National Bank of Commerce (NBC) is acquiring the remaining shares of Republic Bank and on Monday announced a definitive agreement to merge with the Duluth financial institution.
Pending approval by regulators, 85-year-old NBC, a wholly-owned subsidiary of NATCOM Bancshares, Inc., will have approximately $1 billion in assets. NBC already is the largest locally owned community bank in the Twin Ports.
“National Bank of Commerce has the opportunity — in fact, the responsibility — to stitch together the fabric of our community, and make it even stronger,” said Steve Burgess, President and CEO of NBC. “”It’s not about size. It’s about what we can do with that size.”
Both banks put their primary focus on commercial lending. The asset growth will allow NBC to offer larger loans and provide more services, Burgess said, crediting customers for the bank's success.
The transaction is expected to close before the end of 2019. Once final approval is granted, Republic Bank will officially become part of National Bank of Commerce and adopt that name. When combined, the company will employ approximately 200 persons.
“(Republic President and CEO) Dave Gaddie and his team are well-respected in the community and we look forward to having the Republic team join the NBC team. This merger presents us with the opportunity to take the best of both organizations and provide superior services as one. Together, we will be able to make even more possible for our customers and our community.” Burgess said in a morning news release.
Republic Bank was founded by frozen food entrepreneur Jeno Paulucci.
"My late father Jeno and mother Lois lived and breathed the local community,” said Mick Paulucci, one of Jeno’s three children. “That commitment is one of the many wonderful things they taught us. That’s why it was paramount that ownership of Republic Bank went to a trusted, steady and stable organization which would carry on the Paulucci legacy. We chose National Bank of Commerce because they are the Twin Ports largest community bank and a bank committed to serving this area."
The transaction represents one of several bank mergers to occur in the Twin Ports during recent years. Others include the Park State Bank acquisition of Pioneer and the pending Frandsen Bank and Trust purchase of a Duluth Alerus branch. In addition, Bremer Bank is in the process of establishing a Duluth office. The difference, Burgess said, is that NBC is headquartered here and is buying other local banks. Most of its business occurs within 100 miles from Duluth-Superior.
“We’re buying in-town banks and keeping the money here. It’s a major win for the Twin Ports community,” he said.
Mergers also are being fueled by the added regulations banks have faced since the Great Recession. The cost to comply with those rules has been difficult for small banks to absorb.
“It’s been harder and harder for the smaller banks to compete,” Burgess said.
Fredrikson & Byron, P.A. served as legal counsel and Hovde Group LLC served as financial advisor to NBC in this transaction. Stinson Leonard Street LLP served as legal counsel and D.A. Davidson served as financial advisor to Republic.