First Century Bankshares Inc. (fka FCBS)

[56Chevy]

First Century Bank signs merger agreement

6/3/2016

BLUEFIELD — For the first time since it was founded in 1891 as the First National Bank of Bluefield, First Century Bank [FCBS] is being acquired by another company.

Summit Financial Group, Inc., based in Moorefield, has signed a “definitive merger agreement” with First Century Bankshares Inc.

“We have always been the acquirer,” said J. Ronald Hypes, senior vice president and chief financial officer of First Century. “So this is the first time we have been on the other side of the transaction.”

Hypes said one of the main factors in the acquisition is that banks are under more regulatory pressure now than they have ever been.

“The community banking model can absorb only so much of that,” he said. “The regulatory pressure continues to make it difficult to do business.”

Hypes said the bank has good relationships with the regulators, but the costs associated with complying must be taken into consideration.

With larger banking systems, those costs can be more effectively absorbed, he said, adding that Summit is a $1.6 billion company, about four times the size of First Century (with approx. $406MM in assets).

Hypes said the merger presents some good news for customers because a larger variety of services can be offered by taking advantage of a “larger brand.”

“We are very excited about the transaction,” he said, adding that the merger should be finalized by the end of the year.

“That is our target date,” he said. “There are a lot of things that have to happen ... and our shareholders have to approve the transaction, but we should be able to close (near the target date).”

Hypes said the name of the bank will change to Summit Community Bank after the transaction closes, and all branches are now slated to remain open since the location of the two companies’ current branches do not overlap.

“It’s a natural fit,” he said of the acquisition.

The transaction has already been unanimously approved by each company’s board of directors.

“We are extremely pleased to be able to partner with Summit, a company who shares the same long-standing commitment to community banking as First Century has held for almost 125 years,” said First Century CEO Frank Wilkinson. “Our board of directors has been through an extensive process to help determine the best opportunities for our shareholders, customers and employees and we believe Summit is the right partner as we move forward.”

Wilkinson said local banking services will be improved because of the additional enhanced technology and other banking services that will be available through the merger.

“Also by partnering with Summit, our customers will still be able to see familiar faces and know that we will maintain the relationships that have been built over the years,” he said. “This will include local decision making and expanded lending limits to grow valued relationships into the future.”

H. Charles Maddy III, president and CEO of Summit, said the acquisition offers opportunities.

“This transaction represents an exceptional opportunity for Summit to combine with a financially strong and exceptionally well-managed bank possessing a culture of core values similar to ours...” he said. “Our top priority now is to ensure First Century’s clients experience a smooth transition.”

Summit will acquire all of the outstanding shares of common stock of First Century in exchange for cash in the amount of $22.50 per share or 1.2433 shares of Summit common stock, according to the statement released by the company.

First Century shareholders will have a right to receive cash, Summit’s common stock or a combination of cash and Summit common stock.

First Century Bank’s main office is located in Bluefield with 12 locations serving six counties in southern West Virginia and southwestern Virginia.

Those branches include three in Bluefield, W.Va., two in Princeton, one in Bluefield, Va. as well as in Beckley, Hinton, Oceana and Pineville in W.Va. and Max Meadows, Wytheville and Christiansburg in Va.

Source:

http://www.bdtonline.com/news/first-century-bank-signs-merger-agreement/article_5b933118-2939-11e6-ade0-1bea963a640e.html

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Breakdown of the deal goes as follows:

Market value before the announcement was $21.05.

Book value is: $23.80.

Summit Financial Groups' cash offer: $22.50 @ share

This represents a buy out of less than 1X Book coming in at 0.945 X book.

Marker:
First Century Banksh (FCBS)
$21.05 down -0.25 (-1.17%)
Volume: 1,740