DALLAS, Nov. 18, 2019 /PRNewswire/ -- Crossroads Systems, Inc. (OTC Pink: CRSS), a holding company focused on investing in businesses that promote economic vitality and community development, has reached a definitive agreement to acquire Rice Bancshares, Inc. ("RBI"), a registered bank holding company and owner of The First State Bank, a Texas Banking Association. The transaction is subject to regulatory approval.
RBI through The First State Bank operates four full service banking locations in low to moderate income tracts in Dallas, Texas. As of September 30, First State Bank had a reported $150 million in assets and total equity capital of $20.1 million. The proposed purchase will merge the financial mortgage assets of Capital Plus Financial, Crossroads' subsidiary (the "Company"), into The First State Bank with the Company's affordable housing platform contained in a wholly owned community development corporation (CDC) subsidiary of the bank. The combined entity will, through its regulatory applications, become a CDFI Bank and Minority Depository Institution (MDI).
The transaction will expand the Company's mission to serve low to moderate income census tracts across the state of Texas and expand its products and services to the underbanked and unbanked. The Company intends to maintain the First State Bank's current footprint and looks forward to serving the needs of its markets. This transaction allows Crossroads to dramatically lower its cost of capital as well as expand into new markets. There will be preferred and bank common equity issuances to consummate the transaction; however, the Company expects the transaction to be immediately accretive.
Eric A. Donnelly, Chief Executive Officer at Crossroads Systems, said, "Today is an incredible milestone in the evolution of our CDFI and Social Enterprise. We are honored to begin the process of joining CDFI Banks and MDIs across the country collectively doing our part to address the needs of so many who are without basic banking products and services. We are grateful to the executive team at the bank and are thrilled to bring our two organizations together to responsibly serve our communities.
"The transaction provides immediate value accretion to our shareholders and predictability to the balance sheet with a platform for sustainable growth. We anticipate that the transaction will dramatically lower our cost of capital. We will provide a more in depth description of the financial benefits to our shareholders over the next few months as our application makes its way through the regulatory process."
The transaction is subject to customary closing conditions, including the receipt of regulatory approvals and approval of the merger agreement by the shareholders of RBI.
Crossroads was advised in this transaction by Hunton Andrews Kurth as legal counsel. RBI was advised by Fenimore, Kay, Harrison & Ford, LLP as legal counsel.
About Crossroads Systems
Crossroads Systems, Inc. (OTC Pink: CRSS) is a holding company focused on investing in businesses that promote economic vitality and community development. Crossroads' subsidiary, Capital Plus Financial, is a certified Community Development Financial Institution (CDFI) and certified B- Corp which supports Hispanic homeownership with a long term, fixed rate single family mortgage product.
About Rice Bancshares, Inc.
Founded in 1928, The First State Bank of Rice is a member of the Rice Bancshares, Inc. located in Rice, Texas. FSB of Rice offers the services of a modern financial institution while maintaining the integrity of a community bank where decisions are made locally.
Important Cautions Regarding Forward-Looking Statements
This press release includes forward-looking statements that relate to the business and expected future events or future performance of Crossroads Systems, Inc. and Capital Plus Financial and involve known and unknown risks, uncertainties and other factors that may cause its actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, "believe," "expect," "anticipate," "estimate," "intend," "plan," "targets," "likely," "will," "would," "could," and similar expressions or phrases identify forward-looking statements. Forward- looking statements include, but are not limited to, statements about Crossroads Systems' and Capital Plus Financial's ability to implement their business strategy, and their ability to achieve or maintain profitability. The future performance of Crossroads Systems and Capital Plus Financial may be adversely affected by the following risks and uncertainties: economic changes affecting homeownership in the geographies where Capital Plus Financial conducts business, developments in lending markets that may not align with Capital Plus Financial's expectations and that may affect Capital Plus Financial's plans to grow its portfolio, variations in quarterly results, developments in litigation to which we may be a party, technological change in the industry, future capital requirements, regulatory actions or delays and other factors that may cause actual results to be materially different from those described or anticipated by these forward-looking statements. For a more detailed discussion of these factors and risks, investors should review Crossroads Systems' annual and quarterly reports. Forward-looking statements in this press release are based on management's beliefs and opinions at the time the statements are made. All forward-looking statements are qualified in their entirety by this cautionary statement, and Crossroads Systems undertakes no duty to update this information to reflect future events, information or circumstances.
©2019 Crossroads Systems, Inc., Crossroads and Crossroads Systems are registered trademarks of Crossroads Systems, Inc. All trademarks are the property of their respective owners.
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SOURCE Crossroads Systems