Charlottesville, Va.-based Virginia National Bankshares Corp. agreed to combine with Warrenton, Va.-based Fauquier Bankshares Inc. in an all-stock merger of equals, with the former being the surviving holding company.
Fauquier shareholders will receive 0.6750 share of Virginia National Bankshares common stock for each Fauquier share they hold. The aggregate transaction value is $63.4 million and the implied deal price per share is $16.71, the companies said in a presentation. EPS accretion is expected to be more than 25%, and the tangible earnback period is 3.9 years.
S&P Global Market Intelligence calculates the deal value to be 86.8% of common equity and tangible common equity and 9.3x earnings. The deal value is also 7.48% of assets and 8.75% of deposits, and the tangible book discount to core deposits ratio is 1.40%.
S&P Global Market Intelligence valuations for bank and thrift targets in the Southeast region between Oct. 1, 2019, and Oct. 1, 2020, averaged 150.23% of book and 158.58% of tangible book and had a median of 17.30x last-12-months earnings, on an aggregate basis.
Virginia National Bankshares expects approximately $7 million in identified pretax cost saves and estimates 60% of the pretax cost saves will be realized in 2021 and 100% thereafter. The companies expect approximately $7 million in combined pretax merger expenses.
However, the company noted that the pandemic could cause a delay in realizing the cost saves. The combination is expected to be completed in the first half of 2021.
Upon the deal's closing, Virginia National Bankshares shareholders will own approximately 51.4% of the combined company, while Fauquier shareholders will own approximately 48.6%. Following the holding company merger, Fauquier Bank will merge into Virginia National Bank, and the latter will be the surviving bank.
The combined company would have about $1.6 billion in total assets, $1.4 billion in total deposits, $1.3 billion in loans and more than $1.0 billion in assets under management based upon reported amounts as of June 30.
Based on S&P Global Market Intelligence data, the combined company will operate 18 branches in Virginia, to be ranked No. 19 with a 0.37% share of about $380.38 billion in total market deposits.
Following the deal closing, the combined company will operate under the Virginia National brand and serve larger clients in its core Virginia markets of Charlottesville, Warrenton, Winchester and the counties of Albemarle, Fauquier, Frederick and Prince William. The new entity will also speed up current market expansions in Richmond and Northern Virginia.
Virginia National Bankshares' headquarters will remain in Charlottesville, and offices of Fauquier Bank will be rebranded as Virginia National Bank offices.
Following the merger, the boards of Virginia National Bankshares and Virginia National Bank will retain seven members from their current boards and six members from the current boards of Fauquier Bankshares and Fauquier Bank.
Virginia National Bankshares Chairman William Dittmar Jr. will continue to serve as chairman of the combined company, while Fauquier Bankshares Chairman John Adams Jr. will be named vice chairman. In addition, at the effective time of the merger, Virginia National Bankshares President and CEO Glenn Rust will continue in the role. Fauquier Bankshares President and CEO Marc Bogan will be appointed president and CEO of Virginia National Bank. Rust and Bogan will both serve on the boards of Virginia National Bankshares and its banking unit.
Performance Trust Capital Partners is acting as financial adviser to Virginia National Bankshares, and Williams Mullen is acting as its legal adviser. Piper Sandler & Co. is serving as financial adviser to Fauquier Bankshares and Troutman Pepper is serving as its legal adviser.
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