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C&F Financial to buy Virginia-based Peoples Bankshares in stock-and-cash deal

C&F Financial Corp. agreed to acquire Montross, Va.-based Peoples Bankshares Inc. and its subsidiary, Peoples Community Bank, for stock and cash valued at approximately $21.4 million.

The transaction is expected to close in early 2020. Based on financial data as of June 30, the combined company will have $1.8 billion in assets.

Under the terms of the deal, each Peoples shareholder will receive the combination of 0.5366 of a C&F Financial common share and $27.00 in cash per share. As of Aug. 13, the combined stock and cash consideration implied a valuation of $54.79 per share, which represents 136% of Peoples' tangible book value per share as of June 30. After full realization of cost savings, C&F Financial expects to achieve earnings per share accretion of nearly 10% and an internal rate of return of over 20%, according to a news release.

S&P Global Market Intelligence calculates the deal value to be 146.0% of common equity and tangible common equity on an aggregate basis. The deal value is also 10.72% of assets and 11.89% of deposits, while the tangible book premium-to-core deposits ratio is 4.96%.

S&P Global Market Intelligence valuations for bank and thrift targets in the Southeast region between Aug. 13, 2018, and Aug. 13, 2019, averaged 161.99% of book and 174.36% of tangible book and had a median of 19.78x last-12-months earnings, on an aggregate basis.

Following the merger, Thomas Cherry will remain the president and CEO of Virginia-based C&F Financial and unit Citizens and Farmers Bank. Robert Bailey, who serves as president, CEO and a director of Peoples, will join C&F Financial as senior banking officer for the Northern Neck region of Virginia.

Based on S&P Global Market Intelligence data, with the completion of the deal, C&F Financial will enter King George County, Va., with two branches to be ranked third with an 18.48% share of approximately $218.9 million in total market deposits and will enter Westmoreland County, Va., with one branch to be ranked second with a 27.93% share of about $242.6 million in total market deposits. Additionally, the company will enter Richmond County, Va., with one branch to be ranked second with a 20.67% share of roughly $179.9 million in total market deposits and will enter Stafford County, Va., with one branch to be ranked 10th with a 2.83% share of about $1.15 billion in total market deposits.

As of June 30, Peoples had $194 million in total assets, $172 million in deposits and $148 million in gross loans. C&F Financial had $1.6 billion in total assets, $1.2 billion in deposits, and $1.2 billion in gross loans, according to the news release.

Keefe Bruyette & Woods Inc. served as financial adviser and Williams Mullen acted as legal counsel to C&F Financial. Sandler O'Neill & Partners served as financial adviser and Troutman Sanders LLP acted as legal counsel to Peoples Bankshares.

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