FirstBank Announces Merger With Franklin Synergy Bank

Tuesday, January 21, 2020

FB Financial Corporation, parent company of FirstBank, and Franklin Financial Network, Inc., parent company of Franklin Synergy Bank, jointly announced their entry into a definitive merger agreement pursuant to which Franklin will be merged with and into FB Financial.

Franklin is headquartered in Franklin, Tn. with 15 branches throughout Williamson, Rutherford and Davidson counties in the Nashville MSA. Franklin is the leading community bank in its primary markets, demonstrated by its strong market shares in Williamson and Rutherford counties, said officials. Franklin reported total assets of $3.9 billion, loans of $2.8 billion and deposits of $3.2 billion as of Dec. 31, 2019.

The combination enhances FirstBank’s operations in the Nashville MSA, specifically in the Williamson and Rutherford counties where Franklin has a strong community presence. Pro forma for the transaction, FirstBank’s deposit market share will be #6 in the Nashville MSA, #1 in Williamson County and #2 in Rutherford County.

FB Financial’s President and CEO Christopher T. Holmes said, “We are very excited to announce our proposed merger with Franklin. Franklin is a well-known, high-service community bank with a leading position in Williamson and Rutherford counties. We are joining forces with the leading community bank in two of the most attractive counties in our market area. We look forward to building on the strong customer relationships that Franklin has fostered.”

Franklin’s CEO J. Myers Jones, III said, “Our team is excited to join the FB Financial family. We believe that this transaction benefits all of our stakeholders, and we firmly believe that we will be better together. Our focus will remain concentrated on our customers, and our ability to serve their needs will be stronger than ever.”

As part of the transaction, key Franklin executives have agreed to remain with FB Financial following the closing and have entered into employment arrangements that will become effective upon the completion of the merger with FB Financial.

Following the transaction, FB Financial will establish a primary operations center and its mortgage headquarters for the combined company at Franklin’s existing corporate headquarters in downtown Franklin, Tn.

Following the close of the transaction, three members of Franklin’s board of directors will be appointed to the FB Financial board of directors.

According to the terms of the merger agreement, Franklin shareholders will receive 0.9650 shares of FB Financial common stock and $2.00 in cash for each share of Franklin stock. Based on FB Financial’s closing price of $38.80 per share as of Jan. 17, 2019, the implied transaction value is approximately $611 million in the aggregate or $39.44 per share.

The transaction is expected to be approximately 10 percent accretive to FB Financial’s earnings per share on a fully-phased in basis and neutral to FB Financial’s tangible book value per share at the close of the transaction. These strong return metrics include a substantial loan mark and achievable cost savings assumptions as well as plans to reduce the risk of Franklin’s balance sheet by exiting approximately $430 million of shared national credits and non-strategic healthcare and corporate loans and paying down non-core funding with the net proceeds.

Additionally, Mr. Holmes said, “The combination provides FB Financial meaningful earnings accretion, while remaining neutral on tangible book value per share. As in every combination, protecting the balance sheet is paramount, so these financial returns come after taking a conservative approach to the balance sheet; we are assuming a 3.9 percent mark to loans. We are also assuming 30 percent cost savings, even though we have significant overlap in our respective branch networks. We will accelerate Franklin’s strategy of exiting non-strategic assets and growing the core community bank. The combined franchise will be well positioned to build on our strong existing customer relationships and grow our greater Nashville area presence.”

The merger agreement has been unanimously approved by both companies’ boards of directors. The merger is expected to close in the third quarter of 2020 and is subject to regulatory approvals, approval by FB Financial’s and Franklin’s shareholders and other customary closing conditions. James W. Ayers, FB Financial’s executive chairman and 44 percent owner of FB Financial, has entered into a customary voting agreement to vote his shares in favor of the transaction. Additionally, each member of Franklin’s board of directors has entered into similar voting agreements.

J.P. Morgan Securities LLC served as financial advisor to FB Financial Corporation, and Wachtell, Lipton, Rosen & Katz served as legal advisor. Evercore served as financial advisor to Franklin Financial Network, Inc., and Alston & Bird LLP served as legal advisor.

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