STRASBURG, Va. - First National Corporation (NASDAQ: FXNC), the parent company of First Bank (NASDAQ:FRBA), announced today the completion of its merger with Touchstone Bankshares, Inc., effective immediately. The acquisition will see Touchstone Bank integrated into First Bank, with operations continuing under the Touchstone Bank name in Virginia and North Carolina until system integrations conclude in February 2025.
As a result of the merger, shareholders of Touchstone Bankshares will receive 0.8122 shares of First National Corporation's common stock for each share they held. This transaction is expected to expand First National's assets to approximately $2.1 billion, with loans of $1.5 billion and deposits totaling $1.8 billion, based on combined pro-forma figures as of August 30, 2024.
The combined entity will operate through 33 branch offices across Virginia and North Carolina, in addition to three loan production offices and a range of online banking services. Scott Harvard, President and CEO of First National, expressed optimism about the merger, highlighting the enhanced resources now available to small business customers and the potential benefits to the communities served by the banks.
First National, established in 1907, is a community bank that offers a variety of traditional banking services, including a wealth management division and a subsidiary involved in title insurance services.
The merger's completion is a strategic move that could position the company for inclusion in the Russell 2000 index, according to Harvard, which would represent a significant milestone for the market capitalization of the combined companies.
The forward-looking statements provided by First National indicate expectations of cost savings and revenue synergies, but also acknowledge risks such as potential disruptions and integration challenges. The company cautions that actual results may differ from expectations due to various factors, including economic conditions and market competition.
This news is based on a press release statement from First National Corporation.
In other recent news, First National Corporation and Touchstone Bankshares, Inc. have secured all necessary regulatory approvals for their previously announced all-stock merger. The consolidation, set to finalize in the fourth quarter of 2024, is expected to enhance First National's presence in the Richmond metro area with the addition of seven Touchstone branches. Upon completion, the merged entity will boast an estimated $2.1 billion in assets, $1.8 billion in deposits, and $1.5 billion in loans, based on figures as of March 31, 2024.
The strategic merger aims to expand the combined entity's market reach and enhance its product offerings. However, potential challenges such as disruption to customer and employee relationships, integration issues, and unanticipated costs have been noted. The merger is still subject to customary closing conditions and shareholder approval from both corporations.
Touchstone Bank customers can expect to receive detailed information about their account transitions in February 2025. Until the account transition is finalized, both banks will continue to serve their customers through existing branches, websites, and mobile apps. These recent developments mark a significant shift in the banking sector.
InvestingPro Insights
As First National Corporation (NASDAQ: FXNC) completes its merger with Touchstone Bankshares, InvestingPro data provides additional context to this strategic move. The company's market capitalization stands at $109.91 million, reflecting its position as a smaller regional bank. This merger could potentially boost FXNC's market presence and financial metrics.
FXNC's P/E ratio of 14.01 suggests a reasonable valuation compared to industry peers, which may have been a factor in the merger decision. The company's revenue for the last twelve months as of Q2 2024 was $49.19 million, with an impressive operating income margin of 21.43%. These figures indicate a solid financial foundation as FXNC integrates Touchstone Bank's operations.
InvestingPro Tips highlight FXNC's commitment to shareholder returns, noting that the company "has raised its dividend for 11 consecutive years." This track record of dividend growth, combined with a current dividend yield of 3.66%, may appeal to income-focused investors in the newly expanded entity.
Another InvestingPro Tip points out FXNC's "strong return over the last three months," which is supported by the data showing a 17.27% price total return over that period. This recent performance could reflect market optimism about the merger and its potential benefits.
For investors seeking a deeper analysis, InvestingPro offers 6 additional tips for FXNC, providing a more comprehensive view of the company's prospects following this significant corporate action.
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