First Community to acquire Hometown Bancshares in $41.5 million deal

BLUEFIELD, Va. - First Community Bankshares, Inc. (NASDAQ:FCBC), a $737.2 million market cap regional bank with a strong dividend track record, and Hometown Bancshares, Inc. announced Monday they have entered into a merger agreement valued at approximately $41.5 million. According to InvestingPro data, First Community has maintained dividend payments for 32 consecutive years, demonstrating consistent shareholder returns.

Under the terms of the deal, First Community will acquire Hometown and its banking subsidiary, Union Bank, Inc. Each share of Hometown common stock will be converted into 11.706 shares of First Community common stock, representing $472.10 per Hometown share based on First Community’s July 18 closing price of $40.33. First Community currently trades at a P/E ratio of 14.6x and has demonstrated solid financial health, earning a "GOOD" overall rating from InvestingPro’s comprehensive analysis system.

As of June 30, Union Bank had total assets of approximately $402 million. Upon completion, the combined entity is expected to have consolidated assets of about $3.6 billion with 60 branch locations across four states.

The acquisition aligns with First Community’s strategic focus on growing low-cost core deposits and expanding its presence in the Parkersburg-Marietta-Vienna metropolitan area.

"This collaboration will further strengthen our robust banking franchise in West Virginia," said William P. Stafford II, Chairman and CEO of First Community, in the press release statement.

Tim Aiken, President and CEO of Hometown and Union Bank, will join First Community’s team following the merger’s completion.

First Community expects the transaction to be minimally dilutive to tangible book value per share and to provide high-single digit accretion to earnings per share.

The merger has received unanimous approval from both companies’ boards of directors and remains subject to customary closing conditions, including approval from Hometown’s shareholders and regulatory authorities. The transaction is expected to close in the first quarter of 2026.

D.A. Davidson & Co. served as financial advisor to First Community, while Hovde Group, LLC advised Hometown on the transaction.

In other recent news, First Community Bankshares announced its unaudited financial results for the first quarter of 2025, reporting a net income of $11.82 million, or $0.64 per diluted common share. The bank declared a quarterly cash dividend of $0.31 per common share, payable on May 23, 2025, to shareholders of record as of May 9, 2025. The net interest margin for the quarter was 4.34%, reflecting a decrease primarily due to reduced interest income from loans and securities available-for-sale. Noninterest income increased by approximately $970 thousand, attributed to higher service charges on deposits and other operating income. Noninterest expenses rose by $1.56 million, mainly due to increased salaries and benefits. First Community Bankshares’ annualized return on average assets was 1.49%, with a return on average common equity of 9.49%, both showing a decline from the previous year. The bank’s consolidated assets totaled $3.23 billion as of March 31, 2025, with decreases in loans and securities available for sale. Non-performing loans rose to 0.85% of total loans, and the allowance for credit losses was 1.42% at the end of the quarter.

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