Bay Banks and Virginia BanCorp to merge

Kilmarnock-based Bay Banks of Virginia Inc. and Petersburg-based Virginia BanCorp. Inc. have signed a merger agreement, creating a combined Richmond-based combined bank with $794 million in total assets.

Bay Banks is the holding company for Bank of Lancaster and Bay Trust Co., while  Virginia BanCorp.’s subsidiary is Virginia Commonwealth Bank.

Under the agreement, Bay Banks will acquire Virginia BanCorp,, with its shareholders receiving 1.178 shares of Bay Banks common stock for each share of Virginia BanCorp common stock. 

Bay Banks shareholders will own 51 percent of the combined company, and Virginia BanCorp shareholders will own 49 percent.

The merger will create a company with $633 million in total deposits and $623 million in loans based on reported amounts on  of Sept. 30.

The merger agreement has been unanimously approved by the boards of directors of both companies.

“We are excited about our merger with Virginia BanCorp,” Randal R. Greene, Bay Banks president and CEO, said in a statement. “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.”

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 the two banks. 

C. Frank Scott III, the president and CEO of Virginia BanCorp., will be chairman of the board of directors of the holding company. Greene will be vice chairman of the board and president and CEO of the combined company.

The subsidiary banks, Bank of Lancaster and Virginia Commonwealth Bank, will combine and the resulting bank will be called Virginia Commonwealth Bank after the closing. 

Bank of Lancaster Chairman Richard A. Farmar, III will serve as chairman of the board of directors of the combined bank, Greene will serve as vice chairman of the board of directors and as its CEO. Scott will be its president.

The transaction is expected to be completed in the second quarter of 2017, subject to approval of both companies' shareholders, regulatory approvals and other customary closing conditions.

FIG Partners, LLC is acting as financial adviser to Bay Banks and Williams Mullen is acting as its legal adviser in the transaction.  Performance Trust Capital Partners LLC is acting as financial adviser to Virginia BanCorp and LeClairRyan is acting as its legal adviser.

Founded in 1930, Bank of Lancaster has eight branches located in the Northern Neck and Middlesex County and offices in Richmond.

Founded in 1936 as First Federal Savings and Loan Association of Petersburg, Virginia Commonwealth Bank became a state-chartered community bank headquartered in Petersburg in 2008. It has eight banking offices located in the Tri-Cities, Chesterfield County, Henrico County, and Suffolk.