First Community Bancshares Inc. in Bluefield, Va., is bulking up in the Richmond market with a deal to acquire the $286 million-asset Peoples Bank in Virginia for about $40.6 million in cash and stock.
The deal, announced late Thursday, would add nearly $250 million of deposits and four branches to First Community's two in the Richmond area, creating the 10th-largest banking company in the market. The deal would also add about $181 million of loans, which would roughly double the size First Community's loan portfolio in Virginia, according to an analysis by Keefe, Bruyette & Woods Inc.
The acquisition would be the first for the $2.2 billion-asset First Community since it raised $19 million of fresh capital last year primarily for the purpose of buying banks. The company has 55 branches in Virginia, West Virginia, North Carolina and Tennessee and had been eyeing deals both inside and outside of its footprint.
In a news release, First Community's president and chief executive, John Mendez, called the 10-year-old Peoples a "strong, well-capitalized and profitable franchise in one of the most attractive banking markets in the United States." The privately held Peoples reported earnings of $2.1 million in 2011, more than double its profit from a year earlier, according to Federal Deposit Insurance Corp. data.
First Community said Peoples' shareholders would receive $6.08 in cash and 1.07 First Community shares for each share owned. The deal price works out to 1.04 times Peoples' tangible book value.
First Community said that Peoples' CEO James H. Atkinson "will remain involved" in an unspecified role at the combined company and several other Peoples' executives would take assume leadership positions.
The sale is expected to close in the second or third quarter.
Sandler O'Neill and Partners, L.P., advised First Community, and Davenport & Co. advised Peoples. Legal counsel was provided by Bowles, Rice, McDavid, Graff and Love in Charleston, W. Va., and LeClairRyan in Richmond.