First and Citizens Bank To Merge With Summit

The financial needs of Highland County residents have long been served by two independent banks, so it came as a surprise to many to learn that one of those institutions would be giving up that independence. First and Citizens bank, which is located in Monterey, with branch offices in Bath and Augusta counties, announced the signing of a definitive merger agreement between Summit Community Bank, and Highland County Bankshares, Inc, the parent company of First and Citizens. Summit will acquire all outstanding shares for cash in the amount of $38 per share – the transaction had been unanimously approved by the board of directors of both companies, and will likely close in the third quarter of 2016, pending regulatory and stockholder approval.

We spoke with Vernon Wooddell, President and CEO to learn more about the reasons for the merger.

“The banking industry is undergoing a period of rapid change and competition, regulations, technology and demands from the consumer. The past few years have been a particularly challenging time for the directors and management of all banks. The collapse of the housing market in 2006, and the subsequent recession, led to the failure of, I believe it was 518 FDIC insured banks in the U.S. There continues to be a substantial uptick in the rate of bank consolidation across the country, as a result of slow revenue growth, slack loan demand, slim net interest margins, illiquidity of stock, greater technology and cyber security requirements, certainly tougher banking regulations, management/board succession issues, and other factors that have spurred community bankers to consider alternatives to remaining independent.

“Unfortunately, the economic and demographic conditions in the primary markets in which we operate, which are Highland and Bath, do not make fertile ground for achieving loan growth, and loans are the engine that generates most of the revenue for community banks.

“At the end of the day, the board and managements real job is to determine whether our shareholders would be better off with the bank moving into the future on a standalone basis, or by partnering with another financial institution.”

Summit Financial Group is headquartered in Moorefield, West Virginia, and has 15 banking locations in Virginia and West Virginia, the closest being in Franklin.  It has $1.4 billion in assets, making it roughly 10 times the size of First and Citizens. When I asked Mr. Wooddell whether this merger would negatively affect the community aspect customers value when dealing with a local independent institution, he was passionate in his response.

“Absolutely not. The great thing about this, Scott, is that you’re going to be dealing with the same people you’ve been dealing with – same loan officers – the same folks are going to greet you at the window when you go in. And that is so important – I understand exactly what you’re saying. Community banking is about, it’s relationship banking, and that’s not going to change, and that’s one thing that was so appealing about Summit Community Bank. They’re big on local decision making, and long term relationships. This is going to be a great opportunity for the communities that we serve to have a community bank for decades. Summit is large enough that they can deal with all these challenges that banks are facing today, and have all the latest in technology, and we’re just excited for that reason.

“I’ve got to be honest Scott, I have the same feeling about the big banks – if we were talking about Bank of America, Wells Fargo, it would be completely different . But I can say without reservation, I am excited about the opportunity to bring Summit Community bank into this community, because I know it’s going to be a great thing for the communities.”