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Virginia, US Banking Firm First National to Acquire The Bank of Fincastle
Tuesday 23 February 2021

Virginia, US-based bank holding company First National Corp (NASDAQ: FXNC), the bank holding company of First Bank and The Bank of Fincastle (OTC: BFTL) have signed a definitive merger agreement, the banks said.

Upon completion of the acquisition, the combined company is expected to have approximately USD 1.2bn in assets, USD 868m in loans, USD 1bn in deposits and 20 branch offices across Virginia.

First National expects the transaction to be approximately 10% accretive to earnings per share.

First National will acquire Fincastle for a combination of stock and cash valued at approximately USD 3.09 per share for each share of Fincastle's common stock outstanding.

Under the terms of the agreement, Fincastle shareholders could elect, for each share of Fincastle common stock, to receive 0.1649 shares of First National stock, or USD 3.30 in cash, or a combination of stock and cash, subject to election and proration such that the aggregate consideration will consist of 80% First National stock and 20% cash.

Based on First National's closing stock price of USD 18.40 as of February 17, 2021, this equates to an aggregate deal value of approximately USD 31.6m.

Founded in 1875, The Bank of Fincastle currently operates six banking locations in and around the Roanoke Metropolitan Statistical Area.

As of December 31, 2020, Fincastle reported assets of USD 256m, gross loans of USD 202m and deposits of USD 224m.

The merger agreement has been unanimously approved by the boards of directors of each company. The transaction is expected to close in 3Q21, subject to approval of both companies' shareholders, regulatory approvals and other customary closing conditions.

First National and First Bank will appoint three Fincastle directors to join the existing eight legacy directors on each respective board. Scott Steele, the president and chief executive officer of Fincastle will join First Bank as the First Bank Regional president.

Piper Sandler and Co. served as financial advisor and Nelson Mullins Riley and Scarborough, LLP provided legal counsel to First National. Janney Montgomery Scott LLC served as financial advisor, RP Financial, LC served as fairness advisor, and Godfrey and Kahn, S.C. served as legal counsel to Fincastle.

First National Corp. (NASDAQ: FXNC) is the parent company and bank holding company of First Bank, a community bank that first opened for business in 1907 in Strasburg, Virginia.

First Bank offers loan and deposit products and services through its website, its mobile banking platform, a network of ATMs located throughout its market area, one loan production office, a customer service center in a retirement community, and 14 bank branch office locations located throughout the Shenandoah Valley, the central regions of Virginia and in the city of Richmond.

In addition to providing traditional banking services, First Bank operates a wealth management division under the name First Bank Wealth Management.

First Bank also owns First Bank Financial Services, Inc., which invests in entities that provide investment services and title insurance.

The Bank of Fincastle has been a leading financial services provider in the Roanoke region since 1875, and offers a full range of banking, lending and investment products.
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Date Published: 23/02/2021

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