First Bank to purchase six new branches

First Bank Corporation of Strasburg has announced plans to purchase six branches of Bank of America, including this one at Court and Main streets in Woodstock. Rich Cooley/Daily

The First National Corporation, the holding company of First Bank, announced Wednesday that it is buying six Bank of America branches in the Shenandoah Valley and Central Virginia for $377.3 million, making it the largest bank headquartered in the valley north of Roanoke.

First Bank, headquartered in Strasburg, will acquire branches in Woodstock, Elkton, Staunton, Waynesboro, Dilwyn and Farmville, adding an estimated $308 million worth of checking, savings, CDs, IRAs and money market accounts to its balance sheets. This will make the total amount of assets for First Bank $827 million. Currently, First Bank owns 10 branches throughout the Shenandoah Valley, as well as mortgage lending offices in Staunton and Harrisonburg.

Scott Harvard, First Bank president and CEO, said the purchase, which was at a 2.25 percent premium of the deposits, was typical of the current market.

“Premiums have been low since the recession,” Harvard said. “There were times when deposit premiums were 6, 8 or 10 percent, but that was during times when loans were in high demand.”

Harvard said the acquisition is a good fit for First Bank’s business model, because most of the deposits at the branches are checking and savings accounts.

“These are people who come in and bank there every day,” Harvard said. “These are places where there are core relationships between customers and their bank.”

Harvard said when a bank acquires a branch or multiple branches, it buys the deposits, but not the loans. Therefore, customers with accounts at Bank of America will now have accounts at First Bank; those who have loans with Bank of America will still owe Bank of America on the loans.

Harvard said the purchase is a way for First Bank to grow its business.

“It’s an opportunity for us to keep growing our bank, our stockholders’ investments and our staff,” Harvard said.

According to Harvard, 80 percent of the new accounts First Bank will acquire have been open for more than five years. Harvard said long-term relationships in small and midsize banking markets are important for the bank’s success.

“These branches we are buying are similar size communities as the ones we operate in,” Harvard said. “We have a philosophy that people matter … we think that model is transportable to those markets.”

Harvard said the acquisition of branches in Dilwyn and Farmville would also be First Bank’s first penetration of the Central Virginia market.

“The markets are similar to a lot of our markets,” Harvard said. “Dilwyn is a center of agriculture and that’s a culture we are comfortable dealing with, just like Shenandoah County … we like rural Virginia, small towns and medium-size towns in the commonwealth.”

Harvard continued, “Farmville is a college town, with Hampton Sydney and Longwood, which is not unlike Winchester and Harrisonburg, where we do business. Those are interesting communities to us because they are vibrant and interesting.”

Harvard said First Bank is buying the real estate of the branches and will retain the staff currently employed by Bank of America.

According to Harvard, the last time First Bank purchased a branch was seven to eight years ago, when it purchased the Stellar One Bank in Woodstock. Harvard said while the transition was seamless, the experience helped inform how First Bank will approach this acquisition.

“We didn’t have any problems with it, we didn’t stub our toes, but that was a smaller deal,” Harvard said. “A lot of the tactics and actions are the same whether you’re doing one branch or six branches.”

The acquisition is tentatively set to close in April 2015.

Contact staff writer Henry Culvyhouse at 540-465-5137 ext. 184, or hculvyhouse@nvdaily.com