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Capitol Federal Financial acquiring fellow Topeka bank Capital City Bancshares

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Capitol Federal Financial acquiring fellow Topeka bank Capital City Bancshares

In Topeka, Kan., Capitol Federal Financial Inc. is acquiring Capital City Bancshares Inc.

On an aggregate basis, the deal value represents 142.6% of book and tangible book. The deal value is 26.3x earnings, 8.65% of assets, 10.04% of deposits and has a tangible book premium-to-core deposits ratio of 4.13%. SNL valuations for bank and thrift targets in the Midwest region between April 30, 2017, and April 30, 2018, averaged 163.05% of book, 168.82% of tangible book and had a median of 20.33x last-12-months earnings, on an aggregate basis.

Capitol Federal will expand in Douglas County, Kan., by two branches to be ranked first with a 21.97% share of approximately $2.27 billion in total market deposits. It will expand in Johnson County, Kan., by one branch to be ranked first with a 12.36% share of approximately $19.81 billion in total market deposits, and in Shawnee County, Kan., by seven branches to be ranked first with a 40.15% share of approximately $4.46 billion in total market deposits.

Capital City Bank, which had total assets of $438.3 million as of March 31, has agreed to merge into Capitol Federal Savings Bank which had assets of $9.0 billion as of end-2017, upon merger completion. Excluding purchase accounting, the combined company would have pro forma total assets of $9.5 billion, gross loans of $7.5 billion and deposits of $5.7 billion, as of March 31.

Remaining under $10 billion in assets will allow Capitol Federal to continue its current dividend policy of paying 100% of earnings, while providing a positive upside, Capitol Federal Chairman and President John Dicus said.

Capitol Federal posted fiscal second-quarter net income available to common shareholders of $23.3 million, or 17 cents per share. This was lower than the $31.8 million, or 24 cents per share, recorded in the quarter ended Dec. 31, 2017.

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