Item 2.01 Completion of Acquisition or Disposition of Assets
On January 10, 2020, Community First Bancshares, Inc. (the "Company") and its
wholly owned subsidiary, Newton Federal Bank, completed their acquisition of ABB
Financial Group, Inc. ("ABB") and its wholly owned subsidiary, Affinity Bank.
The acquisition was consummated in accordance with an Agreement and Plan of
Merger (the "Merger Agreement"), dated as of August 19, 2019, by and between the
Company, ABB and Community Interim Corporation, which had been formed to
facilitate the acquisition.
At the effective time of the acquisition, each outstanding share of ABB common
stock was converted into the right to receive $7.50 in cash. Including
consideration received by holders of options to purchase ABB common stock, the
aggregate consideration paid in the transaction was approximately $40.3
million. In addition, $5.9 million of preferred stock that had been issued by
ABB has been redeemed, and $1.4 million of trust preferred securities issued by
a subsidiary of ABB have been acquired by the Company and canceled. All accrued
but unpaid dividends and interest have been paid on the preferred stock and
trust preferred securities.
The preceding is qualified in its entirety by reference to the Merger Agreement
and a press release, which are attached as Exhibits 2.1 and 99.1 to this Current
Report, respectively, and are incorporated by reference herein.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
Effective upon the completion of the acquisition, Edward J. Cooney was appointed
Chief Executive Officer and a Director of the Company and Newton Federal Bank.
Mr. Cooney, age 51, was the President of ABB and Affinity Bank beginning in 2005
and also the Chief Executive Officer of ABB and Affinity Bank beginning in
2012. Mr. Cooney replaces Johnny S. Smith as Chief Executive Officer of the
Company and Newton Federal Bank; Mr. Smith remains the President of these
entities.
Mr. Cooney has entered into an employment agreement with the Company and Newton
Federal Bank, which became effective upon the closing of the acquisition. The
employment agreement has an initial terms of three years. Each year, the boards
of directors of the Company and Newton Federal Bank may renew the term of the
employment agreement for another year so that it again has a three-year term.
If the Company or Newton Federal Bank enter into a transaction that would
constitute a "change in control" under the agreements, the term of the agreement
will automatically extend to three years from the effective date of the change
in control.
Under the employment agreement, the initial annual base salary for Mr. Cooney is
$320,000. Mr. Cooney's base salary will be reviewed at least annually to
determine whether an increase is appropriate. In addition to base salary, Mr.
Cooney is entitled to participate in bonus and incentive programs and benefit
plans available to management employees and will be
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reimbursed for all reasonable business expenses incurred. Mr. Cooney will also
be provided with an automobile.
Under the employment agreement, if the Company or Newton Federal Bank terminates
Mr. Cooney's employment for "cause," as that term is defined in the employment
agreement, Mr. Cooney will not receive any compensation or benefits after the
termination date other than compensation and benefits that have accrued through
the date of the termination. If the Company or Newton Federal Bank terminates
Mr. Cooney's employment without cause or if he terminates employment for "good
reason," as that term is defined in the employment agreement, the Company or
Newton Federal Bank will pay Mr. Cooney an amount equal to the greater of
(i) the base salary or (ii) the average monthly compensation (as defined in the
agreement) that would be due to him for the remaining term of the agreement.
The payment will be made in a lump sum within five days of the termination. If
the termination of employment occurs during the term of the employment agreement
but following a change in control, Mr. Cooney will receive a payment equal to
three times the average base salary, bonus and profit sharing contributions paid
or provided as measured over the preceding three full fiscal years prior to the
change in control (or the average annualized base salary and bonus paid to the
executive for such shorter period as the executive has been employed), but not
less than Mr. Cooney's current base salary annualized plus bonus and profit
sharing paid in the prior calendar year immediately preceding such change in
control.
The employment agreement also contains certain post-employment obligations
(non-competition and non-solicitation) that may apply for 24 months following a
termination of employment depending on the nature of the termination.
A copy of the employment agreement will be filed as an exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
In connection with the acquisition, Newton Federal Bank has assumed the
obligations of the Supplemental Executive Retirement Plan, dated January 2,
2019, between Affinity Bank and Mr. Cooney (the "SERP"). Under the SERP, Mr.
Cooney, upon separating from service is entitled to a monthly benefit equal to
$8,333.33. The normal retirement benefit would commence on the first day of the
second month following the later of (i) his normal retirement age (age 65) or
(ii) his separation from service. The benefit is payable monthly and continues
for Mr. Cooney's lifetime (with a guarantee of 180 monthly payments). If Mr.
Cooney dies while in service or prior to benefit payments commencing under the
SERP, his beneficiary will receive a lump sum benefit equal to the present value
of his normal retirement benefit (assuming a payment stream of 180 monthly
payments). If Mr. Cooney dies after benefit payments commence under the SERP,
but prior to receiving 180 monthly payments, his beneficiary will receive a lump
sum payment equal to the present value of the remaining payments that would have
been made had Mr. Cooney received 180 payments. Mr. Cooney fully vested in the
benefits provided under the SERP as a result of the change in control of
Affinity Bank. A copy of the SERP will be filed as an exhibit to the Company's
Annual Report on Form 10-K for the year ended December 31, 2019.
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Mr. Cooney is not a party to any transaction with the Company or the Bank that
would require disclosure under Item 404(a) of Securities and Exchange Commission
Regulation S-K.
On January 7, 2020, the Boards of Directors of the Company and the Bank
appointed Gregory J. Proffitt President of the Company and the Bank, effective
upon the retirement of current President Johnny S. Smith. Mr. Proffitt, age 51,
was appointed Newton Federal Bank's Executive Vice President and Chief
Operations Officer in February 2016. Mr. Proffitt has been employed with Newton
Federal Bank since 2005, serving as Senior Vice President and Chief Operations
Officer beginning in November 2013 and as Controller and Compliance Officer.
For information with respect to a home mortgage loan made to Mr. Proffitt by
Newton Federal Bank, which loan requires disclosure under Item 404(a) of
Securities and Exchange Commission Regulation S-K, please see the Company's
definitive proxy statement for its 2019 annual meeting of stockholders, filed
with the Securities and Exchange Commission on January 30, 2019.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
On January 7, 2020, the Board of Directors of the Company amended the Company's
Bylaws. Specifically, Article III, Section 2 of the Company's Bylaws was amended
to increase the number of directors comprising the Board of Directors from seven
to eight, effective upon the completion of the acquisition, reflecting the
addition of Edward J. Cooney as a director.
The text of the amendment to the Bylaws is attached to this Current Report on
Form 8-K as Exhibit 3.2 and is incorporated by reference into this Item 5.03.
Item 9.01. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired
Financial statements are required by this Item will be filed by amendment to
this Current Report no later than March 27, 2020.
(b) Pro Forma Financial Information
Pro forma financial information required by this Item will be filed by amendment
to this Current Report no later than March 27, 2020.
(c) Not applicable
(d) Exhibits
Exhibit No. Description
2.1 Agreement and Plan of Merger by and between Community First Bancshares,
Inc., Community Interim Corporation and ABB Financial Group, Inc., dated
as of August 19, 2019 (incorporated by reference to Exhibit 2.1 to the
Current Report of Community First Bancshares, Inc. filed with the
Securities and Exchange Commission on August 23, 2019 (Commission File
No. 001-38074)) (schedules and exhibits have been omitted pursuant to
Item 601(b)(2) of Regulation S-K)
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3.2 Text of amendment to Community First Bancshares, Inc. Bylaws
99.1 Press Release dated January 13, 2020
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