SUFFOLK,
Va. and RICHMOND, Va., July 15,
2014 /PRNewswire/ -- Hampton
Roads-based TowneBank (NASDAQ: TOWN) and Richmond-based Franklin Financial Corporation
(NASDAQ: FRNK) today announced the signing of a definitive merger
agreement pursuant to which TowneBank will acquire Franklin.
"Our Towne family is humbled and excited to join hands with a
legendary company that has served the greater Richmond community for over 80 years," said
G. Robert Aston, Jr., Chairman and
CEO of TowneBank. "Since the founding of Towne in my home
garage fifteen years ago, we have built our company around the
values of "serving others and enriching lives" while striving to
build a great community asset. We consider it a wonderful
privilege to expand our business to Richmond and we are grateful to Rick Wheeler and our friends at Franklin for the
invitation to join with them."
Richard T. Wheeler, Jr.,
Chairman, President and CEO of Franklin added, "we are extremely
pleased and excited to be joining forces with such a well regarded
banking institution. The combination will enable the combined
institution to provide a much greater line of products to Franklin
Federal's current customers. We have respected Bob Aston and his team for many years and
admired TowneBank's ability to not only succeed, but to
excel. Since its opening in 1999, TowneBank has grown to be
the largest community bank and the third largest bank in
Hampton Roads, and TowneBank
intends to seek similar growth in the Richmond market. Furthermore, we share
similar values towards employees, customers, communities and
shareholders, so our cultures should blend smoothly."
Based on financials reported on March 31,
2014, the combined companies would have total assets of
$5.9 billion, deposits of
$4.1 billion and loans of
$3.8 billion. Under the terms
of the agreement, common shareholders of Franklin will receive 1.40
shares of TowneBank common stock for each share of Franklin.
This implies a deal value per share of $23.04 or approximately $275 million based on TowneBank's closing stock
price of $16.46 on Monday, July 14, 2014.
In consideration of the merger, extensive due diligence was
performed over a multi-week period. Under the proposed terms,
the transaction is expected to be accretive to TowneBank's earnings
in 2016 and thereafter. Further it is anticipated that the
transaction will be immediately accretive to TowneBank's capital
ratios, which already exceed well-capitalized regulatory
standards. "In addition to acquiring a great foundation for
our entry into the Richmond
market, this transaction has the added benefit of effectively being
a capital raise due to Franklin's strong capital base.
Accordingly, the transaction will provide capital for additional
expansion in Richmond as well as
retiring the preferred stock we issued in connection with the Small
Business Lending Fund Program," added Aston.
Rick Wheeler will join the
TowneBank Corporate Board and Executive Committee as well as
serving on the TowneBank of Richmond Board along with other Franklin board
members and a yet to be named group of Central Virginia business and community
leaders. T. Patrick Collins, a
prominent Richmond banker, has
been named as President and CEO of TowneBank of Richmond.
TowneBank's current executive management, led by Aston and
TowneBank President, J. Morgan
Davis, will form the core of the combined company's
leadership team.
An investor presentation outlining the transaction is provided
on the TowneBank website at www.townebank.com under "Investor
Relations".
Sandler O'Neill + Partners, LP acted as financial advisor to
TowneBank and LeClairRyan, A Professional Corporation acted as its
legal advisor in the transaction. Keefe, Bruyette &
Woods, Inc. acted as financial advisor to Franklin and Kilpatrick,
Townsend & Stockton, LLP acted as its legal advisor.
About TowneBank
As one of the top community banks in
Virginia and North Carolina, TowneBank operates 28 banking
offices serving Chesapeake,
Hampton, Newport News, Norfolk, Portsmouth, Suffolk, Virginia
Beach, Williamsburg,
James City County and York County in Virginia along with Moyock, Grandy, Camden, Southern
Shores, Corolla and
Kill Devil Hills in North Carolina. Towne also offers a full
range of financial services through its controlled divisions and
subsidiaries that include Towne Investment Group, Towne Insurance
Agency, TFA Benefits, TowneBank Mortgage, TowneBank Commercial
Mortgage, Prudential Towne Realty, Towne 1031 Exchange, LLC, and
Corolla Classic Vacations. Local decision-making is a
hallmark of its hometown banking strategy that is delivered through
the leadership of each group's President and Board of Directors.
With total assets of $4.78
billion as of March 31, 2014,
TowneBank is one of the largest banks headquartered in Virginia.
About Franklin
As one of the largest and oldest
community based financial institutions serving Richmond and Central
Virginia, Franklin operates eight banking offices and has
assets of $1.1 billion.
Franklin offers a wide range of retail deposit and investment
brokerage services and has been a leader in commercial real estate
finance.
At March 31, 2014, Franklin had
total deposits of $671 million, net
loans of $555 million and total
shareholders' equity of $243
million. Franklin's capital ratios are among the
strongest in Virginia and the
nation. Throughout its 80 year history, Franklin has been
committed to its customers, its community, its employees and its
members/shareholders.
Additional Information and Where to Find It
In
connection with the proposed merger, TowneBank will file with the
Federal Deposit Insurance Corporation (the "FDIC") a proxy
statement/prospectus and Franklin will file with the Securities and
Exchange Commission (the "SEC") a preliminary proxy statement.
TowneBank and Franklin will each deliver a definitive joint
proxy statement/prospectus to their respective stockholders seeking
approval of the merger and related matters. In addition, each
of TowneBank and Franklin may file other relevant documents
concerning the proposed merger with the FDIC and SEC.
Investors and stockholders of both companies are urged to read
the definitive joint proxy statement/prospectus when it becomes
available and any other relevant documents to be filed with the
FDIC and SEC in connection with the proposed merger because they
will contain important information about TowneBank, Franklin and
the proposed transaction. Investors and stockholders may
obtain free copies of certain of these documents through the
website maintained by the SEC at http://www.sec.gov. Free
copies of the definitive joint proxy statement/prospectus, when
available, also may be obtained by directing a request by telephone
or mail to TowneBank, 6001 Harbour View Boulevard,
Suffolk, Virginia 23425,
Attention: Investor Relations (telephone: (757) 638-6794), or
Franklin Financial Corporation, 4501 Cox Road, Glen Allen, Virginia 23060, Attention:
Investor Relations (telephone: (804) 967-7023), or by accessing
TowneBank's website at https://townebank.com under "Investor
Relations" or Franklin's website at https://www.franklinfederal.com
under "Investor Relations." The information on TowneBank's
and Franklin's websites is not, and shall not be deemed to be, a
part of this release or incorporated into other filings either
company makes with the FDIC or SEC.
TowneBank and Franklin, and their respective directors and
executive officers, may be deemed to be participants in the
solicitation of proxies from the stockholders of TowneBank and/or
Franklin in connection with the merger. Information about the
directors and executive officers of TowneBank is set forth in the
proxy statement for TowneBank's 2014 annual meeting of stockholders
filed with the FDIC on April 18,
2014. Information about the directors and executive
officers of Franklin is set forth in the proxy statement for
Franklin's 2014 annual meeting of stockholders filed with the SEC
on January 14, 2014. Additional
information regarding the interests of these participants and other
persons who may be deemed participants in the merger may be
obtained by reading the definitive joint proxy statement/prospectus
regarding the merger when it becomes available.
Forward-Looking Statements
Statements made in this
release, other than those concerning historical financial
information, may be considered forward-looking statements, which
speak only as of the date of this release and are based on current
expectations and involve a number of assumptions. These include
statements as to the anticipated benefits of the merger, including
future financial and operating results, cost savings and enhanced
revenues that may be realized from the merger as well as other
statements of expectations regarding the merger and any other
statements regarding future results or expectations. Each of
TowneBank and Franklin intends such forward-looking statements to
be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform
Act of 1995 and is including this statement for purposes of these
safe harbor provisions. The companies' respective abilities to
predict results, or the actual effect of future plans or
strategies, is inherently uncertain. Factors which could have a
material effect on the operations and future prospects of each of
TowneBank and Franklin, and the resulting company, include but are
not limited to: (1) the businesses of TowneBank and Franklin may
not be integrated successfully or such integration may be more
difficult, time-consuming or costly than expected; (2) expected
revenue synergies and cost savings from the merger may not be fully
realized or realized within the expected timeframe; (3) revenues
following the merger may be lower than expected; (4) customer and
employee relationships and business operations may be disrupted by
the merger; (5) the ability to obtain required regulatory and
stockholder approvals, and the ability to complete the merger on
the expected timeframe may be more difficult, time-consuming or
costly than expected; (6) changes in interest rates, general
economic and business conditions, legislative/regulatory changes;
the monetary and fiscal policies of the U.S. government, including
policies of the U.S. Treasury and the Board of Governors of the
Federal Reserve; the quality and composition of the loan and
securities portfolios; demand for loan products; deposit flows;
competition; demand for financial services in the companies'
respective market areas; their implementation of new technologies;
their ability to develop and maintain secure and reliable
electronic systems; changes in the securities markets; and
accounting principles, policies and guidelines, and (7) other risk
factors detailed from time to time in filings made by TowneBank
with the FDIC or Franklin with the SEC. TowneBank and Franklin
undertake no obligation to update or clarify these forward-looking
statements, whether as a result of new information, future events
or otherwise.
SOURCE Franklin Financial Corporation