First Community Corporation, the holding company of First Community Bank, and Cornerstone Bancorp, the holding company of Cornerstone National Bank, jointly announced the signing of a definitive merger agreement, under which First Community has agreed to acquire Cornerstone in a cash and stock transaction with a total current value of approximately $25.8 million, based on First Community's closing price of $20.60 per share as of April 10, 2017. The transaction value at the time of the merger may change due to changes in the price of First Community stock.

On a pro forma combined basis, the combined company would have had approximately $1.059 billion in total assets, $892.5 million in total deposits, and $622.3 million in total loans as of December 31, 2016. The transaction will create a 19-office banking company with locations from the Upstate of South Carolina, through the Midlands and into the Central Savannah River Area to Augusta, Georgia.  The merger agreement has been unanimously approved by the Board of Directors of each company.  Closing of the transaction, which is expected to occur early in the fourth quarter of 2017, is subject to customary conditions, including regulatory approval and approval by the shareholders of Cornerstone. 

"This is a natural extension of our company in the Greenville market, which we entered with the activation of our Loan Production Office in March of 2016," said First Community President and CEO Michael C. "Mike" Crapps. "More importantly, we are excited to partner with the Cornerstone team.  The Board of Directors, Chairman and CEO Rodger Anthony and the entire team have created a successful banking organization, with a commitment to quality that permeates all aspects of their business.  We believe the combination of our banking companies will create a unique community based bank with the ability and financial strength to serve the banking needs of our communities and enhance shareholder value through operating advantages and efficiencies gained with the merger of our two institutions." 

Per the merger agreement, Cornerstone shareholders will have the right to receive $11.00 in cash or 0.54 shares of First Community common stock, or a combination thereof, for each share of Cornerstone common stock. The cash and stock elections are subject to proration to ensure that, excluding any dissenter shares, 30% of the outstanding Cornerstone common shares will be exchanged for $11.00 in cash and 70% of the outstanding Cornerstone common shares will be exchanged for shares of First Community common stock.

Rodger Anthony, CEO and Chairman of the Board of Cornerstone, said, "The Board of Directors of Cornerstone Bank, its Executive Officers, and I believe this merger opportunity will allow us to join together with an excellent company that is well capitalized and has much forward momentum.  This combination offers our shareholders a cash dividend and enhanced liquidity, as well as a premium on the capital they invested.  We are excited about the future of this combined company."  

Current Cornerstone Board members will have the opportunity to serve as members of First Community's Upstate Advisory Board.  Additionally, Mr. Anthony will serve the combined company in a consulting role for a six month period following the completion of the acquisition. 

Mr. Anthony commented, "Our customers will continue to receive the same high quality level of service from the bankers that have served them at Cornerstone Bank.  With First Community, we have found a shared passion for our work with local businesses and professionals.  This focus will continue and we are looking forward to the additional capacity and product lines that this combination of banks will bring to our customers."

Mr. Crapps also announced the initiation of the site selection process for a full service banking office in downtown Greenville. Crapps commented, "The staged progression of our Upstate strategy started with the hiring of a great team of bankers in Greenville in March of 2016 to activate our loan production office.  The team including Market President Coleman Kirven, Trey Werner and David Ramseur had an extremely successful first year and exceeded our expectations for loan portfolio growth.  The building out of our Upstate franchise through the combination of the acquisition of Cornerstone and the opening of a downtown Greenville office are natural next steps to more fully serving our customers and building value for our shareholders."

First Community was advised in the transaction by the Hovde Group, LLC as financial advisor and Nelson Mullins Riley & Scarborough LLP, as legal counsel.  Cornerstone was advised by Raymond James and Associates, Inc. as financial advisor, and Haynsworth Sinkler Boyd, P.A. as legal counsel.