Nashville, Tenn.-based CapStar Financial Holdings Inc., the holding company of CapStar Bank, signed a definitive agreement with Athens, Tenn.-based Athens Bancshares Corp., the parent of Athens Federal Community Bank NA, whereby Athens Bancshares will merge into CapStar Financial and Athens Federal will merge into CapStar Bank.
The transaction will exchange 2.864 shares of CapStar common stock for each share of Athens common stock. Based on the closing price of CapStar Financial common stock on June 11, the all-stock deal is valued at about $113.5 million, or $57.54 per share of Athens common stock.
On an aggregate basis, the deal value represents 218.8% of book and 231.6% of tangible book. On a per-share basis, SNL calculates that the deal value is 22.8x earnings. It is 24.03% of assets, 27.46% of deposits and has a tangible book premium-to-core deposits ratio of 18.57%.
For comparison, SNL valuations for bank and thrift targets in the Southeast region between June 11, 2017, and June 11, 2018, averaged 150.09% of book, 158.68% of tangible book and had a median of 26.25x last-12-months earnings, on an aggregate basis, and averaged 164.50% of book, 177.19% of tangible book and had a median of 24.85x LTM earnings, on a per-share basis.
The deal has a one-day premium of 29.04%, based on Athens Bancshares' June 8 closing price of $44.5, and a one-month premium of 32.01%, based on Athens Bancshares' May 11 closing price of $43.5.
CapStar Financial will enter Bradley County, Tenn., with two branches to be ranked No. 10 with a share of 2.10% of approximately $1.56 billion in total market deposits. The company will enter Loudon County, Tenn., with one branch to be ranked eighth with a share of 2.31% of approximately $724.7 million in total market deposits. In addition, CapStar Financial will enter McMinn County, Tenn., with four branches to be ranked first with a share of 26.08% of approximately $997.1 million in total market deposits, and will also enter Monroe County, Tenn., with three branches to be ranked fifth with a share of 13.94% of approximately $661.4 million in total market deposits.
As of March 31, Athens Bancshares had about $482.3 million in total assets. And it had $422.2 million in deposits and $334.5 million in gross loans. CapStar Financial had $1.38 billion in total assets, as of the same date, according to SNL data.
Jeffrey Cunningham, president and CEO of Athens Bancshares, will serve as executive vice president of community banking strategy of the combined entity. Additionally, Michael Hutsell, COO and CFO of Athens Bancshares, and Jay Leggett, Athens Bancshares' city president for Cleveland, will continue in senior roles. Following merger completion, two Athens board members will join the boards of CapStar Financial and CapStar Bank.
The transaction, which is subject to shareholder and regulatory approvals, is expected to close during the fourth quarter.
Keefe Bruyette & Woods Inc. and Sandler O'Neill & Partners LP served as financial advisers for CapStar Financial, while Wachtell Lipton Rosen & Katz served as its legal adviser. For Athens Bancshares, Banks Street Partners LLC served as financial adviser and Luse Gorman PC served as legal adviser.
SNL is owned by S&P Global Market Intelligence.
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