First Citizens Bank has filed a civil lawsuit against KS Bank headquartered in Smithfield in an ongoing hostile take-over attempt against the much smaller community bank.
First Citizens Bank, headquartered in Raleigh, has $34.5 billion in assets compared to $374 million for KS Bank.
According to the American Banker, the lawsuit asks the NC Business Court to invalidate several moves by KS Bank.
According to the report, KS Bank adopted a shareholder rights plan, commonly known as a “poison pill” provision, that would be implemented if First Citizens acquired 15 percent or more of KS Bank stock. If that occurred, other shareholders of KS Bank stock would receive rights to buy additional KS Bank stock shares at a discounted price.
First Citizens already owns approximately 9 percent of KS Bank stock.
In the lawsuit, First Citizens publicly disclosed they have received permission from the Federal Reserve to buy up to 80% of KS Bank stock but must do so before March 9th.
The American Banker reported that First Citizens recently acquired an additional 4.6% of KS Bank stock by the purchase of 61,200 shares and was working with 8 other KS Bank investors to acquire an additional 8.4% stake.
In the lawsuit, First Citizens said they temporarily stopped their efforts to take over KS Bank when they learned of the “poison pill” provision.
First Citizens has now turned to their lawyers and a civil lawsuit in an attempt to invalidate KS Bank’s plans to block the hostile takeover.
According to the American Banker, First Citizens contends KS Bank’s plans should be declared discriminatory because it treats First Citizens’ ownership differently than other investors and stock holders.
In June 2017, First Citizens Bank launched a hostile take over attempt by offering KS Bank $33 per share of stock. In July 2017, First Citizens increased the offer to $35 per share, but was rejected by the KS Bank Board of Directors.
There is speculation, according to the article, First Citizens wants to acquire KS Bank to better compete with BB&T in 9 local towns including: Smithfield, Selma, Clayton, Four Oaks, Garner, Goldsboro, Kenly, Wendell and Wilson, where KS Bank has branch locations.
BB&T has about one-third of the deposit market share in those towns, compared to less than 20 percent for First Citizens.