NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) releases a comment on CenterState Bank Corporation’s pending acquisition of Charter Financial Corporation. Winter Haven, Florida based CenterState Bank Corporation (NASDAQ:CSFL), (“CenterState” or “the Company”) signed a definitive agreement and plan of merger whereas Charter Financial Corporation (NASDAQ:CHFN) (“Charter”) will merge with and into CenterState. The 90% stock and 10% cash deal is valued at approximately $360 million, amounting to 1.92x tangible book value. The transaction is expected to close in the fourth quarter of 2018, which still needs customary regulatory approval and approval of Charter shareholders.
The proposed acquisition would add approximately $1.7 billion in total assets, $1.2 billion in total loans, and $1.3 billion in total deposits to CenterState’s balance sheet. The combined Company would have pro-forma total assets of approximately $12 billion. In KBRA’s opinion, the transaction is neutral to CSFL’s ratings and in-line with management’s strategy of acquisitive growth and expansion both in Florida and contiguous states. CenterState has a solid track record of successfully acquiring and integrating ten banks since 2011. Charter has a strong core deposit base, similar loan mix, and an attractive footprint around Atlanta, Georgia. Although CenterState has no branch locations in Georgia, the Company is familiar with the Atlanta market given that the correspondent banking, mortgage banking, and SBA divisions are located within the region. Moreover, Charter’s banking operations extend to Pensacola, Florida, which aligns well with CSFL’s already substantial market share in the state of Florida. The deal will also provide the potential for improved profitability with an estimated cost savings of 30% of Charter’s noninterest expense base with 85% phased in 2019 and 100% thereafter, coupled with Charter’s solid fee income generation.
In January of 2018, KBRA assigned ratings, including a senior unsecured debt rating of BBB+ for CenterState Bank Corporation, and a senior unsecured debt rating of A- for CenterState Bank, N.A. The Outlook on all long-term ratings is Stable. Though KBRA does not currently rate Charter Financial Corporation or its subsidiary, CharterBank, on a long-term basis, both institutions appear to be in sound financial condition. This is further evidenced by KBRA’s Subscription Rating Service’s financial strength rating of B for CharterBank.
The ratings of CenterState are based on KBRA’s Global Bank and Bank Holding Company Rating Methodology published on February 19, 2016.
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