First National and Touchstone Bankshares secure final approvals

First National Corporation and Touchstone Bankshares, Inc. have successfully obtained the necessary regulatory approvals from the Federal Reserve Bank of Richmond and the Virginia Bureau of Financial Institutions for their planned all-stock merger. This approval paves the way for Touchstone Bank to be seamlessly integrated into First Bank immediately following the merger.

Targeted for completion by the end of the fourth quarter in 2024, the merger’s finalization is subject to standard closing conditions and approval from the shareholders of both companies, with special meetings slated for August 29, 2024. As of March 2024, the merged entity is anticipated to possess approximately $2.1 billion in assets, alongside $1.8 billion in deposits and $1.5 billion in loans.

Post-merger, First Bank is committed to providing Touchstone Bank customers with detailed guidance on the transition of their accounts scheduled for February 2025. Until then, both institutions will maintain their usual operations, serving clients through both their physical locations and digital platforms.

Transaction details specify that Touchstone shareholders will receive 0.8122 shares of First National stock for each share owned, with this exchange ratio based on First National’s stock price of $17.55 as of March 22, 2024. This values the transaction at approximately $47.0 million, or $14.25 per share of Touchstone.

Touchstone Bank, established in 1906 as The Bank of Dinwiddie and headquartered in Prince George, Virginia, operates twelve branches across Richmond, south-central Virginia, and northern North Carolina. Known for a comprehensive suite of banking services, the bank offers loan centers, ATM facilities, and advanced online and mobile banking solutions, and is publicly traded under Touchstone Bankshares on the OTCPK.

First National, listed on Nasdaq and established in 1907 in Strasburg, Virginia, continues to uphold its community-based banking ethos through First Bank. The impending merger is expected to expand their service reach significantly, contingent on the successful completion of the merger details and securing all requisite approvals.

Scott Harvard, President and CEO of First National, has articulated his approval of the regulatory green light, which he views as a catalyst for growth and an enhancer of shareholder value. Harvard has praised the cultural and operational alignment between the two institutions, which he believes will foster superior service delivery across the combined entity’s markets. He also looks forward to expanding First National’s presence in the Richmond metro area, notably with the addition of seven new branches and the integration of the Touchstone team into the First Bank family.

This strategic consolidation reflects a wider trend in the U.S. community banking sector, where smaller institutions merge to achieve scale, enhancing their competitive edge against larger banks which dominate by assets but not necessarily through customer service or community presence. The merger represents not only a strategic growth opportunity but also a promising investment prospect for those seeking stable returns in the sector, underpinned by First National’s sound financial management and consistent dividend history.