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In Georgia, Community First Bancshares to buy ABB Financial for $40.3M

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In Georgia, Community First Bancshares to buy ABB Financial for $40.3M

Covington, Ga.-based Community First Bancshares Inc (MHC) agreed to acquire Atlanta-based ABB Financial Group Inc. in an all-cash deal valued at about $40.3 million.

ABB Financial shareholders will receive $7.50 in cash for each common share they own. ABB Financial President and CEO Ed Cooney will become the CEO of Community First Bancshares and unit Newton Federal Bank (MHC) and a director of both. Johnny Smith will remain president and a director of both Community First Bancshares and Newton Federal Bank.

The deal is expected to close in the fourth quarter or in the first quarter of 2020. Affinity Bank will merge into Newton Federal Bank.

S&P Global Market Intelligence calculates the deal is 158.1% of common equity, 158.1% of tangible common equity and 14.9x earnings, on an aggregate basis. The deal value is 13.10% of assets, 17.71% of deposits, has a tangible book premium to core deposits ratio of 9.44%.

S&P Global Market Intelligence valuations for bank and thrift targets in the Southeast region between Aug. 20, 2018, and Aug. 20, 2019, averaged 161.41% of book and 173.27% of tangible book and had a median of 19.78x last-12-months earnings, on an aggregate basis.

Community First Bancshares will enter Cobb County, Ga., with one branch to be ranked no. 15 with a 1.36% share of approximately $15.18 billion in total market deposits.

The Covington, Ga.-based bank said the deal is set to be "meaningfully accretive" to its 2020 EPS, excluding one-time merger costs. The earnback period for tangible book value is expected to be less than 3.5 years, using the crossover method.

Community First Bancshares had total assets of $305.1 million and ABB Financial had total assets of $308.0 million, both as of June 30, according to S&P Global Market Intelligence data. The combined company will have about $613 million in assets, $465 million in deposits and $500 million in loans, based on June 30 data and excluding merger accounting adjustments, according to a press release.

Banks Street Partners is the financial adviser of Community First Bancshares, while Luse Gorman PC is the legal counsel. RP Financial LC provided a fairness opinion to ABB Financial and Miller & Martin PLLC is the company's legal counsel.

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