CapStar Financial Holdings in Nashville, Tenn., has agreed to buy Athens Bancshares in Tennessee.

The $1.4 billion-asset CapStar said in a press release Monday that it will pay $113.5 million in stock for the $482.3 million-asset parent of Athens Federal Community Bank. The deal, which is expected to close in the fourth quarter, prices Athens at 209% of its tangible book value.

Athens Federal has 10 branches in southeastern Tennessee. It has $422.2 million in deposits and $334.5 million in loans.

“We have a deep respect for Athens, its valuable customers and its dedicated employees,” Claire Tucker, CapStar’s president and CEO, said in the release. “Both of our organizations are built around customer-centric strategies and we understand the importance of delivering increasing value to customers, colleagues, communities and shareholders.”

CapStar said it expects to deal to have double-digit earnings per share accretion in 2020. It should take less than four years to earn back any dilution to CapStar's tangible book value.

CapStar plans to cut about a quarter of Athens' annual noninterest expense. CapStar said it expects to incur about $11.5 million in merger-related expenses.

Jeffrey Cunningham, Athens’ president and CEO, will become CapStar’s executive vice president of community banking strategy. Michael Hutsell, Athens’ chief operating officer and chief financial officer, and Jay Leggett, the company’s Cleveland city president, will have senior roles. Two Athens directors will join CapStar’s board.

CapStar has agreed to contribute $1.5 million over the next four years to the Athens Federal Foundation.

The company also announced that it will begin paying a quarterly dividend in the third quarter. Its initial quarterly dividend will be 4 cents a share.

Keefe, Bruyette & Woods; Sandler O’Neill; and Wachtell, Lipton, Rosen, & Katz advised CapStar. Banks Street Partners and Luse Gorman advised Athens.

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