HOUSTON, Dec. 4 -- Franklin Bank Corp. (Franklin or Company), the parent company of FranklinBank, S.S.B. (Franklin Bank), and First National Bank of Bryan announcedthat they have entered into an agreement in which Franklin Bank willacquire the outstanding shares of First National Bank of Bryan in exchangefor $134.0 million in cash.
"The acquisition of First National Bank of Bryan enhances FranklinBank's commercial and community banking businesses in one of the fastestgrowing markets in the state of Texas and increases the Company'scommercial loan generation capacity," said Tony Nocella, Franklin'sPresident and Chief Executive Officer. "The acquisition also addsattractive commercial lending and depository relationships."
As of September 30, 2006, First National Bank had $517 million in totalassets, $332 million in community banking loans and $448 million incommunity banking deposits. For the nine months ending September 30th,First National Bank reported net income of $5.6 million. Additionally,Franklin will add First National Bank's six community banking offices toits banking office network.
"Today's transaction strengthens our already solid position in theCentral Texas market," said Nocella. "First National Bank of Bryan is thesecond largest bank in the Bryan/College Station market and has had aten-year record of strong growth and excellent credit performance. Itsdeposit and loan production teams are recognized as industry leaders and welook forward to offering the broader Franklin Bank product line to FirstNational Bank of Bryan's clients."
Glenn Mealey, Executive Vice President of Administration andAcquisitions, added, "This transaction provides us additional opportunitiesfor strong loan and deposit growth and opportunities to cross-sell businessand community banking products to First National's existing customer base.We believe that there are significant economic synergies to be gained bybringing our two very similar community-focused banking operationstogether."
Tim Bryan, Chairman and Chief Executive Officer of First National Bankof Bryan, commented, "The merger with Franklin Bank links our company withone of the most dynamic banking organizations in the state and is anattractive financial transaction for our shareholders. We believe our corecommercial lending and community banking units will transition smoothlywith Franklin Bank. The customers of First National Bank of Bryan shouldexpect business as usual. They will receive the same outstandingpersonalized customer service to which they have grown accustomed over themany years they have been doing business with First National Bank ofBryan."
Franklin Bank Corp. will update its 2007 guidance subsequent to thecompletion of due diligence, which will be completed prior to closing thetransaction. Franklin expects the transaction to be accretive to theCompany's 2007 earnings. The acquisition is expected to be completed in thesecond quarter of 2007 and is subject to approval of First National Bank ofBryan's shareholders, regulatory approvals, and the completion of duediligence by Franklin. The agreement has been approved by both companies'boards of directors. "We expect to have First National Bank of Bryan fully-integrated by the end of the fourth quarter 2007," said Nocella.
"In addition, Franklin is in the process of evaluating the economicbenefits of restructuring its single family loan portfolio and raisingadditional funds to continue the growth of its commercial loan portfolio in2007 and to remain well-capitalized," Nocella concluded.
Franklin Bank was represented in the transaction by its legal advisorsBracewell & Giuliani LLP. First National Bank of Bryan was represented inthe transaction by Sutherland Asbill & Brennan LLP.
Corporate Overview
Franklin Bank Corp., headquartered in Houston, Texas, was formed inApril 2002 and is now a $5.2 billion company. Franklin's common stockinitiated trading on the NASDAQ in December 2003 under the ticker symbolFBTX. Franklin Bank Corp.'s common stock is currently included within thefollowing indices: Russell 3000, Russell 2000, Russell Microcap, AmericanCommunity Bankers, S&P SmallCap 600 Index, S&P Composite 1500, S&P 1000,NASDAQ Bank, NASDAQ Composite, NASDAQ NNM Composite, and NASDAQ GlobalSelect Market Composite. In May 2006, Franklin raised additional capitalthrough a Preferred Stock offering that is now trading on the AMEX underthe ticker symbol FBK-P.
Franklin's community banking philosophy focuses on a high growthcommercial lending approach outside the major metropolitan cities in Texas.In addition to its corporate headquarters in Houston, there are currently36 community banking offices in Texas, 8 regional commercial lendingoffices, 38 retail mortgage loan production offices, and a wholesalemortgage production office.
Through its subsidiary, Franklin Bank S.S.B., Franklin offers a widevariety of commercial products that allows it to serve customers in itscommunities, as well as on a national basis. Franklin Bank focuses onproviding high-quality personalized service through its "trusted financialadvisors" and strives to meet all financial needs of its customers. Inaddition to various deposit and loan products, Franklin Bank offers retailbrokerage services. For more information, you can visit its website atwww.bankfranklin.com. Franklin Bank is FDIC insured and an equalhousing lender.
