Bluefield, VA-based First Community Bankshares, Inc. (“First
Community”) (NASDAQ: FCBC), parent company of First Community Bank,
and Mount Airy, NC-based Surrey Bancorp (“Surrey”) (OTCPK: SRYB),
parent company of Surrey Bank & Trust, jointly announced today
their entry into an agreement and plan of merger pursuant to which
First Community will acquire Surrey and its wholly owned bank
subsidiary, Surrey Bank & Trust. As of September 30, 2022,
Surrey Bank & Trust had total assets of approximately $500
million. Upon completion of the transaction, First Community is
expected to have total consolidated assets in excess of $3.6
billion with branch locations in four states.
This combination will bring together two
high-performing community banks that have historically produced
returns on average assets well-above one percent and efficiency
ratios below sixty percent while maintaining low-risk profiles. “We
have long admired Surrey Bank & Trust for its financial
performance and its government lending platform. We are looking
forward to bringing the two franchises together to better serve
our customers and local communities” said Gary R. Mills,
President and CEO of First Community Bank.
Edward (Ted) C. Ashby III, CEO and Director of
Surrey, commented, “When considering a long-term partner, we wanted
a bank that shared our values of providing the highest level of
banking services to our community, valued its employees and
performed at a level worthy of its shareholders. In First
Community, we found all those qualities and are confident that our
combined franchise will continue to generate value for all our
stakeholders.”
“We are pleased to announce our partnership with
Surrey Bank & Trust, and I am confident the combination will
create a leading community banking institution in northwestern
North Carolina and southwestern Virginia. First Community’s
commercial loan customers will benefit from Surrey’s government
guarantee lending expertise, and Surrey’s customers will benefit
from the additional scale, increased lending limits, and enhanced
product and technology offerings of First Community. Shareholders,
customers and employees of both banks will benefit greatly from
future synergies and efficiencies,” said William (Will) P.
Stafford, II, Chairman and Chief Executive Officer of First
Community.
The agreement and plan of merger provides for
the merger of Surrey with and into First Community, with First
Community as the surviving corporation. Under the terms of the
agreement and plan of merger, each share of Surrey common and Class
A common stock outstanding immediately prior to the merger will be
converted into the right to receive 0.7159 shares of First
Community common stock, which equates to $26.95 per share of Surrey
common stock and an aggregate transaction value of approximately
$113.2 million based on First Community’s recent 10-day
volume-weighted average price.
First Community Bank and Surrey Bank & Trust
have entered into a separate merger agreement providing for the
merger of Surrey Bank & Trust with and into First Community
Bank immediately following the merger of First Community and
Surrey, with First Community Bank as the surviving bank.
The transaction, which received unanimous
approval by both First Community’s and Surrey’s Board of Directors,
is subject to customary closing conditions, including the approval
of Surrey’s shareholders and the receipt of all required regulatory
approvals. All members of the Surrey Board of Directors owning
shares have entered into support agreements to vote the shares of
Surrey they own in favor of the transaction. The transaction is
expected to be consummated in the second quarter of 2023. At that
time, Mr. Ashby and one other current member of Surrey’s Board of
Directors will join the Board of First Community Bank.
Additionally, Pedro (Peter) A. Pequeno, II, Surrey’s President, and
other key executives and employees plan to join the First Community
team. We believe that joining together these two strong teams will
ensure a successful transition of Surrey's loan and deposit
relationships.
Pequeno commented, “We wanted to partner with a
financial institution that shared our values on how we treated our
employees, customers, and community. The ability to combine our
expertise in government guaranteed lending with a full suite of
banking services offered by First Community was a winning
combination for the families and businesses in the markets we
serve.”
First Community expects the transaction to be
minimally dilutive to tangible book value per share (non-GAAP) and
to provide mid-single digit accretion to earnings per share.
Performance Trust Capital Partners, LLC served as financial advisor
to First Community, and Bowles Rice LLP served as legal counsel.
Raymond James & Associates, Inc. served as financial advisor to
Surrey, and Brooks, Pierce, McLendon, Humphrey & Leonard, LLP
served as legal counsel.
About First Community Bankshares, Inc.
First Community is a financial holding company
headquartered in Bluefield, Virginia that provides banking products
and services through its wholly owned subsidiary First Community
Bank. First Community Bank operates 48 branch banking locations in
Virginia, West Virginia, North Carolina, and Tennessee. The company
reported consolidated assets of $3.16 billion as of September 30,
2022. The company’s common stock is listed on the NASDAQ Global
Select Market under the trading symbol “FCBC.” Additional investor
information is available on the company’s website at
www.firstcommunitybank.com.
About Surrey Bancorp
Surrey offers a relationship-based and highly
bespoke banking experience to individuals, professional, and small
to mid-sized business clients. With a customer-focused and value
driven approach, Surrey delivers banking services through talented
employees and digital channels, with 7 branch banking locations in
northwestern North Carolina and southwestern Virginia.
Investor Contacts
David D. BrownChief Financial OfficerFirst
Community Bankshares, Inc. Phone: (276) 326-9000
Important Information for Shareholders
This press release shall not constitute an offer
to sell, the solicitation of an offer to sell, or the solicitation
of an offer to buy any securities or the solicitation of any vote
or approval, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation, or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. In connection with
the proposed transaction, First Community will file a registration
statement on Form S-4 with the Securities and Exchange Commission
(the “SEC”), which will contain the proxy statement of Surrey and a
prospectus of First Community. Shareholders of Surrey are
encouraged to read the registration statement, including the proxy
statement/prospectus that will be part of the registration
statement, because it will contain important information about the
proposed transaction, Surrey, and First Community. After the
registration statement is filed with the SEC, the proxy
statement/prospectus and other relevant documents will be mailed to
Surrey shareholders and will be available for free on the SEC’s
website (www.sec.gov). The proxy statement/prospectus will also be
made available for free by contacting David D. Brown, First
Community’s Chief Financial Officer, at 276-326-9000 or Pedro A.
Pequeno, the President of Surrey, at 336-783-3902. No offer
of securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
Forward-Looking Statements
Certain of the statements made in this press
release may constitute forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
Such forward-looking statements, including statements regarding the
intent, belief, or current expectations of First Community’s
management regarding the company’s strategic direction, prospects,
or future results or the benefits of the proposed transaction, are
subject to numerous risks and uncertainties. These forward-looking
statements are based upon the current beliefs and expectations of
the respective managements of First Community and Surrey and are
inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are
beyond the control of First Community and Surrey. In addition,
these forward-looking statements are subject to assumptions with
respect to future business strategies and decisions that are
subject to change. Actual results may differ materially from the
anticipated results discussed in these forward-looking statements
because of possible uncertainties. The following factors, among
others, could cause actual results to differ materially from the
anticipated results or other expectations expressed in the
forward-looking statements: (1) the risk that the cost savings
and revenue synergies anticipated in connection with the proposed
transaction may not be realized or may take longer than anticipated
to be realized, (2) disruption from the proposed transaction
with customers, suppliers, or employee or other business
relationships, (3) the occurrence of any event, change, or
other circumstances that could give rise to the termination of the
agreement and plan of merger, (4) the risk of successful
integration of the two organizations’ businesses, (5) the
failure of Surrey shareholders to approve the proposed transaction,
(6) the amount of costs, fees, expenses, and charges related
to the proposed transaction, (7) the ability to obtain
required governmental and regulatory approvals for the proposed
transaction, (8) reputational risk and the reaction of the
parties’ customers to the proposed transaction, (9) the
failure of the conditions to closing of the proposed transaction to
be satisfied, (10) the risk that the integration of Surrey’s
operations with those of First Community will be materially delayed
or will be more costly or difficult than expected, (11) the
possibility that the proposed transaction may be more expensive to
complete than anticipated, including as a result of unexpected
factors or events, (12) the dilution caused by First
Community’s issuance of additional shares of its common stock in
the proposed transaction, (13) changes in management’s plans for
the future, (14) prevailing economic and political conditions,
particularly in our market areas, (15) credit risk associated with
our lending activities, (16) changes in interest rates, loan
demand, real estate values, and competition, (17) changes in
accounting principles, policies, or guidelines, (18) changes in
applicable laws, rules, or regulations, and (19) other competitive,
economic, political, and market factors affecting our business,
operations, pricing, products, and services. Certain additional
factors which could affect the forward-looking statements can be
found in First Community’s annual reports on Form 10-K, quarterly
reports on Form 10-Q, and current reports on Form 8-K, in each case
filed with or furnished to the SEC and available on the SEC’s
website at http://www.sec.gov and in Surrey’s annual reports by
accessing Surrey’s website at www.surreybank.com under the tab
“About Us” and then under the heading “Investor Relations” and
“Shareholder Relations”. First Community and Surrey caution that
the foregoing list of factors is not exclusive. All subsequent
written and oral forward-looking statements concerning the proposed
transaction or other matters attributable to First Community or
Surrey or any person acting on their behalf are expressly qualified
in their entirety by the cautionary statements above. First
Community and Surrey disclaim any obligation to update or revise
any forward-looking statements contained in this press release,
which speak only as of the date hereof, whether as a result of new
information, future events, or otherwise.
Participants in the Transactions
First Community, Surrey and their respective
directors, executive officers and certain other members of
management and employees may be deemed “participants” in the
solicitation of proxies from Surrey’s shareholders in favor of the
merger with First Community. Information regarding the persons who
may, under the rules of the SEC, be considered participants in the
solicitation of the Surrey shareholders in connection with the
proposed merger will be set forth in the proxy statement/prospectus
when it is filed with the SEC.
You can find information about the executive
officers and directors of First Community in its Annual Report on
Form 10-K for the year ended December 31, 2021, and in its
definitive proxy statement filed with the SEC on March 16, 2022.
You can find information about Surrey’s executive officers and
directors in Surrey’s annual report for the year ended December 31,
2020, by accessing Surrey’s website at www.surreybank.com under the
tab “About Us” and then under the heading “Investor Relations” and
“Shareholder Relations”. You can obtain free copies of these
documents from First Community or Surrey using the contact
information above.
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