Tennessee-based Y-12 FCU to buy Kentucky-based First State Bank of the Southeast

Oak Ridge, Tennessee-based Y-12 FCU agreed to acquire Middlesboro, Kentucky-based First State Bank of the Southeast Inc. in a transaction expected to close in early 2025, according to a news release posted on CUInsight.com.

The deal marks Y-12 FCU's expansion into Kentucky, according to the release. First State Bank of the Southeast, a subsidiary of First State Bancshares Inc., has eight branches throughout Southeast Kentucky and Northeast Tennessee.

With the transaction, Y-12 FCU will enter Kentucky with seven branches to be ranked No. 64 with a 0.25% share of about $124.95 billion in total market deposits and will expand in Tennessee by one branch to be ranked No. 25 with a 0.61% share of roughly $253.62 billion in total market deposits, S&P Global Market Intelligence data showed.

As of June 30, Y-12 FCU had $1.97 billion in assets and First State Bank of the Southeast had $415.2 million in assets, according to Market Intelligence data.

Market Intelligence valuations for bank and thrift targets in the Midwest region between Oct. 23, 2023, and Oct. 23, 2024, averaged 120.18% of book and 125.34% of tangible book and had a median of 17.02x last-12-months earnings, on an aggregate basis.

Mercer Capital Inc. is financial adviser and Honigman LLP was legal adviser to Y-12 FCU. Cornerstone provided advisory support to the credit union on its diligence and communications planning. Hovde Group LLC is financial adviser and Wyatt Tarrant & Combs LLP was legal adviser to First State Bank of the Southeast.

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