rated banks in the United States, and I don’t think you can overstate power of that strength in safety to depositors and ability to lend. TD has been one of the only banks to actually increase their lending over the last two years.”

Harton said, too, that culturally TD and TSFG matched in their civic commitment and that TD has promised to provide no less support in dollar amounts to community activities.

He said the Carolina First Foundation with assets of $10 million will continue after the merger and that “we will have representation” on TD’s foundation of $130 million. Both foundations give away about 10 percent of their assets annually.

After 10 consecutive quarterly losses, collapsing capital and endless and futile attempts to raise $800 million or more to stay independent, TSFG accepted TD’s offer to buy all outstanding shares at 28 cents a share or 0.004 shares of TD common for each TSFG share, a total of about $61 million.

In addition, TD agreed to pay the U.S. Treasury $130 million of the $347 given to TSFG in TARP money. The government took a loss of $217 million. TD also has said it will have to deal with close to $1 billion in bad loans from the recession.

According to the Federal Reserve, TD has consolidated assets of $568 billion and is the second largest bank by deposits in Canada. Its U.S. division has $155 billion in assets. With acquisition of TSFG’s $12.4 billion in assets, the U.S. division will become the 17th largest bank by deposits in the United States, the Fed said.

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