Village Bank and Trust Financial Corp. of Midlothian, Va., said Monday that it has a deal to buy River City Bank in Mechanicsville for $20.2 million in cash and stock.
Village Bank and Trust plans to merge the $122 million-asset River City, which has three branches, with its $393 million-asset Village Bank, which has 10.
The deal would bring Village Bank and Trust closer to its goal of encircling Richmond, Thomas W. Winfree, the president and chief executive officer of the company and its bank, said in a press release.
Each share of River City would be exchanged for $11 in cash, a share of Village Bank and Trust, or an equivalent combination of cash and stock. The price works out to a 45% premium over River City's closing price Friday.
William D. Stegeman, its president and chief executive officer, would join Village Bank and Trust after the deal closed, but the two companies did not say what his title would be.
Four of River City's directors would join Village Bank and Trust's board, increasing its membership to 12.
The deal is expected to close in the third quarter, and Village Bank and Trust said it should be accretive to earnings in the first full year after that. The company also said it plans to trim more than $1.3 million of River City's expenses in that first year.
Michael A. Katzen, River City's chairman, said in the release that his bank and Village Bank and Trust share similar cultures and would make for "a more vibrant company" with higher earnings potential.
After merging with River City, Village Bank would have $423 million of loans and $444 million of deposits.
