City Holding Co. to purchase Community Bank
Community operates nine branches along the I-81 corridor in western Virginia and two branches in Virginia Beach. The merger will significantly expand City’s presence in Virginia.
“City has admired the Community franchise for some time,” said Charles R. (Skip) Hageboeck, president & CEO of City. “Community has a solid retail deposit franchise, operates in markets with higher growth rates than City’s core markets, and has established itself as a significant commercial lender in both the Staunton and Virginia Beach markets.
“We are excited to partner with Community, and believe that City’s own emphasis on community-based banking, and the opportunity to bring additional products and services to both retail and business customers of Community, make this a fantastic combination.”
City also recently completed the acquisition of Virginia Savings Bank, headquartered in Front Royal. Virginia Savings Bank had assets of $130 million while Community has assets of $500 million.
City and Community anticipate the transaction will be completed in the first quarter of 2013, pending regulatory approvals, the approval of Community shareholders, and the completion of other customary closing conditions.
The directors of Community have agreed to vote their shares in favor of the merger.
“For nearly 85 years, Community has served its customers and communities in the Shenandoah Valley of Virginia,” said Norman C. (Butch) Smiley III, president & CEO of Community. “We are proud of the service we have provided to our customers and by the community and civic pride our company and our employees have demonstrated. However, the challenges facing small community banks and the lack of significant economic growth since 2008, in addition to increasingly stringent regulatory oversight and expense, led Community to consider partnering with a larger community bank which shares our commitment to customers and to local communities.
“City is a highly respected, profitable and well-run community bank. Bank Director Magazine ranked City the #3 best performing bank in the US in 2010. Our shareholders will benefit from City’s financial strength, our customers will benefit from enhancements to products and services that larger banks can offer, and our communities will continue to enjoy the commitment of a bank with strong roots in its communities. We are excited about combining our business with City.”
Under the terms of the agreement, Community shareholders will receive 0.1753 shares of City common stock for each share of Community common stock. Based upon the closing price of City’s common stock on Friday, July 27, 2012, the total value of common shares issued is estimated at $26.1 million, or $6 per share of Community.
City’s current annual dividend of $1.40 per share would amount to approximately 24.5 cents per Community share, on a pro forma basis. Keefe, Bruyette & Woods, Inc. served as financial advisor to City. Scott & Stringfellow, LLC served as financial advisor to Community. Jackson Kelly PLLC served as legal advisor to City. Silver, Freedman & Taff served as legal advisor to Community.