Athens Federal Community Bank
Headquarters: Athens, Tennessee Parent company: Athens Bancshares Corp. Established: 1934 Assets: $482 million Deposits: $425.2 million Net income: Bank earned $4.4 million last year, up 10.3 percent from the previous year Staff: 114 employees Offices: 10 in McMinn, Monroe, Bradley and Loudon counties Web site: www.athensfederal.com
CapStar Bank
Headquarters: Nashville Established: 2008 Parent company: Capstar Financial Holdings Assets: $1.38 billion as of March 31 Deposits: $1.14 billion Net income: $2.1 million, nearly five times as much as the previous year Staff: 182 employees Offices: Five in Davidson, Sumner and Williamson counties Web site: www.capstarbank.com
One of Tennessee's fastest growing banks is buying the biggest bank in Athens, Tennessee as it expands into East Tennessee.
CapStar Bank, the Nashville-based bank established a decade ago, has agreed to pay $113.5 million to acquire Athens Federal Community Bank, which operates 10 branches in McMinn, Monroe, Bradley and Loudon counties. Pending regulatory and shareholder approval, the deal is expected to close in the fourth quarter of the year and on a pro-forma basis create the eighth biggest bank based in Tennessee.
Athens Federal, established in 1934, had $482.3 million in total assets, $422.2 million in deposits and $334.5 million in gross loans as of March 31.
CapStar Bank, created in 2008, operates five offices in Middle Tennessee and has nearly $1.4 billion in assets.
After projected cost savings are fully realized by 2020, CapStar projects the purchase will generate double digit growth in earnings per share with an internal rate of return of more than 20 percent.
"We have a deep respect for Athens, its valuable customers and its dedicated employees," CapStar President and Chief Executive Officer Claire W. Tucker said in an announcement of the deal. "This merger is consistent with our mission of building a high performing bank in Tennessee. We believe this transaction will offer customers and employees of both banks even greater strength and resources while maintaining our commitments to the communities in which we serve."
In a presentation to analysts this week outlining the purchase, Tucker said the acquisition is a natural extension for Capstar.
"Athens maintains a community banking franchise in the attractive Eastern Tennessee corridor, which is complementary to the commercial banking expertise and Mid-Tennessee concentration of Capstar," she said.
Athens Federal Community Bank President Jeffrey L. Cunningham said the merger "will greatly benefit our customers and our communities.
"This is a great partnership – two companies with the same shared values and goals," he said. "We are excited."
After the merger, Cunningham will continue in a senior executive role as the executive vice president of Community Banking Strategy. Michael Hutsell, Athens's chief operating officer and chief financial officer, and Jay Leggett, Athens's Cleveland city president, will also continue with CapStar in senior roles. Upon completion of the merger, two members of the Athens board will join the boards of directors of CapStar.
Once the merger is completed, existing Capstar shareholders will control 69.3 percent of the combined company and shareholders of Athens Bancshares Corp. will own 30.7 percent of the company.
As a sign of this commitment CapStar has agreed to contribute $1.5 million to the Athens Federal Foundation over the next four years.