Filed by Virginia Financial Corporation
pursuant to Rule 425 under the Securities
Act of 1933 and deemed filed pursuant to
Rule 14a-12 under the Securities
Exchange Act of 1934
Subject Company: Virginia Commonwealth Financial Corporation
Commission File No. 000-22747:
Dated: June 13, 2001
JOINT PRESS RELEASE OF VIRGINIA FINANCIAL CORPORATION AND VIRGINIA COMMONWEALTH
FINANCIAL CORPORATION
[VFC LOGO] [VIRGINIA COMMONWEALTH FINANCIAL CORPORATION LOGO]
For further information, please contact:
Virginia Financial: Harry V. Boney, Jr. (540) 885-1232
Virginia Commonwealth: O. R. Barham, Jr. (540) 825-4809
VIRGINIA FINANCIAL CORPORATION AND VIRGINIA COMMONWEALTH FINANCIAL CORPORATION
ANNOUNCE PEER MERGER AND FORMATION OF VIRGINIA FINANCIAL GROUP, INC.
Culpeper and Staunton, VA -- June 12, 2001--The Board of Directors of
Virginia Financial Corporation (OTC Bulletin Board: VFNL) and Virginia
Commonwealth Financial Corporation (Nasdaq SmallCap Market: VCFC) today
announced the signing of a definitive agreement to merge in a merger-of-equals
transaction, which will create the third largest independent bank holding
company and fourth largest independent trust company in the Commonwealth of
Virginia.
Harry V. Boney, Jr., current President and CEO of Virginia Financial
Corporation, said, "I am thrilled for us to be joining forces with such a
dynamic company. We are excited about planning ways for our combined company to
provide additional services even more effectively than in the past. Each of the
community banks involved will be able to expand services offered as a result of
this. We believe that this transaction will be virtually `invisible" to our
customers, who will be banking with the same good people and in the same
locations as before."
O. R. (Ed) Barham, Jr., current President and CEO of Virginia Commonwealth
Financial Corporation agreed, saying, "This is a true merger of equals, one in
which one plus one should equal more than two for our customers and
shareholders. We are looking forward to combining the operations of two
companies that already are so similar.
The names, corporate structures and banking offices of the banking subsidiaries
of Virginia Commonwealth and Virginia Financial, along with their respective
directors, officers and employees, will not change as a result of the merger.
The trust operations of Virginia Financial will be combined with Virginia
Commonwealth's trust affiliate, and will be managed by Thomas A. Davis, as
President and J. Quintin Mullins, as Chief Operating Officer.
The combined company, which will be known as Virginia Financial Group, Inc.,
will be the holding company for: Planters Bank & Trust Company of Virginia - in
Staunton, Second Bank & Trust - in Culpeper, Virginia Heartland Bank - in
Fredericksburg, Caroline Savings Bank - in Bowling Green, and Virginia
Commonwealth Trust Company - in Culpeper.
With total combined assets of over $962 million and a pro forma market
capitalization of $190 million, the company will be the third largest
independent bank holding company in Virginia. The combined organization will
have a network of twenty-nine banking branches serving a contiguous market
through the Shenandoah Valley and central and north central Virginia. The
combined trust company will have fee based assets under management of $442
million, and $56 million in commission based assets under management. After the
merger, the company will have dual headquarters in Culpeper and Staunton,
Virginia.
Terms of the agreement, which has been unanimously approved by the boards
of directors of both companies, call for shareholders of Virginia Commonwealth
to receive 1.4391 shares of Virginia Financial Group common stock in a tax-free
exchange for each share of Virginia Commonwealth stock. Each share of common
stock of Virginia Financial outstanding before the effective date will be
exchanged for a share of Virginia Financial Group and remain outstanding. It is
the intent to have Virginia Financial Group's shares listed on the Nasdaq
National Market. The shareholders of Virginia Financial will own approximately
54% of the combined company, while the shareholders of Virginia Commonwealth
will own approximately 46%.
Virginia Financial Group's 16-seat board of directors will be made up of 8
directors each from Virginia Commonwealth and Virginia Financial. When the
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merger is completed, Harry V. Boney, Jr., Chairman and President of Virginia
Financial, will become Chairman of the new company. O.R. Barham, Jr., President
and Chief Executive Officer of Virginia Commonwealth, will be the President and
Chief Executive Officer of Virginia Financial Group. Jeffrey W. Farrar,
Executive Vice President and Chief Financial Officer of Virginia Commonwealth,
will serve in the same position of the combined company.
Commenting on the merger, Mr. Boney stated, "We are excited about the
strategic benefits presented by this merger, and pleased to be partnering with a
management team that we have known for years. Virginia Commonwealth is a fine
community banking organization with a strong franchise. Both companies have
solid capital positions, excellent credit quality and strong branch office
networks. We expect the merger to enhance shareholder value, because our
business plans are compatible, and the resulting company will have a larger and
more dynamic presence in the central Virginia market."
Mr. Barham, President and Chief Executive Officer of Virginia Commonwealth,
stated, "We are extremely excited about this merger and the strategic
opportunities it affords us going forward. We are partnering with an
institution that has had solid success in building shareholder value. Our
institutions have very similar business models and approaches to community
banking. Our combined trust and asset management company will now have the
critical mass and enhanced ability to be a dynamic financial service provider. I
know our tradition of providing superb customer service will be greatly enhanced
by this merger."
"We believe that together we will be able to strengthen the long-standing
tradition of community service and leadership that both of our companies have.
We share a commitment to the communities we serve, and that commitment will be
strengthened by this merger," concluded Barham.
The transaction will be accounted for as a pooling of interests. It is
expected to close in the fourth quarter of 2001 and is subject to normal
shareholder and regulatory approvals. Virginia Financial and Virginia
Commonwealth have granted each other options to purchase, under certain
circumstances, up to 19.9% of each other's outstanding common shares.
Virginia Commonwealth Financial Corporation (Nasdaq SmallCap Market: VCFC)
is the $465.8 million holding company for Second Bank & Trust, Virginia
Heartland Bank and Caroline Savings Bank, which operate fourteen branch offices
located in the counties of Culpeper, Madison, Orange, Rockingham, Spotsylvania,
Stafford, Caroline and the City of Fredericksburg. Virginia Commonwealth Trust
Company provides trust and asset management services to these market areas.
Virginia Financial Corporation (OTC Bulletin Board: VFNL) is the $495.9
million holding company for Planters Bank & Trust Company of Virginia. The
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company serves its customers through a network of fifteen branch offices in
Augusta, Rockbridge and Rockingham counties, and the cities of Staunton,
Waynesboro, Lexington, Buena Vista and Harrisonburg.
* * * * *
This news release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements may be identified by their reference to future periods and include,
without limitation, those statements relating to the anticipated effects of the
merger. The following factors, among others, could cause the actual results of
the merger to differ materially from the expectations stated in this release:
(1) the risk that the businesses of Virginia Financial and Virginia Commonwealth
will not be integrated successfully or such integration may be more difficult,
time-consuming or costly than expected; (2) the ability to fully realize the
expected cost savings and revenues on a timely basis; (3) the ability of the
companies to obtain the required shareholder or regulatory approvals of the
merger; (4) a materially adverse change in the financial condition of either
company; (5) the strength of the United States economy in general and the
strength of the local economies in which the combined company will conduct
operations may be different than expected resulting in, among other things, a
deterioration in credit quality or a reduced demand for credit, including the
resultant effect on the combined company's loan portfolio and allowance for loan
losses; (6) adverse changes in interest rates, deposit flows, loan demand, real
estate values and competition; and (7) changes in legislation and regulation
that adversely affect the financial services industry.
In addition, other factor's that may cause Virginia Financial and Virginia
Commonwealth's results to differ materially from those described in the forward-
looking statements can be found in Virginia Financial's and Virginia
Commonwealth's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K filed with the Securities and Exchange Commission.
All subsequent written and oral forward-looking statements concerning the
proposed transaction or other matters that are attributable to Virginia
Financial or Virginia Commonwealth or any person acting on their behalf are
expressly qualified in their entirety by the cautionary statements referenced
above. Virginia Financial and Virginia Commonwealth do not undertake any
obligation to update any forward-looking statement to reflect circumstances or
events that occur after the date the forward-looking statements are made.
Additional Information:
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The proposed transaction will be submitted to Virginia Financial's and
Virginia Commonwealth's shareholders for their consideration, and Virginia
Financial and Virginia Commonwealth will file a registration statement, a joint
definitive proxy statement/prospectus and other relevant documents concerning
the proposed transaction with the SEC. Stockholders are urged to read the
registration statement, and the joint definitive proxy statement/prospectus
regarding the proposed transaction when it becomes available, and any other
relevant documents filed with the SEC, as well as any amendments or supplements
to those documents, because they will contain important information. You will
be able to obtain a free copy of the joint definitive proxy
statement/prospectus, as well as other filings containing information about
Virginia Financial and Virginia Commonwealth, at the SEC's Internet site
(http://www.sec.gov). Copies of the joint definitive proxy
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statement/prospectus, and the SEC filings that will be incorporated by reference
in that document, can also be obtained, without charge, by directing a request
to: EVP and CFO, Virginia Commonwealth Financial Corporation, 102 South Main
Street, P.O. Box 71, Culpeper, Virginia 22701-0071 or to President, Virginia
Financial Corporation, 24 South Augusta Street, P.O. Box 1309, Staunton,
Virginia 24401.
Virginia Financial and Virginia Commonwealth, and directors and executive
officers of the companies, may be deemed to be participants in the solicitation
of proxies in favor of the merger from the companies' respective shareholders.
For information regarding the stock ownership of the directors and executive
officers of Virginia Financial and Virginia Commonwealth, reference is made to
the most recent proxy statements issued by the respective companies, which are
available at the SEC's Internet site and at addresses provided in the preceding
paragraph. Additional information regarding the interests of those participants
may be obtained by reading the definitive joint proxy statement/prospectus
regarding the proposed transaction when it becomes available.
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