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Branch swap: New M&A model? Or just one-off?

Jury’s out on early 2016 proposal

Can there be a better way to restructure than traditional M&A? Can there be a better way to restructure than traditional M&A?

Earlier this year, First Community Bancshares Inc., based in Bluefield, Va., and First Bancorp, based in Southern Pines, N.C., announced a branch swap to take effect in the third quarter. The deal calls for First Community’s bank unit, First Community Bank, to get seven branches in Virginia owned by First Bancorp’s bank unit, First Bank. In exchange, First Bank will pick up six First Community branches in N.C. All deposits and certain loans will transfer along with the buildings. 

Is this a one of a kind deal? Or an idea with legs? Views are mixed.

“It’s a very savvy idea,” says community bank investor Joshua Siegel. “It makes more sense than spreading yourself out across the map like in a game of Risk.”

“I think deals like that will become more common,” says Alston & Bird LLP partner Mark Kanaly. The appeal lies in obtaining exactly what the bank wants. But such deals would not offer the benefits that consolidation and reduction of costs would bring. “Nobody’s really looking for new brick and mortar,” says attorney Jeff Gerrish of Gerrish McCreary Smith. But a net-zero deal can have some appeal.

Still, Collyn Gilbert of Keefe, Bruyette & Woods is skeptical: “It’s part of a last-ditch effort to make branches work.”  [Read more about Gilbert’s view on branches in “Branches as excess baggage”]

Read main article, "M&A: Waiting at the crossroads"

This article originally appeared in the April-May Banking Exchange magazine. Read the article in magazine format.

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Steve Cocheo

Steve Cocheo’s 39+ years in financial journalism have taken him to all 50 states and nearly every corner of financial services in companies from fintech startups to community banks to regional and national giants. He is executive editor of Banking Exchange and digital content manager of Previously he spent 36 years on the staff of ABA Banking Journal and 22 years concurrently as editor of ABA Bank Directors Briefing. He is the only journalist to have sat in on three federal banking exams, was a finalist for the Jesse H. Neal national business journalism awards, and a winner of multiple awards from the American Society of Business Publication Editors. In 2017 he received three awards from ASBPE: National Gold, National Bronze, and Regional Silver. Connect with Steve Cocheo and Banking Exchange on LinkedIn. Email Cocheo at [email protected] Follow Banking Exchange on Twitter

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