Shares of Community Financial Corp. (CFFC) gained more than 27 percent in extended trade Thursday after the company said it has agreed to be acquired by City Holding Co. (CHCO) for $6 per share, or a total of $26.1 million.
Staunton, Virginia-based Community Financial operates nine branches along the I-81 corridor in western Virginia and two branches in Virginia Beach, Virginia. Charleston, West Virginia-based City Holding noted that the merger will significantly expand its presence in Virginia.
City Holding recently completed the acquisition of Virginia Savings Bank, headquartered in Front Royal, Virginia. Virginia Savings Bank had assets of $130 million, while Community Financial has assets of $500 million.
Under the deal, City Holding will acquire Community Financial and its wholly owned subsidiary, Community Bank. Shareholders of Community Financial will receive 0.1753 shares of City common stock for each share of Community common stock held by them.
The directors of Community Financial have agreed to vote their shares in favor of the transaction.
Based upon the closing price of City Holding's common stock on Friday, July 27, 2012, the total value of common shares issued is estimated at $26.1 million, or $6 per share of Community Financial. Both the companies expect the transaction to be completed in the first quarter of 2013.
City Holding's current annual dividend of $1.40 per share would amount to about 24.5 cents per Community Financial share.
Charles Hageboeck, President & CEO of City Holding, said, "City has admired the Community franchise for some time. Community has a solid retail deposit franchise, operates in markets with higher growth rates than City's core markets, and has established itself as a significant commercial lender in both the Staunton and Virginia Beach markets."
Norman Smiley, President & CEO of Community, said, "Our shareholders will benefit from City's financial strength, our customers will benefit from enhancements to products and services that larger banks can offer, and our communities will continue to enjoy the commitment of a bank with strong roots in its communities. We are excited about combining our business with City."
CHCO closed Thursday's regular session at $32.37 0.29 0.89 percent on a volume of 49,901 shares.
In after-hours trading on Thursday, shares of CFFC gained $1.06 or 27.18 percent to $4.96.
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