HomeTrust to acquire TriSummit Bank

KINGSPORT — HomeTrust Bancshares Inc. announced Wednesday it will acquire TriSummit Bank.Upon the completion of the transaction, the combined company is expected to have assets in excess of $3 billion, according to a news release.TriSummit opened for business in 2007 with financial centers in Kingsport, Johnson City and Bristol, Va.Dana Stonestreet, chairman, resident, and CEO of HomeTrust said: "We are excited about the opportunity to continue to expand our presence in the Tri-Cities, Tennessee market. This acquisition is consistent with our stated business strategy to grow both organically and through in-market acquisitions. This in-market transaction provides the opportunity to significantly reduce expenses by leveraging our current infrastructure."R. Lynn Shipley Jr., president and CEO of TriSummit, noted: "We are very pleased to partner with HomeTrust. This merger enables our team to expand commercial relationships which have been constrained due to our size. We will also bring additional treasury management services and an expanded portfolio of other products and services to our consumer clients such as after-hour customer service support and enhanced residential mortgage lending."Established in 2007, TriSummit Bank is headquartered in Kingsport. Its holding company, TriSummit Bancorp Inc., has more than $353 million in consolidated assets. TriSummit operates six banking facilities in Kingsport, Johnson City, Bristol, Va., Morristown and Jefferson City. HomeTrust is based in North Carolina.The merger agreement has been unanimously approved by the boards of directors of both companies. The transaction is anticipated to close in the first calendar quarter of 2017, subject to TriSummit shareholder approval and customary closing conditions, including regulatory approvals.Under the terms of the agreement, TriSummit shareholders will receive a total of $8.80 per share in merger consideration consisting of $4.40 in cash plus $4.40 in HomeTrust common stock. This represents approximately $31.8 million of aggregate transaction consideration. The number of HomeTrust shares to be issued will be determined based on HomeTrust's weighted average closing stock price on the NASDAQ Stock Market during the 20 trading days ending on the fifth trading day prior to the closing date. The exchange ratio will be fixed at 0.2310 if the weighted average closing price is equal to or less than $19.05 per share (HomeTrust's tangible book value per share at June 30, 2016) and at 0.2099 if the weighted average closing price is equal to or greater than $20.96 per share, provided the stock portion of the merger consideration may be increased and the cash portion of the merger consideration decreased to assure that merger qualifies as a tax-free reorganization. In addition, it is expected that TriSummit's $7.1 million TARP preferred stock (now held by private shareholders) will be redeemed in connection with the closing of the merger.The deal value equates to 121 percent of TriSummit's June 30, 2016, tangible book value, 2.7 percent premium to core deposits, and 8.2 times TriSummit's 2018 estimated earnings including fully phased-in cost synergies. Excluding certain one-time merger charges, the transaction is anticipated to be accretive to earnings per share by approximately 8 percent in fiscal 2017 and 30 percent in 2018. Tangible book value per common share is expected to be diluted by approximately 4 percent at closing, with a projected earnback period of 3.5 years, according to the release.