Altavista, Va.-based Pinnacle Bankshares Corp. and Danville, Va.-based Virginia Bank Bankshares Inc. have agreed to combine in a strategic merger.
The transaction is expected to be completed in the third quarter. The combined company would have about $703 million in total assets, $624 million in total deposits and $537 million in loans, based on reported amounts as of Sept. 30, 2019, according to a news release.
Under the terms of the deal, Virginia Bank Bankshares shareholders can elect to receive either $16.00 cash or 0.5000 of a Pinnacle Bankshares common share for each Virginia Bank Bankshares common share held, subject to the limitation that 70% of the shares will be exchanged for the stock consideration and 30% of the shares will be exchanged for the cash consideration. After the merger, Pinnacle Bankshares shareholders will own 71% of the combined company, and Virginia Bank Bankshares shareholders will own about 29%.
S&P Global Market Intelligence calculates the deal value at $29.0 million.
On a per-share basis, the deal value is 119.1% of book and tangible book, and 15.4x earnings. The deal value is also 13.10% of assets and 15.02% of deposits, and the tangible book premium to core deposits ratio is 2.54%.
S&P Global Market Intelligence valuations for bank and thrift targets in the Southeast region between Jan. 21, 2019, and Jan. 21, 2020, averaged 158.87% of book and 166.17% of tangible book and had a median of 16.82x last-12-months earnings, on an aggregate basis.
Upon consummation of the transaction, Virginia Bank Bankshares will merge into Pinnacle Bankshares, with the latter as the surviving holding company. Virginia Bank Bankshares unit Virginia Bank and Trust Co. will merge into Pinnacle Bankshares subsidiary First National Bank, with First National Bank as the surviving entity.
Virginia Bank and Trust offices will be rebranded as First National Bank offices as systems are integrated. No office closures are expected as a result of the merger.
Based on S&P Global Market Intelligence data, Pinnacle Bankshares will enter the city of Danville, Va., with four branches to be ranked fifth with a 10.18% share of approximately $1.32 billion in total market deposits and will enter Pittsylvania County, Va., with three branches to be ranked fifth with a 9.07% share of about $377.9 million in total market deposits.
Following the mergers, the boards of Pinnacle Bankshares and First National Bank will include the current 13 directors of the company and the bank and five directors from Virginia Bank Bankshares.
Pinnacle Bankshares Chairman Jeb Burton will continue to serve as chairman of Pinnacle Bankshares and First National Bank. Virginia Bank Bankshares Chairman and CEO Donald Merricks will serve as vice chairman of Pinnacle Bankshares and First National Bank.
Pinnacle Bankshares President and CEO Todd Hall will continue to serve as president and CEO of Pinnacle Bankshares and First National Bank, while Virginia Bank and Trust President Jerry Oakes will become the Danville market president for First National Bank.
Banks Street Partners is acting as financial adviser and Troutman Sanders LLP is acting as legal adviser to Pinnacle Bankshares. Janney Montgomery Scott LLC is serving as financial adviser and Williams Mullen is acting as legal adviser to Virginia Bank Bankshares.