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FTN Financial to Acquire Coastal Securities for $160M

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On Oct 27, 2016, FTN Financial, a division of First Tennessee Bank, announced that it will acquire a Houston-based financial company Coastal Securities for $160 million in cash, based on the book/market value of acquired net assets at closing. First Tennessee Bank is a subsidiary of First Horizon National Corporation (FHN - Free Report) .

Coastal Securities which is a national lender in the trading, securitization and analysis of Small Business Administration (SBA) loans has offices in Houston, Dallas, San Antonio, Austin and Little Rock, AR. Moreover, the combination of FTN’s existing SBA trading activities and Coastal’s loan products are expected to increase FTN Financial’s revenues and help in product diversification.

The chairman of Coastal’s parent company said, “The combination of our deep expertise in government-guaranteed loan products with FTN Financial’s extensive distribution platform, liquidity and capital presents a compelling opportunity for our customers, employees and shareholders.  Our team at Coastal looks forward to joining with FTN Financial to enhance our market position and create further value for our clients.”

The deal, which is expected to close in early 2017, has already been approved by the Board of Directors of First Horizon and Coastal Financial Holdings. Notably, upon closure, the deal should be immediately accretive to First Horizon’s earnings per share, return on tangible common equity and return on assets.

Per a presentation made by First Horizon, all the employees of Coastal Securities will continue to be part of the combined business, whereas a retention program would be established for some of its employees.

Justifying the deal, President of FTN Financial, Michael E. Kisber said, “With more than 25 years of experience, Coastal has established itself as a market leader in the SBA and USDA product sectors.  A pioneer in the pooling of SBA loans, Coastal consistently ranks annually as one of the top pool assemblers, providing important market liquidity to facilitate ongoing government-guaranteed lending activities across the nation.”

Currently, First Horizon carries a Zacks Rank #3 (Hold).

Some better-ranked south-east bank stocks include Farmers Capital Bank Corporation , Carolina Financial Corporation and Ameris Bancorp (ABCB - Free Report) .

Farmers Capital has witnessed an upward earnings estimate revision of 8.3% over the past 30 days and its share price is up 16.9% year to date. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Carolina Financial also sports a Zacks Rank #1 and has witnessed an upward earnings estimate revision of approximately 12.9% over the past 30 days. Moreover, its share price is up 28.1% year to date.

Ameris Bancorp has witnessed an upward earnings estimate revision of 1.3% over the past 30 days and its share price is up 6.1% year to date. It currently carries a Zacks Rank #2 (Buy).

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