Parkway Acquisition Corp. (OTCQX: PKKW), the parent company of Skyline National Bank, and Great State Bank (OTC Pink: GSTB) announced today that they have entered into a definitive agreement to combine their companies. Under the terms of the agreement, Great State Bank will merge with and into Skyline National Bank in a stock transaction valued at approximately $14.5 million. Skyline will continue to be a wholly-owned subsidiary of Parkway.
The combined organization is expected to have 20 full-service banking offices, assets of nearly $700 million, deposits of over $600 million and shareholders' equity of over $70 million, including 5 full-service offices and 2 loan production offices in North Carolina (in Alleghany, Ashe, Caldwell, Cleveland, Wilkes, Watauga, and Yadkin) and 15 full-service offices and 1 loan production office in Virginia (in Carroll, Grayson, Galax, Floyd, Montgomery, Radford, Roanoke, Salem and Wythe).
"This combination will expand our presence into several additional North Carolina counties and further our goal of being the leading community bank in our region. This transaction is a partnership of two organizations that share a similar culture of service and community and represents a natural extension of Skyline into the adjacent markets of Wilkes, Watauga and Yadkin counties in North Carolina. We look forward to serving the local businesses and individuals in these areas and continuing to offer an unmatched customer experience in our existing markets," said Allan Funk, President and CEO of Skyline and its parent company, Parkway.
Greg Edwards, President and CEO of Great State, said this about the opportunity: "Our board and employees are very proud of the tremendous progress we have made since 2008 when we started out to build a local bank in a very challenging economy. We have been looking for ways to strategically advance our efforts as we've grown, and combining with a neighboring bank that has a similar mission and purpose seemed like a natural extension of our strategy to be a local bank serving hometown businesses."
According to the terms of the merger agreement, which has been unanimously approved by the Boards of Directors of both companies, Great State shareholders will receive 1.21 shares of Parkway common stock for each share of Great State common stock. Based on Parkway's 10-day volume weighted average closing price of $12.29 per share as of February 28, 2018, the aggregate deal value is approximately $14.5 million, or $14.87 per share of Great State. The transaction is expected to be immediately accretive to Parkway's estimated earnings before one-time costs, with a tangible book value earnback of approximately 3 years, and an internal rate of return which exceeds internal thresholds.
Two Great State directors will be invited to join the Parkway and Skyline Board of Directors. Great State President and CEO, Greg Edwards, will remain with the bank in an important leadership role as Regional President for North Carolina. Ron Pearson, currently EVP and Chief Credit Officer of Great State, is expected remain with the bank as a Senior Credit Officer for North Carolina. Larry Farthing, CFO, who has recently announced his transition to retirement, plans to stay with the company at least through the merger date.
The combination is subject to approval by Parkway's and Great State's shareholders, banking regulators and other customary closing conditions. The transaction is expected to be completed during the third quarter of 2018.
In connection with the transaction, Raymond James & Associates, Inc. is acting as financial advisor and has provided a fairness opinion to Parkway, and Williams Mullen provided legal advice to Parkway. Performance Trust Capital Partners, LLC is acting as financial advisor and has provided a fairness opinion to Great State, and Ward and Smith, P.A. provided legal advice to Great State.
About Parkway Acquisition Corp.
Parkway Acquisition Corp. is a bank holding company headquartered in Floyd, Virginia, and is the parent company for Skyline National Bank. Skyline National Bank is a community bank, headquartered in Grayson County, VA. Skyline National Bank has 16 branches, and one opening soon in Ashe County NC, and provides a highly competitive suite of personal and business banking products and services to customers in southwestern Virginia and northwestern North Carolina. Parkway had $548 million in assets as of December 31, 2017.
About Great State Bank
Great State Bank is a community bank headquartered in Wilkesboro, North Carolina. Great State was formed in 2008 in response to the area's need for a locally owned and operated community bank. Great State operates three full service branches with locations in Wilkesboro, NC, Boone, NC and Yadkinville, NC. Great State also has two loan production offices in Shelby, NC and Lenoir, NC. Great State had $139 million in assets as of December 31, 2017.
