DEFM14A: Affinity Bancshares to be Acquired by Atlanta Postal Credit Union in $159.8 Million Deal

Affinity Bancshares, Inc. announces a definitive agreement to be acquired by Atlanta Postal Credit Union for $22.50 per share, leading to the dissolution of the company and distribution of net assets to stockholders.

Summary

• Affinity Bancshares, Inc. (AFBI) has entered into a purchase agreement with Atlanta Postal Credit Union (Atlanta Postal) for the purchase of substantially all assets and assumption of liabilities of Affinity Bank, National Association.
• The agreement, dated May 30, 2024, as amended, includes a cash purchase price of $22.50 per share of Affinity Bancshares stock, plus consideration for stock options, and the final value of liquidation accounts.
• The estimated distribution to stockholders is projected to be between $22.40 and $22.60 per share, contingent on the asset sale closing by March 31, 2025.
• Following the asset sale, Affinity Bank will liquidate, and Affinity Bancshares will dissolve, distributing net assets to stockholders.
• A special meeting of stockholders is scheduled for November 4, 2024, to vote on the asset sale and company dissolution proposals.
• The board of directors unanimously recommends voting in favor of the asset sale, company dissolution, executive compensation, and adjournment proposals.
• The deal is expected to close in the fourth quarter of 2024 or the first quarter of 2025, pending regulatory and stockholder approvals.
• Performance Trust Capital Partners, LLC, delivered an opinion to the Companys board of directors that, as of May 30, 2024, the sum of the Stock Consideration, the Option Consideration and the Retained Cash to be paid by Atlanta Postal and/or retained by the Company pursuant to the purchase agreement is fair, from a financial point of view, to the Companys stockholders.

Sentiment

Score: 7

Explanation: The document is generally positive, outlining a clear plan for the acquisition and dissolution, with a favorable outcome for stockholders. However, there are inherent risks and uncertainties associated with the transaction, which temper the overall sentiment.

Positives

• Stockholders are expected to receive a cash distribution of $22.40 to $22.60 per share.
• The board of directors supports the transaction, viewing it as beneficial for stockholders.
• The deal provides liquidity to stockholders at a premium to the current stock price.
• Executive officers will enter into new employment agreements with Atlanta Postal.

Negatives

• The estimated distribution is subject to change based on several factors, and the ultimate per share distribution may be lower.
• The company will cease to exist after the dissolution, and stockholders will no longer have an ownership interest.
• The asset sale and dissolution process may take up to a year or longer to finalize.
• The purchase price will be reduced dollar-for-dollar to the extent the Company pays dividends to its stockholders before the completion of the asset sale.

Risks

• Regulatory approvals may be delayed or not obtained.
• Stockholder approval may not be received.
• The asset sale may not be consummated in a timely manner or at all.
• Unexpected costs, fees, and expenses may reduce the amount available for distribution to stockholders.
• Changes in general business, industry, or economic conditions could affect the transaction.
• The amount of cash to be received by the Bank and/or to be utilized by the Bank and the Company following the completion of the asset sale, and the resulting amount available for distribution to Company stockholders, either in the aggregate or on a per-share basis may change.

Future Outlook

The asset sale is expected to close in the fourth quarter of 2024 or the first quarter of 2025, pending regulatory and stockholder approvals, after which Affinity Bancshares will dissolve and distribute its net assets to stockholders.

Management Comments

• The Companys board of directors unanimously recommends that you vote FOR the asset sale proposal; FOR the Company dissolution proposal; FOR the executive compensation proposal; and FOR the adjournment proposal.

Industry Context

The acquisition reflects a trend of consolidation in the banking industry, with credit unions increasingly acquiring community banks to expand their market presence.

Comparison to Industry Standards

• The proxy statement includes a fairness opinion from Performance Trust Capital Partners, LLC, which suggests that the consideration to be received by the Bank is fair, from a financial point of view, to the common stockholders of the Company.
• The proxy statement includes a comparison of the transaction to selected Southeast business combinations and other transactions Performance Trust deemed relevant.
• The proxy statement includes a comparison of the transaction to selected national business combinations and other transactions Performance Trust deemed relevant.
• The proxy statement includes a comparison of the transaction to selected regional public companies.
• The proxy statement includes a comparison of the transaction to selected national public companies.

Stakeholder Impact

• Stockholders are expected to receive a cash distribution.
• Executive officers may receive severance payments and enter into new employment agreements.
• Employees may be offered employment with Atlanta Postal or receive severance packages.
• Customers of Affinity Bank will become customers of Atlanta Postal.

Next Steps

• Stockholders to vote on the asset sale and company dissolution proposals at the special meeting on November 4, 2024.
• Obtain required regulatory approvals from the FDIC, OCC, GDBF, NCUA and Federal Reserve.
• Complete the asset sale and subsequent liquidation of Affinity Bank.
• Dissolve Affinity Bancshares and distribute net assets to stockholders.

Key Dates

Keywords

asset sale, dissolution, acquisition, stockholders, liquidation, Affinity Bancshares, Atlanta Postal, bank