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Carolina Trust BancShares buying Clover Community Bankshares in $21.5M deal

Lincolnton, N.C.-based Carolina Trust BancShares Inc. is acquiring South Carolina-based Clover Community Bankshares Inc. and unit Clover Community Bank in a cash-and-stock deal valued at approximately $21.5 million.

For each common or preferred share held, Clover shareholders will have the option to receive 2.7181 shares of Carolina Trust common stock or $22.00 in cash, provided that the consideration will be a mix of 20% cash and 80% stock.

Carolina Trust will fund the cash portion of the consideration internally. It also expects to issue around 2.1 million common shares in connection with the merger.

On an aggregate basis, the deal value is 160.0% of book and tangible book, and 21.2x earnings. It is also 16.51% of assets, 18.58% of deposits, and the tangible book premium-to-core deposits ratio is 7.51%.

For comparison, SNL valuations for bank and thrift targets in the Southeast region between June 14, 2017, and June 14, 2018, averaged 152.04% of book and 160.67% of tangible book and had a median of 26.25x last-12-months earnings, on an aggregate basis.

The deal, which is subject to approvals from regulators and shareholders of both companies, is expected to close in the fourth quarter.

Upon completion, the combined company will have around $600 million in assets, $450 million in loans, $500 million in deposits and $65 million in shareholders' equity. It will have 11 full-service branches and one loan production office. As of March 31, Carolina Trust Bank had $446.5 million in assets, while Clover Community Bank had $130.2 million in assets.

Carolina Trust will enter York County, S.C., with two branches to be ranked eighth with a 4.45% share of approximately $2.64 billion in total market deposits.

Upon merger completion, two directors from Clover will be invited to join Carolina Trust's board. One of these incoming directors will be nominated for election to Carolina Trust's board at the next annual shareholders meeting.

The deal is expected to be highly accretive to Carolina Trust's earnings, with a tangible book value earnback period of around three years.

Raymond James & Associates Inc. served as financial adviser and provided a fairness opinion to Carolina Trust, while Wyrick Robbins Yates & Ponton LLP served as legal counsel. FIG Partners LLC served as financial adviser and provided a fairness opinion to Clover, while Nelson Mullins Riley & Scarborough LLP served as legal adviser.

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