Community First Bancshares, Inc., the parent company of Newton Federal Bank, and ABB Financial Group, Inc., parent company of Affinity Bank, announced that they have entered into a definitive merger agreement whereby CFBI has agreed to acquire ABB and its wholly owned bank subsidiary, Affinity Bank, in an all-cash transaction. The transaction has been unanimously approved by the Boards of Directors of each company and is expected to close in the fourth quarter of 2019 or the first quarter of 2020.

ABB is headquartered in Atlanta, less than one mile from The Battery, the dynamic neighborhood that includes SunTrust Park, home of the Atlanta Braves. ABB also operates a loan production office in the fast-growing and affluent Cumming/Alpharetta, Georgia market.

The merger will expand CFBI’s presence in the highly desirable Atlanta MSA and accelerates CFBI’s growth strategy following its mutual holding company reorganization and initial public offering in 2017. It also enhances CFBI’s commercial banking capabilities and adds an affluent dental clientele that has spurred ABB’s growth over the last several years. The pro forma company will be one of the 10-largest Georgia-based banks, by deposits, headquartered in the Atlanta MSA.

Under the terms of the merger agreement, ABB shareholders will receive cash merger consideration of $7.50 for each share of ABB. Including consideration received by ABB option holders, the transaction is valued at approximately $40.3 million. Additionally, ABB’s preferred stock and trust preferred securities will be redeemed at the close of the transaction, and all accrued but unpaid dividends and interest will be paid on the preferred stock and trust preferred securities. The transaction is expected to be meaningfully accretive to CFBI’s 2020 earnings per share, excluding one-time merger costs, and the tangible book value earn-back is expected to be less than 3.5 years, utilizing the crossover method.

“This transaction marks an important milestone for Newton Federal Bank as we continue to position our organization as a premier Atlanta community bank,” said Billy Fortson, Chairman of CFBI. “ABB brings an attractive customer base and an energetic banking team that, combined with our wonderful team at Newton Federal Bank, will offer a best-of-class banking experience for current and prospective customers. Our partnership will also contribute to attracting talented, Atlanta-area bankers to further our growth strategy and reward shareholders with strong performance.”

“We are very excited to join the CFBI team,” said ABB Chief Executive Officer Ed Cooney. “This combination is incredibly positive for both banks’ clients, employees and shareholders. I’ve known CFBI CEO Johnny Smith for a long time and look forward to working with him and his team. Together, we will leverage the combined resources and products to clients and prospects across our combined markets in furthering our shared objective of providing a superior banking solution for all stakeholders.”

“This is a transformative event for the Newton Federal customers, employees and shareholders,” stated CFBI Chief Executive Officer Johnny Smith. “Our respective management teams have spent a considerable amount of time prior to this point, studying the relative strengths and weaknesses of our banks. Together, we believe the strengths are enhanced and the weaknesses are diminished. I believe there will be very few Georgia community banks that will match our diverse lines of business and attractive market demographics.”

Upon completion of the transaction, Ed Cooney will become CEO of CFBI and Newton Federal Bank and will also become a director of both entities. Johnny Smith of CFBI will remain President of CFBI and Newton Federal Bank and will continue to serve on the boards of both entities. Affinity Bank will merge into Newton Federal Bank. Based on June 30, 2019 bank-level financials, and excluding merger accounting adjustments, the combined institution will have approximately $613 million in assets, $465 million in deposits and $500 million in loans.

Completion of the transaction is subject to customary closing conditions, including the receipt of required regulatory approvals and the approval of ABB’s shareholders.

Banks Street Partners, a Performance Trust Company, acted as financial advisor to CFBI, and Luse Gorman, PC, served as its legal advisor. RP Financial, LC. provided a Fairness Opinion to ABB, and Miller & Martin, PLLC served as its legal advisor.