Franklin Financial Network to merge into FB Financial Corporation

  • 0
  • 3 min to read
Franklin Synergy Bank

Franklin Synergy Bank opened in November 2007 in the Aspen Grove professional building. They moved to their Columbia Ave. headquarters in May 2010.


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

Franklin Financial is headquartered in Franklin with 15 branches throughout Williamson, Rutherford and Davidson counties in the Nashville MSA. It is the leading community bank in its primary markets, demonstrated by its strong market shares in Williamson and Rutherford counties, and 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 significantly enhances FirstBank’s operations in the Nashville MSA, specifically in the attractive Williamson and Rutherford counties where Franklin Financial has a strong community presence. Pro forma for the transaction, FirstBank’s deposit market share will be No. 6 in the Nashville MSA, No. 1 in Williamson County and No. 2 in Rutherford County.

“We are very excited to announce our proposed merger with Franklin,” said President and CEO of FB Financial, Christopher Holmes. “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.”

“Our team is excited to join the FB Financial family,” said CEO of Franklin Financial, Myers Jones. “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 Financial’s existing corporate headquarters in downtown Franklin.

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 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% 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 Financial’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.

“The combination provides FB Financial meaningful earnings accretion while remaining neutral on tangible book value per share,” Holmes said. “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% mark to loans. We are also assuming 30% 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 Financial’s shareholders and other customary closing conditions.

"For our customers, this merger means our ability to meet your needs has never been stronger and our focus has never been more about you," said Jones. "We are excited to be building a phenomenal Tennessee-headquartered bank and look forward to years of growing together."

James W. Ayers, FB Financial’s Executive Chairman and 44% 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 Financial’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.

"As we continue to grow with this great Nashville-based merger, we never forget where we came from," Holmes said. "Merging with Franklin Synergy is part of our commitment to giving our customers more, from best in class technology to the customer service that got us to where we are today."

(0) comments

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.