Two of Middle Tennessee's young community lenders are joining forces in a $38 million deal that will create another area $1 billion bank.
Officials with Franklin Financial Network, the parent of Franklin Synergy Bank, said Thursday morning they plan to pay $38 million for MidSouth Bank, the fifth-largest deposit holder in Rutherford County. The combined company will have 11 offices in Williamson and Rutherford counties and remain headquartered in downtown Franklin. Of note, the companies share just two customers.
"Looking at our future growth opportunities, there is no place that's better for us to be than Rutherford County," Franklin Financial President and CEO Richard Herrington told the Post Thursday afternoon. "Community banking in the suburbs is different than in the city and, for both banks, our specialty is in outlying areas."
Herrington (on the right in the picture) will keep the latter of those titles for the holding company while MidSouth Chairman and CEO Lee Moss (left) will be its president. Franklin Synergy CFO Sally Kimble will hold that title for the holding company while MidSouth CFO Kevin Busbey will be CFO of the bank itself. Moss and two other MidSouth directors will join the Franklin Financial board, growing it to 10.
Shareholders of MidSouth will receive Franklin Financial shares (Ticker: FRFN) for their stock and end up owning 36 percent of the company. When the deal closes — it's expected to do so by the second quarter of next year — the company will have deposits of about $760 million, which would rank it 11th in the Nashville area and between fellow young banks CapStar and Avenue.
Herrington and Moss have told their teams they are not planning to cut jobs as part of the acquisition. There are enough growth opportunities ahead, they said, to give employees — senior-level and lower-ranked — options to grow into different roles. Case in point: MidSouth President Dallas Caudle, who will in the future be the bank's Rutherford County leader and its chief investment officer.
Word of MidSouth's plan to sell to Franklin Financial comes 18 months after the bank was relieved from extraordinary regulatory oversight that had called for it to raise extra capital and improve operations. In the two years ended June 30, MidSouth posted a profit of $3.3 million.
"We did all the right things," Moss said of the Fed's extra attention. "We raised capital and we quickly turned a profit. That put us in a position to be attractive to Franklin Synergy."
SunTrust Robinson Humphrey and Baker Donelson Bearman Caldwell & Berkowitz advised Franklin Financial on the deal. MidSouth was advised by Sterne Agee & Leach and law firm Daniel W. Small & Co.