Mountain 1st parent to buy Gastonia bank

Published 3:44 pm Thursday, February 19, 2009

Greg Gibson, Chief Executive Officer of 1st Financial Services Corporation, said he believes the partnership with AB&T Financial Corporation is &dquo;an exceptionally good fit&dquo; which brings a number of advantages to 1st Financial and Mountain 1st.

He said the companies have similar corporate cultures, Alliance Bank&squo;s growth is in markets adjoining areas that Mountain 1st has already reached, and AB&T&squo;s equity base will increase 1st Financial&squo;s &dquo;already strong capital level.&dquo;

&dquo;Together our combined approximate $880 million in assets will be supported by approximately $71 million in tangible common equity and $20 million in preferred equity,&dquo; said Gibson. &dquo;In the current economic environment, we believe that a strong capital base is essential in maintaining a strong bank and in maintaining the ability to continue to grow and capitalize on opportunities presented in this environment.&dquo;

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Gibson added that the merger will provide an enhanced retail network, efficiencies and additional management strength and depth.

The merger will allow Mountain 1st to enter the Gaston County market. Gibson said AB&T&squo;s local markets offer demographics that are, &dquo;on average, even better than some of our own existing markets.&dquo;

After the merger, 1st Financial will operate in 11 western North Carolina counties and, at almost $900 million in assets, will be one of the 20 largest independent banking companies headquartered in the state.&dquo;

&dquo;At this level, we believe, the larger company can achieve some significant operating efficiencies by combining the two companies; we are expecting economies of approximately 20% of AB&T&squo;s non-interest expenses,&dquo; said Gibson. &dquo;We also expect to leverage AB&T&squo;s excess capital with good loans relatively quickly and lower their cost on certain borrowed funds. As a result, we expect the transaction to be accretive to 1st Financial&squo;s common earnings per share in the first full year of combined operations.&dquo;

In announcing the transaction, Dan Ayscue, Chief Executive Officer of AB&T Financial Corporation, said his company is excited that the merger will allow it to take advantage of the economic growth &dquo;emanating from North Carolina&squo;s Charlotte/Mecklenburg market into surrounding communities such as Gaston and Cleveland counties.&dquo;

&dquo;We believe that our partnership with 1st Financial will provide us access to additional capital, technology and expertise in the products and services that we need to fully take advantage of the competitive opportunities in our market,&dquo; says Ayscue. &dquo;We also believe Mountain 1st&squo;s community bank culture is extremely strong. We have a high degree of confidence in the Mountain 1st team to meld our two organizations and continue building a great North Carolina banking franchise.&dquo;

AB&T Financial Corporation is a one-bank holding company for Alliance Bank & Trust Company. As of December 31, 2008, the company had, on a consolidated basis, approximately $170 million in assets, $140 million in loans, $121 million in deposits and $28 million in stockholders&squo; equity. AB&T Financial Corporation shares are traded on the OTCBB under the symbol ABTO.

Alliance Bank & Trust Company, which opened in Gastonia, North Carolina in 2004, has approximately $170 million in assets and $24.5 million in tangible common equity and operates four North Carolina banking offices, in Gastonia(2), Kings Mountain and Shelby.

1st Financial Services Corporation is the parent of Mountain 1st Bank & Trust Company. Established in 2004, Mountain 1st is a North Carolina state-chartered bank with fifteen offices in ten western North Carolina counties. As of December 31, 2008, 1st Financial had, on a consolidated basis, approximately $707 million in assets, $571 million in loans, $591 million in deposits and $63 million in stockholders&squo; equity. 1st Financial Services Corporation has approximately 5 million outstanding shares, which are traded on the OTCBB under the symbol FFIS.

Under the terms of the merger agreement, AB&T Financial Corporation shareholders will exchange each of their approximately 2,678,205 shares of common stock and 369,636 stock options for 1.175 1st Financial Services Corporation common shares, and the approximately 369,636 stock options would be exchanged for options to purchase shares of 1st Financial common stock on the same basis.

The merger is designed to be a tax free exchange. Cash will be paid in lieu of fractional shares.&bsp; The transaction would have a total value of approximately $17 million, based on the recent trading price for 1st Financial Services Corporation shares.

The terms of exchange represent pro forma ownership in the resulting combined institution of approximately 37.8% and 62.2% for AB&T Financial Corporation and 1st Financial Services Corporation shareholders, respectively, on a diluted basis. Closing of the merger, which is expected to occur in the second or third quarter of 2009, is subject to certain conditions, including approval by the shareholders of both companies and regulatory approval.