trending Market Intelligence /marketintelligence/en/news-insights/trending/Riyxc6h0nbMyZTQ9RuzYgw2 content esgSubNav
In This List

Charter Financial buying Resurgens Bancorp for $26.3M

Blog

Banking Essentials Newsletter: July Edition - Part 2

Blog

Anticipate the Unknown Go Beyond Fundamentals to Uncover Early Signs of Private Company Credit Deterioration

Blog

Taking Loss Given Default Estimation to the Next Level: An Aspiration for All Creditors, Not Just Banks

Blog

Anticipate the Unknown A Fundamentals Approach to Detect Early Signs of Private Company Credit Deterioration


Charter Financial buying Resurgens Bancorp for $26.3M

West Point, Ga.-based Charter Financial Corp. is buying Tucker, Ga.-based Resurgens Bancorp in an all-cash deal valued at around $26.3 million.

Under the deal terms, Charter will acquire all of Resurgens' 1,338,589 outstanding common shares and cash out all outstanding in-the-money stock options and warrants. Resurgens shareholders will receive $17.00 in cash for each Resurgens common share they hold. Each outstanding Charter common share will remain outstanding and be unaffected by the deal.

On an aggregate basis, S&P Global Market Intelligence calculates the deal value to be 164.5% of book and tangible book, and 17.5x last-12-months earnings. The price is 19.12% of deposits and 15.77% of assets, and the tangible book premium to core deposits ratio is 7.49%.

For comparison, S&P Global Market Intelligence valuations for bank and thrift targets in the Southeast region between June 1, 2016 and June 1, 2017 averaged 149.73% of book, 159.87% of tangible book and had a median of 22.25x LTM earnings, on an aggregate basis.

Charter Merger Sub LLC will merge with and into Resurgens, which in turn will merge with and into Charter. Additionally, Resurgens unit Resurgens Bank will merge with and into Charter unit CharterBank. The transaction is expected to close during the third quarter.

The deal will add approximately $167 million in assets, $138 million in deposits, and $135 million in gross loans to Charter, including two branches in Tucker and Decatur, Ga. As of March 31, Charter had $1.48 billion in assets.

Based on data compiled by S&P Global Market Intelligence, Charter Financial Corporation will enter DeKalb County, Georgia with two branches to be ranked No. 11 with a 1.30% share of approximately $9.80 billion in total market deposits.

The transaction is subject to approval from regulators and Resurgens shareholders. Should the deal be terminated, Resurgens may be required to pay Charter a termination fee of $912,000 or reimburse expenses of up to $250,000. In addition, Charter is not required to consummate the transaction if Resurgens shareholders who hold more than 10.0% of the company's outstanding common stock exercise dissenter's rights. Another condition of the deal is that CharterBank must secure approval from the Office of the Comptroller of the Currency to make a dividend distribution to its parent company.

The deal is expected to generate earnings-per-share accretion in the high teens for Charter, with an internal rate of return of +20%. The transaction also adds to Charter's operating and capital leverage; a moderate payback period of less than four years for tangible book value dilution is expected. A presentation for the transaction also cites that there will be "significant management team retention." The deal value is 168.6% of tangible book, and 18.9x last-12-months earnings. Estimated cost savings is 25% of Resurgens' last-12-months noninterest expense, core deposit intangible is $1.0 million, and pretax transaction expenses are expected to be $2.7 million. Fair value marks is 1.5% of the aggregate mark on total loans.

FIG Partners LLC acted as financial adviser to Charter, while Alston & Bird LLP, represented by Mark Kanaly, acted as its legal adviser. Meanwhile, Sandler O'Neill & Partners LP, represented by Kevin O'Keefe and Chris Maser acted as Resurgens' financial adviser, while Nelson Mullins Riley & Scarborough LLP, represented by J. Brennan Ryan, served as legal adviser.

To use S&P Global Market Intelligence's branch analytics tools to compare market overlap, click here. To use S&P Global Market Intelligence Maps to create custom maps, click here.

SNL Image