Shareholders of Dogwood State Bank (OTC: DSBX) and Community First Bancorporation (OTC: CFOK) have overwhelmingly approved the merger between Community First and Dogwood. The transaction, expected to close early in the third quarter of 2024, will significantly strengthen the combined entity’s market position with assets totaling approximately $2.13 billion.

Strategic Implications of the Merger

The merger, which was announced in February 2024, is a strategic move to enhance liquidity and funding options for Dogwood State Bank, while expanding its footprint in high-growth markets. The combined company will have around $1.80 billion in deposits and $1.66 billion in loans, indicating a solid financial base to support future growth and customer service enhancement.

Steve Jones, CEO of Dogwood State Bank, expressed satisfaction with the shareholder endorsement, noting, “The strong showing of support from our combined shareholders highlights their confidence in the strategic direction and the significant opportunities this merger will create.” Jones emphasized that the merger will allow Dogwood to deliver long-term value and strengthen its competitive position in the banking sector.

Richard Burleson, President and CEO of Community First, echoed these sentiments, highlighting the cultural and operational synergies between the two institutions. “Our combination will allow us to continue growing our customer base in the markets we serve and will enable our customers to benefit from expanded products and services,” said Burleson.

Merger Terms and Financial Impact

Under the terms of the merger agreement, Community First Bancorporation’s common shareholders will receive 0.5875 shares and preferred shareholders will receive 64.7719 shares of Dogwood’s voting common stock. The transaction, intended to be a tax-free reorganization for federal income tax purposes, values Community First Bancorporation common shares at approximately $11.75 based on Dogwood’s recent capital raise.

The pro forma entity will boast total assets of $2.2 billion, with total deposits of $1.8 billion and net loans of $1.7 billion. The transaction is projected to be more than 65% accretive to Dogwood’s earnings per share in 2025. Despite initial tangible book value dilution, primarily driven by the current interest rate environment, the earn-back period is expected to be approximately one year.

The merger between Dogwood State Bank and Community First Bancorporation is a significant development in the banking industry. It reflects a growing trend of strategic consolidations aimed at enhancing financial stability and expanding market reach. The combined entity’s increased scale and operational efficiencies are likely to provide substantial benefits to shareholders, customers, and the communities they serve.

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