First National Corporation (NasdaqCM:FXNC) entered into a definitive merger agreement to acquire Touchstone Bankshares, Inc. (OTCPK:TSBA) for $46.9 million on March 25, 2024. Under the terms of the agreement, Touchstone shareholders will receive 0.8122 shares of First National stock for each share of Touchstone stock, which equates to an aggregate deal value of approximately $47.0 million, or $14.25 per share of Touchstone stock. The total assets of combined company are expected to be approximately $2.1 billion, with $1.5 billion in loans, $1.8 billion in deposits, thirty branch offices across Virginia and two branches in North Carolina. Touchstone needs to pay termination fee equals $1.9 million.

First National and First Bank will appoint three Touchstone directors to join the existing nine legacy directors on each respective Board. James Black, the President and Chief Executive Officer of Touchstone, will join First Bank as Executive Vice President and South Region President. The transaction is subject to approval of both companies?

shareholders, regulatory approvals, and other customary closing conditions and expected to close in the fourth quarter of 2024. The merger agreement has been unanimously approved by the boards of directors of each company. First National expects the transaction to be approximately 36% accretive to earnings per share with an estimated earn-back period for tangible book value dilution of approximately 3.0 years.

Hovde Group, LLC served as financial advisor to First National. Benjamin A. Barnhill of Nelson Mullins Riley & Scarborough, LLP provided legal counsel to First National. Scott Clark, Avi J. Barak of Piper Sandler & Co.

served as financial advisor to Touchstone. Scott Richter and Benjamin McCall of Williams Mullen served as legal counsel to Touchstone. Piper Sandler & Co.

acted as fairness opinion provider to Touchstone.