KILMARNOCK, Va. and PETERSBURG, Va., Nov. 3, 2016 /PRNewswire/ -- Bay Banks of Virginia, Inc. (OTCQB: BAYK) ("Bay Banks") and Virginia BanCorp Inc. ("Virginia BanCorp") today jointly announced the signing of a definitive agreement to combine in a strategic merger of equals. The combined company would have approximately $794 million in total assets, $633 million in total deposits, and $623 million in loans based on reported amounts as of September 30, 2016. Headquarters for the combined organization will be in Richmond, Virginia.
The merger agreement has been unanimously approved by the boards of directors of both companies. Under the terms of the agreement, Bay Banks will acquire Virginia BanCorp, and Virginia BanCorp shareholders will receive a fixed exchange ratio of 1.178 shares of Bay Banks common stock for each share of Virginia BanCorp common stock. Bay Banks shareholders will own 51% of the combined company, and Virginia BanCorp shareholders will own 49%. Bay Banks of Virginia CEO Randal R. Greene and Virginia BanCorp CEO C. Frank Scott, III have both been searching for ways to strategically advance their respective companies' missions, while at the same time, looking for opportunities to provide greater returns for their shareholders. Both CEOs agree that this merger of equals will allow them to provide a broader array of services for their current customers while capitalizing on opportunities in the growing Richmond market. Randal R. Greene, Bay Banks President and Chief Executive Officer, stated, "We are excited about our merger with Virginia BanCorp. The combined company is expected to become the fifth largest community bank headquartered in Richmond with deposits in the Richmond MSA totaling approximately $298 million. Our combined presence, coupled with our shared commitment to providing premier service, uniquely positions our franchise to grow as the community bank of choice in the Richmond market. We believe that the merger will also provide significant financial benefits for our shareholders." C. Frank Scott, III, President and Chief Executive Officer of Virginia BanCorp, said, "We believe that Bay Banks is the ideal partner for our bank. Merging these financially sound institutions is a natural fit. Both banks are led by seasoned teams of community bankers who make local decisions to serve the communities in which we operate. This merger will allow us to better provide quality banking services to our customers, a rewarding workplace for our employees and superior value to our shareholders." The holding company will continue to be called Bay Banks of Virginia, Inc. The board of directors of the combined company will include five members from each of the current boards of directors of Bay Banks and Virginia BanCorp. Mr. Scott will serve as the Chairman of the board of directors of the holding company, and Mr. Greene will serve as Vice Chairman of the board of directors and as President and Chief Executive Officer of the combined company. The subsidiary banks of Bank of Lancaster and Virginia Commonwealth Bank will combine and the resulting bank will be called Virginia Commonwealth Bank following the closing. Bank of Lancaster Chairman Richard A. Farmar, III will serve as Chairman of the board of directors of the combined bank, Mr. Greene will serve as Vice Chairman of the board of directors and as its Chief Executive Officer, and Mr. Scott will serve as its President. The merger is expected to be immediately accretive to earnings per share, with a tangible book value dilution payback of less than three years. Cost savings of 14% of combined non-interest expense is expected to be fully realized in 2018.