Alexandria-based Red River Bank will acquire Fidelity Bank of Baton Rouge for an undisclosed sum, the companies announced Thursday.
Under the deal Red River Bancshares Inc., the holding company of Red River Bank, will buy Fidelity Bancorp Inc., the holding company for Fidelity Bank.
Red River expects to complete the deal in the first quarter of 2013.
Red River Bank President and Chief Executive Officer Blake Chatelain said the bank is familiar with the Baton Rouge market after looking at a number of potential acquisitions in the area.
While exploring some of those opportunities, Red River executives met with Fidelity and found the two banks share a similar culture and focus on customer service and commercial banking for local businesses, Chatelain said.
“I think the more we talked, the more we realized that joining forces with them would be the best way for us to go into the Baton Rouge market,” he said. “I think they realized that joining forces with us would bring more resources and better products and services to the customers that they serve. So we just felt like this was a good match.”
The added products include investment management services, he said.
The acquisition expands Red River’s footprint to six parishes with 20 branches and 27 ATMS. Red River now has 15 branches and 241 employees and is the seventh-largest bank headquartered in Louisiana, with $1.1 billion in assets.
Fidelity has $126 million in assets, with approximately 50 employees at five branches in the Baton Rouge area.
Red River expects to convert the Fidelity branches by the end of the first quarter, Chatelain said. Fidelity’s management will remain in place, but it’s too early to say how or whether the acquisition will affect other Fidelity employees.
Banking industry experts have said the increased federal regulatory burden and accompanying costs that resulted from the financial markets’ meltdown would further consolidate the banking business. Chatelain steered away from saying those concerns played a role in Fidelity’s decision to sell.
The added regulations are a concern for all banks, but the burden is heavier for smaller organizations, he said.
The smaller banks can’t hire the staff and the specialists needed to navigate a pretty complex regulatory environment.
Chatelain said the community banking world is changing.
“There is a scale that is needed. You don’t need to be $50 billion, and you don’t need to be $1 trillion,” Chatelain said. “But probably being $1 billion-plus is needed these days to have the scale to have the specialists you need.”