8-K: First Community Bankshares to Acquire Hometown Bancshares in $41.5 Million All-Stock Merger

First Community Bankshares, Inc. announced an agreement to acquire Hometown Bancshares, Inc. for approximately $41.5 million in an all-stock transaction, expanding its presence in West Virginia and aiming for high-single digit earnings per share accretion.

Summary

• First Community Bankshares, Inc. (Purchaser) will acquire Hometown Bancshares, Inc. (Company) in an all-stock merger, valued at approximately $41.5 million.
• The transaction is based on a closing price for First Community's common stock of $40.33 as of July 18, 2025.
• Each outstanding share of Hometown common stock will be converted into the right to receive 11.706 shares of First Community common stock, equating to $472.10 per Hometown share.
• Hometown's banking subsidiary, Union Bank, Inc., will merge into First Community Bank, First Community's wholly-owned subsidiary.
• The merger is intended to qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code.
• Hometown's stock appreciation rights (except certain unvested ones as of January 1, 2025) and dividend equivalent rights will become fully vested and be cashed out by First Community.
• Unvested stock appreciation rights as of January 1, 2025, and certain executive compensation agreements will be assumed by First Community.
• Hometown's ESOP will be terminated on the day immediately before the Effective Time, with outstanding ESOP Loans to be repaid.
• Hometown's directors have entered into voting and support agreements, committing to vote their shares (approximately 17.1% of outstanding Hometown Common Stock) in favor of the merger.
• The Exchange Ratio may be adjusted if Hometown's Actual Adjusted Shareholders Equity is less than $29,250,000 as of the last day of the calendar month immediately prior to the Effective Time.

Sentiment

Score: 8

Explanation: The document announces a strategic acquisition with clear financial benefits (EPS accretion) and operational synergies. While it lists standard merger risks, the overall tone and projected outcomes are highly positive for First Community Bankshares.

Positives

• The merger is expected to be minimally dilutive to tangible book value per share for First Community.
• The transaction is projected to provide high-single digit accretion to earnings per share for First Community.
• The acquisition aligns with First Community's strategic focus on growing low-cost core deposits.
• The combined entity is positioned to expand its presence in the Parkersburg-Marietta-Vienna MSA.
• Union Bank's customers will benefit from increased scale, higher lending limits, and enhanced product and technology offerings from First Community.
• First Community Bank will introduce new services like Trust and Wealth Management to Union Bank's communities.

Negatives

• The transaction is expected to be minimally dilutive to First Community's tangible book value per share.

Risks

• Cost savings and revenue synergies anticipated from the transaction may not be realized or may take longer than anticipated.
• Disruption from the proposed transaction with customers, suppliers, or employee or other business relationships.
• The occurrence of any event, change, or other circumstances that could lead to the termination of the Agreement.
• Risk of unsuccessful integration of the two organizations' businesses.
• Failure of Hometown shareholders to approve the proposed transaction.
• The amount of costs, fees, expenses, and charges related to the proposed transaction could be higher than expected.
• Inability to obtain required governmental and regulatory approvals for the proposed transaction.
• Reputational risk and negative reaction of the parties' customers to the proposed transaction.
• Failure of the conditions to closing of the proposed transaction to be satisfied.
• The integration of Hometown's operations with First Community may be materially delayed or be more costly or difficult than expected.
• The possibility that the proposed transaction may be more expensive to complete than anticipated due to unexpected factors or events.
• Changes in management's plans for the future.
• Prevailing economic and political conditions, particularly in the market areas.
• Credit risk associated with lending activities.
• Changes in interest rates, loan demand, real estate values, and competition.
• Changes in accounting principles, policies, or guidelines.
• Changes in applicable laws, rules, or regulations.
• Other competitive, economic, political, and market factors affecting business, operations, pricing, products, and services.

Future Outlook

The merger is expected to close in the first quarter of 2026, subject to customary closing conditions including regulatory and shareholder approvals. First Community anticipates the transaction to be minimally dilutive to tangible book value per share and to provide high-single digit accretion to earnings per share. First Community also expects to welcome Union Bank's Chief Executive Officer, Tim Aiken, to its team upon completion of the transaction.

Management Comments

• Gary R. Mills, President and CEO of First Community Bank, stated, 'Our partnership with Hometown and Union Bank is a natural expansion into West Virginia markets that are similar in size and makeup to the locations where we've had great success across our broader banking footprint. We look forward to bringing the two franchises together to better serve our customers and local communities.'
• Tim Aiken, President, CEO and Director of Hometown and Union Bank, commented, 'When considering a long-term partner, we sought a community-minded bank that shares our commitment to providing top-tier banking services with that personal touch. Also, First Community Bank will bring services to our communities that Union Bank currently does not provide, such as Trust and Wealth Management services. We are confident that our combined franchise will serve our communities well and continue to create value for our customers, shareholders, and employees.'
• William (Will) P. Stafford, II, Chairman and Chief Executive Officer of First Community, added, 'We are pleased to announce our partnership with Union Bank. This collaboration will further strengthen our robust banking franchise in West Virginia. We believe First Community will benefit from Union's strong deposit base, while Union's customers will enjoy the advantages of increased scale, higher lending limits, and enhanced product and technology offerings from First Community.'

Industry Context

This merger represents a strategic expansion for First Community Bankshares into new West Virginia markets, leveraging Hometown's existing footprint. The acquisition of Union Bank, Inc. by First Community Bank aims to consolidate banking operations, enhance service offerings (e.g., Trust and Wealth Management), and increase market presence, aligning with a trend of consolidation and regional expansion within the community banking sector to achieve greater scale and efficiency.

Management Changes

Corporate Governance

Related Party Transactions

• Directors of Hometown Bancshares, Inc. have entered into Voting and Support Agreements with First Community Bankshares, Inc., committing to vote their shares (approximately 17.1% of outstanding Hometown Common Stock) in favor of the merger.

Stakeholder Impact

• Shareholders of Hometown Bancshares, Inc. will receive First Community common stock, converting their ownership into shares of the larger, combined entity.
• Existing shareholders of First Community Bankshares, Inc. will experience minimal dilution to tangible book value per share due to the issuance of new shares.
• Employees of Hometown Bancshares, Inc. and Union Bank, Inc. will either be retained by First Community (Continuing Employees) with equivalent compensation or, if their positions are eliminated, will receive severance.
• Key employees of Hometown may be offered retention bonuses and grants of First Community common stock.
• Customers of Union Bank, Inc. are expected to benefit from increased scale, higher lending limits, and enhanced product and technology offerings from First Community Bank.
• Regulatory bodies will review and approve the merger, ensuring compliance with banking laws and regulations.

Next Steps

• First Community will file a registration statement on Form S-4 with the SEC within 60 days from the agreement date.
• Hometown will call a meeting of its shareholders to vote on the approval of the Agreement and the transactions.
• Both parties will use reasonable best efforts to obtain all necessary governmental and regulatory approvals.
• Hometown's ESOP will be terminated immediately before the Effective Time, and outstanding ESOP Loans will be repaid.
• First Community will assume certain unvested stock appreciation rights and executive compensation agreements.
• First Community will submit and obtain a favorable determination letter from the IRS regarding the Company ESOP termination.
• First Community will notify or file an application with Nasdaq for the listing of new shares.
• The merger is expected to be consummated in the first quarter of 2026.
• Union Bank, Inc. will merge into First Community Bank following the main merger.

Key Dates

Recommendation

Keywords

Merger, Acquisition, Banking, Financial Services, Bank Holding Company, Community Bank, SEC Filing, Form 8-K, Stock Exchange, Shareholder Approval, Regulatory Approval, West Virginia, Virginia, FCBC, Hometown Bancshares, First Community Bankshares