First Bank’s Richmond branch at 5601 Patterson Ave.
First Bank has taken the next big step in its bid for a larger presence in the Richmond market.
The Strasburg, Virginia-based bank on Tuesday finalized its acquisition of Touchstone Bank, a $662 million institution headquartered in Prince George.
The deal brings First Bank to $2.1 billion in total assets and includes Touchstone’s 12 branches, seven of which are in the southern reaches of the Richmond region, along with $338 million in local deposits from Touchstone.
They add to First Bank’s 21 branches across Virginia, including its existing local presence with a West End branch on Libbie Avenue and a loan office in Innsbrook.
Scott Harvard, First Bank’s CEO, said the deal, first announced in March, was driven by the bank’s desire to continue to scale up in an increasingly competitive industry.
“Scale will continue to be important. This transaction will help us gain op leverage and efficiency,” said Harvard, a veteran Virginia banker who has been at the helm of First Bank for 12 years.
The all-stock transaction was valued at approximately $47 million. Shareholders of Touchstone’s publicly traded parent company, Touchstone Bankshares, received 0.81 shares of First Bank’s parent, First National Corp.
Although the combination is complete, Harvard said the banks will continue to operate under their separate brands until a full conversion of their systems early next year. After that the Touchstone name will be retired in favor of the First Bank flag.
The combined banks eventually will use the First Bank brand and the Touchstone name will be retired.
Touchstone was created in 2018 after the merger of Prince George-based Bank of McKenney and Citizens Community Bank in South Hill. Its roots trace back to The Bank of Dinwiddie, founded in 1906.
Harvard said Touchstone has about 105 employees and about 75% of them are expected to remain with First Bank after the conversion next year. Elimination of some redundant positions is typical in such bank deals. That will bring First Bank’s headcount to around 310.
Harvard will remain as CEO of the combined banks and its headquarters will remain in Strasburg. James Black, who had been Touchstone’s CEO, will remain with the company as president of its southern region operations.
The Touchstone deal is First Bank’s second full bank acquisition since 2021, when it took on Bank of Fincastle in the western part of the state. That same year it beefed up its Richmond presence by buying an $83 million local loan portfolio and welcoming a team of seven bankers from Tennessee-based SmartBank.
First Bank had also previously grown by acquiring six Bank of America branches and their $200 million in deposits in various markets in Virginia, such as Waynesboro, Staunton and Woodstock, in 2016.
Harvard said that growth strategy will continue.
Scott Harvard
“We certainly don’t think this will be the end of needing to continue to build scale. If you’re not growing, you’re probably dying,” he said.
He said First Bank has a particular interest in expanding its presence in the Richmond area. He said First Bank will move forward with a new branch Touchstone had put into motion at the Courthouse Landing development in Chesterfield and added that the bank will look for two to three additional branches in the region over the next five years. He said western Chesterfield, Hanover and western Henrico are target areas.
Harvard said margins in the banking industry overall remain tight and tricky to navigate, adding that the recent lowering of interest rates by the Federal Reserve doesn’t necessarily make things easier for banks.
“With rates down, we’ll see deposit costs go down but over time we’ll see the same thing happen to our loan rates. But if lower rates stimulate the economy and give us a soft landing, I think it’s good for everybody.”
Piper Sandler is Touchstone’s financial adviser in the deal. Williams Mullen is its legal counsel. First National is represented by financial adviser Hovde Group and law firm Nelson Mullins Riley & Scarborough.
The First Bank-Touchstone deal continues a busy couple weeks for the local banking market. Last week, Midlothian-based Village Bank announced it had struck a $120 million all-cash deal to be acquired by TowneBank out of Hampton Roads.