Item 2.01. Completion of Acquisition or Disposition of Assets.
As previously announced, Summit Financial Group, Inc., a West Virginia
corporation ("Summit"), entered into an Agreement and Plan of Merger, dated
September 17, 2019 (the "Merger Agreement"), with Cornerstone Financial
Services, Inc., a West Virginia corporation ("Cornerstone"). Pursuant to the
terms of the Merger Agreement and effective as of January 1, 2020, Cornerstone
merged (the "Merger") with and into a limited liability company and wholly-owned
subsidiary of Summit's wholly-owned banking subsidiary, Summit Community Bank,
Inc., a West Virginia banking corporation ("Summit Community Bank"), formed
solely for the purpose of consummating the Merger ("Merger Sub"), with Merger
Sub as the surviving entity in the Merger. Immediately following the Merger,
Merger Sub was liquidated (the "Liquidation") so that Summit Community Bank owns
all of the outstanding shares of Cornerstone's wholly owned banking subsidiary,
Cornerstone Bank, Inc., a West Virginia banking corporation ("Cornerstone
Bank"). Immediately following the Liquidation, Cornerstone Bank was merged (the
"Bank Merger") with and into Summit Community Bank, with Summit Community Bank
surviving as the surviving bank in the Bank Merger.
At the effective time of the Merger (the "Effective Time"), Cornerstone
shareholders received the right to receive cash in the amount of $5,700.00 per
share of Cornerstone common stock (the "Cash Consideration"), par value $100.00
per share ("Cornerstone Common Stock"), 228 shares of Summit common stock, par
value $2.50 per share ("Summit Common Stock"), per share of Cornerstone Common
Stock (the "Stock Consideration" and together with the Cash Consideration, the
"Merger Consideration") or a combination of Cash Consideration and Stock
Consideration, subject to proration to result in approximately 50% Cash
Consideration and 50% Stock Consideration.
There were no material relationships, other than in respect of the Merger,
between Summit and Cornerstone, its directors or officers or any of its
affiliates.
The foregoing description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the Merger Agreement,
which is incorporated herein by reference as Exhibit 2.1.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(d) On December 19, 2019, the Board of Directors of each of Summit and Summit
Community Bank (collectively, the "Boards", and each, individually, a "Board")
approved a prospective increase in the size of each Board to eighteen (18)
members, with such increase being contingent upon, and to be effective
concurrent with, completion of the Merger and Bank Merger. Pursuant to the terms
of the Merger Agreement, the Boards also approved on a prospective basis the
appointment of Ronald B. Spencer, former Chairman of Cornerstone's Board of
Directors, as a director of Summit and Summit Community Bank to fill the vacancy
created by that action. Mr. Spencer's appointment was contingent on, and to be
effective concurrent with, the completion of the Merger and Bank Merger.
As discussed in more detail in Item 2.01 above, the Merger and Bank Merger were
effective as of January 1, 2020, and Mr. Spencer became a director of Summit and
Summit Community Bank at that time. Pursuant to the Merger Agreement, and
provided that he continues to meet the standards for directors of Summit and
Summit Community Bank, each of Summit and Summit Community Bank is obligated to
re-nominate Mr. Spencer to its Board at its next annual meeting of shareholders
following the effective time of the Merger and Bank Merger, which will be held
in May 2020.
As a director of Summit and Summit Community Bank, Mr. Spencer will be eligible
to receive the same cash compensation paid to other members of the Boards.
Item 8.01 Other Events.
On January 2, 2020, Summit issued a press release announcing the completion of
the Merger. A copy of the press release is attached hereto as Exhibit 99.1 and
is being furnished to the Securities and Exchange Commission and shall not be
deemed "filed" for any purpose.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
Agreement and Plan of Merger, dated as of September 17, 2019, by and
2.1 between Summit Financial Group, Inc. and Cornerstone Financial Services,
Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current
Report on Form 8-K filed on September 18, 2019).
99.1 Press Release, dated January 2, 2020, issued by Summit Financial
Group, Inc.
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