Michael Kramer
Atlantic Capital logoAtlanta-based Atlantic Capital Bancshares, Inc. announced today it will buy the parent company of FSG Bank in Chattanooga, the largest independent bank in Chattanooga, for $160 million.
Directors of the two banks approved the merger, which is expected to be completed this fall, pending regulatory and shareholder approval.
The combination will create a bank with $2.7 billion in assets, $2.2 billion in deposits and $1.9 billion in net loans. Atlantic Capital will be based in Atlanta with the bank maintaining corporate offices in Atlanta and Chattanooga. Banking offices will continue to operate under their current brands.
Douglas L. Williams, chief executive for Atlantic Capital, will be CEO of the combined entity, with D. Michael Kramer, CEO of First Security, serving as president and chief operating officer.
"Atlantic Capital focuses on corporate banking to small and mid-sized companies, which is perfectly compatible with FSG's strategy and focus on small business and commercial banking," Kramer said in a statement after the market closed today. "Likewise, the ability to market FSG's core competencies in the ninth largest metropolitan area in the U.S. will provide significant opportunities for enhanced revenue and growth."
Through expected cost synergies, Atlantic Capital expects the transaction to be neutral to estimated pro forma earnings in the first full year of combined operations, with significant earnings accretion projected thereafter. The merger will create a financial institution well positioned to achieve its targeted financial performance objectives of a 1 percent return on average assets and 12 percent return on average tangible common equity within 24 months of closing.
"Our goal is to build a premier financial institution in the Southeast by focusing on business and private banking," Williams said. "Each bank brings complementary strengths that will only be enhanced by the combined size and geographic reach of the merger. The merger will provide the foundation for a strong financial institution that will produce solid returns for our shareholders."
Under terms of the merger agreement, FSG shareholders may elect cash equal to $2.35 per share, stock based on a fixed exchange ratio of 0.188 shares of Atlantic Capital common stock for each FSG share or any combination thereof.
FSG shareholder elections may be adjusted as necessary to result in an overall ratio of 40 percent cash and 60 percent stock. Atlantic Capital intends to register its shares with the SEC and seek a listing on NASDAQ concurrent with closing of the transaction.