VantageSouth Bancshares And Yadkin Financial To Merge - Quick Facts

(RTTNews) - VantageSouth Bancshares Inc. (VSB) and Yadkin Financial Corp. (YDKN) announced that they have entered into a definitive merger agreement. The combination will create the largest community bank headquartered in North Carolina with about $4.0 billion in assets and significant distribution and scale across the state.

In the merger, VantageSouth Bancshares Inc. shareholders will receive 0.3125 shares of Yadkin Financial common stock for each share of VantageSouth Bancshares common stock. At the effective date, the transaction would be valued at about $299 million, based on the closing price of Yadkin Financial common stock on January 24, 2014.

The merger is expected to generate approximately $10 million in fully phased-in annual cost savings or approximately 8% of the expected combined expense total. This estimate is after realization of standalone cost save initiatives initiated before the merger announcement. Additionally, the merger is expected to be over 15% accretive to the standalone 2015 earnings per share of both entities, excluding the impact of the potential revenue enhancement opportunities.

In the merger, Yadkin Financial will be the legal acquirer and VantageSouth Bancshares will be the accounting acquirer.

The combined company will be governed by a 14 person Board of Directors consisting of an equal number of VantageSouth and Yadkin directors. Yadkin's Joe Towell will become Executive Chairman of the new company, serving as Chairman of the Board of Directors as well as a senior executive in the company.

VantageSouth's Scott Custer will become President and Chief Executive Officer of the combined company and continue his service as a director. The other members of the executive management team include Terry Earley, Mark DeMarcus, Steve Jones, and Ed Shuford.

In conjunction with the announced merger, VantageSouth Bancshares, Inc. announced the execution of securities purchase agreements for a $46.9 million private placement of its common stock to new and existing investors, including certain members of VantageSouth Bancshares, Inc. Board of Directors and their affiliates. The capital raise is expected to close on or about January 31, 2014, subject to certain customary closing conditions.

VantageSouth said that the net proceeds of the private placement will be used to redeem the Company's outstanding $42.8 million of preferred stock previously issued to the U.S. Department of Treasury pursuant to the TARP Capital Purchase Program , to repurchase the warrants to purchase 1.35 million shares of common stock from Treasury and for general corporate purposes.

Upon closing of the merger and the capital raise, Yadkin Financial Corporation shareholders will own approximately 45.4% of stock in the combined company; VantageSouth Bancshares, Inc. existing shareholders will own approximately 45.5% and the investors in the capital raise will own approximately 9.1%.

Upon closing, the name of the holding company will be Yadkin Financial Corporation. The company will be headquartered in Raleigh, North Carolina, with banking operations located in Statesville, North Carolina.

The transaction has been unanimously approved by the Board of Directors of each company and is expected to close late the second-quarter 2014, subject to shareholder and regulatory approval and other customary closing conditions.