| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
On April 1, 2019, American National Bankshares Inc. (“American National”) completed its acquisition of HomeTown Bankshares Corporation (“HomeTown”). The merger of HomeTown with and into American National (the “Merger”) was effected pursuant to the terms and conditions of the Agreement and Plan of Reorganization, dated as of October 1, 2018, between American National and HomeTown, and a related Plan of Merger (together, the “Merger Agreement”). Immediately after the Merger, HomeTown Bank, HomeTown’s wholly-owned bank subsidiary, merged with and into American National Bank and Trust Company (“American National Bank”), American National’s wholly-owned bank subsidiary.
Pursuant to the Merger Agreement, holders of shares of HomeTown common stock received 0.4150 shares of American National common stock for each share of HomeTown common stock held immediately prior to the effective date of the Merger, plus cash in lieu of fractional shares. Each outstanding HomeTown stock option granted under a HomeTown stock plan, whether vested or unvested as of the date of the Merger, was converted into an option to purchase shares of American National common stock adjusted based on the 0.4150 exchange ratio. Each restricted stock award granted under a HomeTown stock plan that was unvested and outstanding was converted into restricted stock of American National adjusted based on the 0.4150 exchange ratio. Each share of common stock of American National outstanding immediately prior to the Merger remained outstanding and was unaffected by the Merger.
This description of the Merger and 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 to Exhibit 2.1 to this report. A copy of the press release announcing the completion of the Merger is attached as Exhibit 99.1 to this report and is incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant. |
Pursuant to the Merger Agreement and effective as of the date of the Merger, American National assumed the due and punctual payment of the principal of, and any premium and interest on, HomeTown’s $7,500,000 of outstanding 6.75% Fixed to Floating Rate Subordinated Notes due 2025 (the “Notes”). The Notes have a maturity date of December 30, 2025 and have an annual fixed interest rate of 6.75% until December 30, 2020. Thereafter, the Notes will have a floating interest rate equal to LIBOR plus 5.15%. Interest will be paid semi-annually, in arrears, on June 30 and December 30 of each year during the fixed interest rate period and quarterly, in arrears, on March 30, June 30, September 30 and December 30 of each year during the floating interest rate period.
American National may redeem the Notes, in whole or in part, on or after December 30, 2020. American National may redeem the Notes, in whole or in part, prior to December 30, 2020 only if (1) a subsequent event occurs that precludes the Notes from being recognized as Tier 2 capital for regulatory capital purposes; (2) a change or prospective change in law occurs that prevents American National from deducting the interest payable on the Notes for U.S.
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