FB Financial in Nashville, Tenn., has restructured the consideration of a pending acquisition to address a regulator’s concerns.
The $3.2 billion-asset FB Financial disclosed in a regulatory filing Friday that it had reduced the amount of stock it will give Clayton HC Inc. to buy Clayton Bank and Trust and American City Bank. FB Financial agreed in February to pay $282 million for the Tennessee banks.
The original agreement would have given Clayton HC a roughly 24% stake in FB Financial, based on shares outstanding on May 11. The amended deal adds more cash in order to lower that stake to less than 5%.
The Federal Reserve had expressed concerns about Clayton HC gaining a large stake in FB Financial since the company also owns half of Apex Bancorp in Camden, Tenn., the filing said. Jim Clayton owns about 98% of Clayton HC.
FB Financial also disclosed that it could substitute more cash to reduce or eliminate $60 million in subordinated debt it plans to issue to Clayton HC as part of the deal.
To help finance the higher cash component, FB Financial plans to sell $142 million in common stock through a private placement. Any remaining funds from the placement will be used for general corporate purposes.
The amended terms should increase FB Financial’s earnings per share accretion compared with the original agreement, said Chris Holmes, the company’s president and CEO. The new consideration should also boost pro forma capital ratios and reduce the tangible book value dilution.
The acquisition is expected to close in the third quarter.