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As filed with the Securities and Exchange Commission on
February 27, 2008
Registration No. 333-148675
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Pre-Effective Amendment
No. 2 to
Form S-4
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
COMMUNITY BANKERS ACQUISITION
CORP.
(Exact name of registrant as
specified in its charter)
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Delaware
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6022
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20-2652949
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(State or other jurisdiction
of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification No.)
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9912 Georgetown Pike,
Suite D-203
Great Falls, Virginia
22066
(703) 759-0751
(Address, including zip code,
and telephone number, including area code, of registrants
principal executive offices)
Gary A. Simanson, President and
Chief Executive Officer
Community Bankers Acquisition
Corp.
9912 Georgetown Pike,
Suite D-203
Great Falls, Virginia
22066
(703) 759-0751
(Name, address, including zip
code, and telephone number, including area code, of agent for
service)
Copies to:
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Jonathan H. Talcott
Kathryn C. Kling
Nelson Mullins Riley & Scarborough LLP
101 Constitution Avenue, N.W., Suite 900
Washington, D.C. 20001
(202) 712-2806
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Kathleen L. Cerveny
Ellenoff Grossman & Schole LLP
1627 K Street, N.W., 10th Floor
Washington, D.C. 20006
(202) 470-4921
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Wayne A. Whitham, Jr.
Charles W. Kemp
Williams Mullen
Two James Center
1021 East Cary Street
Richmond, Virginia 23219
(804) 643-1991
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Approximate date of commencement of the proposed sale to the
public: As soon as practicable after the
effectiveness of this registration statement and the
satisfaction or waiver of all other conditions to the merger
described in the joint proxy statement/prospectus.
If the securities being registered on this form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, check the
following
box. o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the Exchange Act. (Check one):
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Large accelerated
filer o Accelerated
filer o Non-accelerated
filer o Smaller
reporting
company þ
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(Do not check if a smaller
reporting company)
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration
Statement will become effective on such date as the Securities
and Exchange Commission, acting pursuant to Section 8(a),
may determine.
COMMUNITY
BANKERS ACQUISITION CORP.
9912 Georgetown Pike,
Suite D-203
Great Falls, Virginia 22066
Telephone:
(703) 759-0751
,
2008
Dear Community Bankers Acquisition Corp. Stockholder:
You are cordially invited to attend the annual meeting of the
stockholders of Community Bankers Acquisition Corp., a Delaware
corporation (Community Bankers). The annual meeting
will be held
on ,
2008,
at
.m., local time,
at .
At the annual meeting, you will be asked to consider and vote on
(1) a proposal to adopt the Agreement and Plan of Merger,
dated as of September 5, 2007, by and between Community
Bankers Acquisition Corp. and TransCommunity Financial
Corporation; (2) a proposal to adopt an amendment to the
certificate of incorporation of Community Bankers to reset the
terms of the classes of Community Bankers directors,
effective upon consummation of the merger; (3) a proposal
to adopt an amendment to the certificate of incorporation of
Community Bankers to change the corporations name to
Community Bankers Trust Corporation, effective upon
consummation of the merger; (4) a proposal to elect each of
Chris A. Bagley and Keith Walz to the board of directors;
(5) a proposal to ratify the appointment of Miller,
Ellin & Company LLP as Community Bankers
independent public accountants for the fiscal year ending
December 31, 2007; and (6) a proposal to authorize the
board of directors to adjourn the annual meeting to allow time
for further solicitation of proxies.
Pursuant to Delaware law, adoption of the merger agreement
requires the affirmative vote of the holders of a majority of
the outstanding shares of Community Bankers common stock
entitled to vote at the annual meeting. Community Bankers
certificate of incorporation also requires the affirmative vote
of the holders of a majority of Community Bankers outstanding
shares of common stock issued in Community Bankers initial
public offering and voted at the annual meeting. Both
requirements must be met for adoption of the merger agreement.
In addition, for the merger to be consummated, the holders of
less than 20% of the outstanding shares of common stock
(1,499,999 shares) issued in Community Bankers
initial public offering must have voted against the merger and
thereafter exercised their rights to convert their shares into
cash equal to a pro rata portion of Community Bankers
trust account.
Adoption of each of the amendments to the certificate of
incorporation requires the affirmative vote of a majority of the
shares of Community Bankers outstanding common stock
entitled to vote at the annual meeting.
Election of each of Chris A. Bagley and Keith Walz to the board
of directors and ratification of the appointment of Community
Bankers independent public accountants for the fiscal year
ending December 31, 2007 each requires the affirmative vote
of the holders of a majority of the shares of Community Bankers
common stock present in person or represented by proxy and
entitled to vote at the annual meeting.
Authorization for the board of directors to adjourn the annual
meeting until a later date requires the affirmative vote of the
holders of a majority of the shares of Community Bankers common
stock present in person or represented by proxy and entitled to
vote at the annual meeting, whether or not a quorum is present.
Each of these proposals is more fully described in the
accompanying joint proxy statement/prospectus.
If you hold shares of common stock issued in Community
Bankers initial public offering (whether such shares were
acquired pursuant to such initial public offering or
afterwards), then you have the right to vote against the merger
proposal and demand that Community Bankers convert such shares
into cash equal to a pro rata portion of the trust account in
which a substantial portion of the net proceeds of Community
Bankers initial public offering are held. As
of ,
2008, there was $ in the trust
account, including accrued interest on the funds in the trust
account, or approximately $ per
share issued in the initial public offering. The actual
conversion price will differ from the
$ per share due to any interest
earned on the funds in the trust account
since ,
2008, and any taxes payable in respect of interest earned
thereon.
If you wish to exercise your conversion rights, you must:
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affirmatively vote against the merger proposal in person or by
submitting your proxy card before the vote on the merger
proposal and checking the box that states Against
for proposal number 1; and
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either:
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check the box that states Exercise Conversion Rights
on the proxy card; or
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send a letter to Community Bankers at 9912 Georgetown Pike,
Suite D-203,
Great Falls, VA 22066, stating that you are exercising your
conversion rights and demanding your shares of Community Bankers
common stock be converted into cash; and
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physically tender, or if you hold your shares of Community
Bankers common stock in street name, cause your
broker to physically tender, your stock certificates
representing shares of Community Bankers common stock to
Community Bankers; or
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deliver your shares electronically using the Depository
Trust Companys DWAC (Deposit/Withdrawal At Custodian)
System, to Community Bankers transfer agent
by ,
2008. See Summary Conversion Rights and
The Merger Conversion Rights of Community
Bankers Stockholders.
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Prior to exercising your conversion rights, you should verify
the market price of Community Bankers common stock, as you
may receive higher proceeds from the sale of your common stock
in the public market than from exercising your conversion
rights. Shares of Community Bankers common stock are
currently quoted on the American Stock Exchange under the symbol
BTC.
On ,
2008, the record date for the annual meeting of stockholders,
the last sale price of Community Bankers common stock was
$ . Your shares will only be
converted if the merger is consummated and you voted against the
merger and properly demanded conversion rights according to the
instructions in this letter and the joint proxy
statement/prospectus.
All of the Community Bankers insiders (including all of
Community Bankers officers, directors and initial
stockholders) have agreed to vote the 1,875,000 shares of
Community Bankers common stock acquired by them before Community
Bankers initial public offering (which constitute 20% of
Community Bankers outstanding shares of common stock), on
the merger proposal consistent with the majority of the votes
cast on the merger by the holders of the shares of common stock
issued in the initial public offering. They have further
indicated that they will vote the shares held by them in favor
of the adoption of the amendments to the certificate of
incorporation, for the election of Chris A. Bagley and Keith
Walz to Community Bankers board of directors, for the
ratification of the appointment of the independent public
accountants for the fiscal year ending December 31, 2007,
and for the proposal to authorize the board of directors to
adjourn the annual meeting to allow time for further
solicitation of proxies in the event there are insufficient
votes present at the annual meeting to approve the proposals.
The Community Bankers board of directors has unanimously
determined that the proposals and the transactions contemplated
thereby are in the best interests of Community Bankers and its
stockholders. The board of directors recommends that you vote,
or give instruction to vote, FOR the adoption
of each of the proposals and that you vote in favor of each of
the two director nominees.
Enclosed is a notice of annual meeting and the joint proxy
statement/prospectus containing detailed information concerning
the merger proposal and the transactions contemplated by the
merger agreement, as well as detailed information concerning
each of the proposals. We urge you to read the joint proxy
statement/prospectus and attached annexes carefully.
Your vote is important. Whether or not you plan to attend the
special meeting in person, please sign, date and return the
enclosed proxy card as soon as possible in the envelope provided.
I look forward to seeing you at the meeting.
Sincerely,
Eugene S. Putnam, Jr.
Chairman of the Board
COMMUNITY
BANKERS ACQUISITION CORP.
9912 Georgetown Pike,
Suite D-203
Great Falls, Virginia 22066
Telephone:
(703) 759-0751
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held
On ,
2008
To the Stockholders of Community Bankers Acquisition Corp.:
Community Bankers Acquisition Corp. will hold its
annual meeting of stockholders
on ,
2008,
at .m.,
local time,
at
for the following purposes:
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1.
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To consider and vote upon a proposal to adopt the Agreement and
Plan of Merger, dated as of September 5, 2007, by and
between Community Bankers Acquisition Corp. and TransCommunity
Financial Corporation, pursuant to which TransCommunity
Financial Corporation will merge with and into Community Bankers
Acquisition Corp., as described in more detail in the enclosed
joint proxy statement/prospectus;
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To consider and vote upon a proposal to adopt an amendment to
the certificate of incorporation of Community Bankers, effective
upon consummation of the merger, to revise the current
Section F of Article SIXTH to reset the terms of the
classes of Community Bankers directors;
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To consider and vote upon a proposal to adopt an amendment to
the certificate of incorporation of Community Bankers, effective
upon consummation of the merger, to revise Article FIRST of
Community Bankers certificate of incorporation to change
the name of the corporation from Community Bankers Acquisition
Corp. to Community Bankers Trust Corporation,
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To consider and vote upon the election as director of each of
Chris A. Bagley and Keith Walz to serve a term for three years
expiring at the 2010 annual meeting of stockholders, or until a
successor is elected and qualified (or, if the merger described
in the first proposal above is consummated, until the effective
date of the merger);
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To ratify the appointment of Miller, Ellin & Company
LLP as Community Bankers independent public accountants
for the fiscal year ending December 31, 2007;
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To consider and vote on a proposal to authorize the board of
directors to adjourn the annual meeting to allow time for
further solicitation of proxies, in the event there are
insufficient votes present in person or represented by proxy at
the annual meeting to approve the proposals; and
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To transact any other business as may properly be brought before
the Community Bankers annual meeting or any adjournments or
postponements of the Community Bankers annual meeting.
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Unless Community Bankers and TransCommunity agree otherwise,
the merger will only be consummated if the stockholders of
Community Bankers adopt the staggered board amendment to the
certificate of incorporation. In addition, the staggered board
amendment and the name change amendment to the certificate of
incorporation will only be effected in the event and at the time
the merger with TransCommunity is consummated.
Community Bankers has fixed the close of business
on ,
2008 as the record date for determining those stockholders
entitled to vote at the annual meeting and any adjournments or
postponements of the annual meeting. Accordingly, only
stockholders of record on that date are entitled to notice of,
and to vote at, the annual meeting and any adjournments or
postponements of the annual meeting.
If you hold shares of common stock issued in Community
Bankers initial public offering (whether such shares were
acquired pursuant to such initial public offering or
afterwards), then you have the right to vote against the merger
proposal and demand that Community Bankers convert such shares
into cash equal to a pro rata portion of the trust account in
which a substantial portion of the net proceeds of Community
Bankers initial public offering are held. For more
information regarding your conversion rights, see The
Merger Conversion Rights of Community Bankers
Stockholders on page of the joint proxy
statement/prospectus.
Whether or not you plan to attend the annual meeting in person,
please complete, date, sign and return the enclosed proxy card
as promptly as possible. Community Bankers has enclosed a
postage prepaid envelope for that purpose. Any Community Bankers
stockholder may revoke his or her proxy by following the
instructions in the joint proxy statement/prospectus at any time
before the proxy has been voted at the annual meeting. Even if
you have given your proxy, you may still vote in person if you
attend the annual meeting. Please do not send any stock
certificates to us at this time.
Community Bankers encourages you to vote on these very important
matters. The Board of Directors of Community Bankers
unanimously recommends that Community Bankers stockholders vote
FOR each of the proposals above.
By Order of the Board of Directors,
Eugene S. Putnam, Jr.
Chairman of the Board
,
2008
TAKING ANY ACTION THAT DOES NOT INCLUDE AN AFFIRMATIVE VOTE
AGAINST THE MERGER, INCLUDING ABSTAINING FROM VOTING ON THE
MERGER PROPOSAL, WILL PREVENT YOU FROM EXERCISING YOUR
CONVERSION RIGHTS. YOU MUST AFFIRMATIVELY VOTE AGAINST THE
MERGER PROPOSAL IN PERSON OR BY SUBMITTING YOUR PROXY CARD
BEFORE THE VOTE ON THE MERGER PROPOSAL TO EXERCISE YOUR
CONVERSION RIGHTS. IN ORDER TO CONVERT YOUR SHARES, YOU MUST
ALSO EITHER PHYSICALLY TENDER, OR IF YOU HOLD YOUR SHARES OF
COMMUNITY BANKERS COMMON STOCK IN STREET NAME, CAUSE
YOUR BROKER TO PHYSICALLY TENDER, YOUR STOCK CERTIFICATES
REPRESENTING SHARES OF COMMUNITY BANKERS COMMON STOCK TO
COMMUNITY BANKERS OR DELIVER YOUR SHARES ELECTRONICALLY USING
THE DEPOSITORY TRUST COMPANYS DWAC SYSTEM, TO
COMMUNITY BANKERS TRANSFER AGENT
BY ,
2008. FAILURE TO MEET THESE REQUIREMENTS WILL CAUSE YOUR
CONVERSION DEMAND TO BE REJECTED. SEE THE SECTIONS ENTITLED
SUMMARY CONVERSION RIGHTS AND THE
MERGER CONVERSION RIGHTS OF COMMUNITY BANKERS
STOCKHOLDERS FOR MORE SPECIFIC INSTRUCTIONS.
TRANSCOMMUNITY
FINANCIAL CORPORATION
4235 Innslake Drive
Glen Allen, Virginia 23060
(804) 934-9999
,
2008
Dear TransCommunity Financial Corporation Shareholder:
You are cordially invited to attend a special meeting of the
shareholders of TransCommunity Financial Corporation
(TransCommunity). The special meeting will be held
on ,
2008,
at .m.,
local time,
at .
At the special meeting, you will be asked to consider and vote
on a proposal to adopt the Agreement and Plan of Merger, dated
September 5, 2007, by and between TransCommunity and
Community Bankers Acquisition Corp.(Community
Bankers). You will also be asked to vote on a proposal to
authorize the board of directors to adjourn the special meeting
to allow time for further solicitation of proxies, should that
be necessary.
Each of these proposals is more fully described in the
accompanying joint proxy statement/prospectus.
The TransCommunity board of directors has determined unanimously
that the proposals and the transactions contemplated thereby are
in the best interests of TransCommunity and its shareholders.
The board of directors recommends that you vote, or give
instruction to vote, FOR the adoption of each
of the proposals.
Under Virginia law, you have the right to assert appraisal
rights with respect to the merger and demand in writing that
Community Bankers pay the fair value of your shares of
TransCommunity common stock. In order to exercise and perfect
appraisal rights, generally you must:
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not vote any shares owned by you in favor of the merger;
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deliver written notice of your intent to demand payment for your
shares to TransCommunity before the vote is taken on the merger
at the special meeting;
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complete, sign and return the form to be sent to you pursuant to
Section 13.1-734
of the Virginia Stock Corporation Act; and
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if you hold certificated shares, deposit your TransCommunity
common stock certificates in accordance with the instructions in
the form.
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A copy of the applicable Virginia statutory provisions is
included in the joint proxy statement/prospectus as
Appendix C, and a more detailed description of the
procedures to demand and perfect appraisal rights is included in
the section entitled The Merger Appraisal
Rights of TransCommunity Stockholders beginning on
page .
Enclosed is a notice of special meeting and the joint proxy
statement/prospectus containing detailed information concerning
the merger proposal and the transactions contemplated by the
merger agreement. We urge you to read the joint proxy
statement/prospectus and attached annexes carefully.
Your vote is important. Because approval of the merger proposal
requires the affirmative vote of holders of a majority of the
shares entitled to vote at the TransCommunity special meeting,
abstaining from voting (including by way of a broker non-vote),
either in person or by proxy, will have the same effect as a
vote against approval of the merger agreement. Whether or not
you plan to attend the special meeting in person, please sign,
date and return the enclosed proxy card as soon as possible in
the envelope provided. We look forward to seeing you at the
special meeting, and we appreciate your continued loyalty and
support.
Sincerely,
Bruce B. Nolte
President & Chief Executive Officer
TRANSCOMMUNITY
FINANCIAL CORPORATION
4235 Innslake Drive
Glen Allen, Virginia 23060
(804) 934-9999
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
To Be Held
On ,
2008
To the Shareholders of TransCommunity Financial Corporation:
TransCommunity Financial Corporation will hold a special meeting
of shareholders
on ,
2008,
at .m.,
local time,
at
for the following purposes:
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1.
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To consider and vote upon a proposal to approve the Agreement
and Plan of Merger, dated as of September 5, 2007, by and
between Community Bankers Acquisition Corp. and TransCommunity
Financial Corporation, pursuant to which TransCommunity
Financial Corporation will merge with and into Community Bankers
Acquisition Corp., as more particularly described in the
enclosed joint proxy statement/prospectus; and
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2.
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To consider and vote on a proposal to authorize the board of
directors to adjourn the special meeting to allow time for
further solicitation of proxies, in the event there are
insufficient votes represented in person or by proxy at the
special meeting to approve the merger proposal.
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TransCommunity has fixed the close of business
on ,
2008 as the record date for determining those shareholders
entitled to vote at the special meeting and any adjournments or
postponements of the special meeting. Accordingly, only
shareholders of record on that date are entitled to notice of,
and to vote at, the special meeting and any adjournments or
postponements of the special meeting.
TransCommunity shareholders have the right to assert appraisal
rights with respect to the merger and demand in writing that
Community Bankers pay the fair value of your shares of
TransCommunity common stock under applicable provisions of
Virginia law. In order to exercise and perfect appraisal rights,
generally you must:
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not vote any shares owned by you in favor of the merger;
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deliver written notice of your intent to demand payment for your
shares to TransCommunity before the vote is taken on the merger
at the special meeting;
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complete, sign and return the form to be sent to you pursuant to
Section 13.1-734
of the Virginia Stock Corporation Act; and
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if you hold certificated shares, deposit your TransCommunity
common stock certificates in accordance with the instructions in
the form.
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A copy of the applicable Virginia statutory provisions is
included in the joint proxy statement/prospectus as
Appendix C, and a more detailed description of the
procedures to demand and perfect appraisal rights is included in
the section entitled The Merger Appraisal
Rights of TransCommunity Stockholders beginning on
page .
Whether or not you plan to attend the special meeting in person,
please complete, date, sign and return the enclosed proxy card
as promptly as possible. TransCommunity has enclosed a postage
prepaid envelope for that purpose. Any TransCommunity
shareholder may revoke his or her proxy by following the
instructions in the joint proxy statement/prospectus at any time
before the proxy has been voted at the special meeting. Even if
you have given your proxy, you may still vote in person if you
attend the special meeting. Please do not send any stock
certificates to TransCommunity at this time.
TransCommunity encourages you to vote on this very important
matter. The Board of Directors of TransCommunity Financial
Corporation unanimously recommends that TransCommunity Financial
Corporations shareholders vote FOR the
proposals above.
By Order of the Board of Directors,
Bruce B. Nolte
President and Chief Executive Officer
,
2008
JOINT
PROXY STATEMENT/PROSPECTUS
FOR THE
PROPOSED MERGER OF
COMMUNITY BANKERS ACQUISITION CORP.
AND
TRANSCOMMUNITY FINANCIAL CORPORATION
The boards of directors of Community Bankers Acquisition Corp.
and TransCommunity Financial Corporation have unanimously agreed
to a merger of our companies. If the proposed merger is
completed, TransCommunity stockholders will receive
1.4200 shares of Community Bankers common stock for each
share of TransCommunity common stock they own, subject to
possible adjustment as described in this joint proxy
statement/prospectus. This 1.4200 multiple, as it may be
adjusted, is referred to as the exchange ratio.
Community Bankers was formed to effect a merger, capital stock
exchange, asset acquisition or other similar business
combination with an operating business in the banking industry.
Its common stock is listed on the American Stock Exchange under
the symbol BTC. TransCommunity common stock is
quoted on the OTC Bulletin Board under the symbol
TCYF.OB. Based on the closing price of Community
Bankers common stock
on ,
2008 of $ , TransCommunity
stockholders will receive approximately
$ worth of Community Bankers
common stock for each share of TransCommunity stock they own.
The actual value of the Community Bankers common stock received
by TransCommunity stockholders in the merger will depend on the
market value of Community Bankers common stock at the time of
closing.
This joint proxy statement/prospectus provides detailed
information about the merger and the annual meeting of Community
Bankers stockholders and the special meeting of TransCommunity
stockholders. It also provides information about the Community
Bankers common stock to be issued to TransCommunity stockholders
in the event the merger is approved. As described in this proxy
statement/prospectus, we cannot complete the merger unless we
obtain the necessary government approvals and unless the
stockholders of both Community Bankers and TransCommunity
approve the merger proposal.
In addition to the proposed merger of Community Bankers with
TransCommunity, Community Bankers has entered into an agreement
and plan of merger, dated as of December 13, 2007, with BOE
Financial Services of Virginia, Inc., a bank holding company
based in Tappahannock, Virginia. BOE common stock is listed on
the Nasdaq Capital Market under the symbol BSXT.
Although the stockholders of Community Bankers and
TransCommunity will not be voting on Community Bankers
proposed merger with BOE at the annual meeting and special
meeting, this joint proxy statement/prospectus contains certain
information about BOE, and the proposed merger with BOE.
Please carefully review and consider this joint proxy
statement/prospectus which explains the merger proposal in
detail, including the discussion under the heading Risk
Factors beginning on page 24. It is important
that your shares are represented at your stockholders meeting,
whether or not you plan to attend. Accordingly, please complete,
date, sign, and return promptly your proxy card in the enclosed
envelope. You may attend the meeting and vote your shares in
person if you wish, even if you have previously returned your
proxy.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved the securities
to be issued under this joint proxy statement/prospectus or
determined if this joint proxy statement/prospectus is truthful
or complete. Any representation to the contrary is a criminal
offense.
This joint proxy statement/prospectus is
dated ,
2008. It is first being mailed to Community Bankers and
TransCommunitys stockholders on or
about ,
2008.
TABLE OF
CONTENTS
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1
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4
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8
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10
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24
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24
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28
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31
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34
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35
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35
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36
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38
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39
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41
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42
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42
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42
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42
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43
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44
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44
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45
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45
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45
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45
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46
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46
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46
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46
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46
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47
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47
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47
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48
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48
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Recent Developments
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iv
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|
COMMUNITY BANKERS STOCKHOLDER PROPOSALS
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226
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F-1
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APPENDIX A
|
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Agreement and Plan of Merger by and between Community Bankers
and TransCommunity
|
APPENDIX B
|
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Proposed Amended and Restated Certificate of Incorporation
|
APPENDIX C
|
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Sections B.1-729
through B.1-741 of the Virginia Stock Corporation Act, as amended
|
APPENDIX D
|
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Fairness Opinion of Keefe, Bruyette & Woods, Inc.
|
APPENDIX E
|
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Fairness Opinion of Sandler ONeill & Partners,
L.P.
|
APPENDIX F
|
|
Agreement and Plan of Merger by and between Community Bankers
and BOE
|
v
QUESTIONS
AND ANSWERS FOR ALL STOCKHOLDERS
|
|
|
Q: |
|
Why is TransCommunity merging with and into Community
Bankers? |
|
A: |
|
TransCommunity is merging with and into Community Bankers
because the boards of directors of both companies believe that
the merger will provide stockholders of both companies with
substantial benefits and enable Community Bankers to use
TransCommunity as a growth platform to build a larger banking
franchise. In addition, Community Bankers proposed merger
with BOE will further increase operating efficiencies and the
growth opportunities of the surviving corporation. After the
merger, TransCommunity Bank, N.A. will generally continue to
operate as it has prior to the merger. However, it is
anticipated that TransCommunity Bank will merge with and into
Bank of Essex, the bank subsidiary of BOE, in the event
Community Bankers merger with BOE is consummated. A
detailed discussion of the background of and reasons for the
proposed merger is contained under the headings The
Merger Background of the Merger, The
Merger Community Bankers Reasons for the
Merger, and The Merger
TransCommunitys Reasons for the Merger. |
|
Q: |
|
How does the board recommend that I vote on the merger? |
|
A: |
|
You are being asked to vote FOR the approval
of the merger of TransCommunity with and into Community Bankers
pursuant to the terms of the merger agreement. The board of
directors of each of Community Bankers and TransCommunity has
unanimously determined that the proposed merger is in the best
interests of its stockholders, unanimously approved the merger
agreement and unanimously recommend that its stockholders vote
FOR the approval of the merger. |
|
Q: |
|
What vote is required to approve the merger? |
|
A: |
|
Community Bankers. Pursuant to Delaware law,
adoption of the merger agreement requires the affirmative vote
of the holders of a majority of the outstanding shares of
Community Bankers common stock entitled to vote at the annual
meeting. Pursuant to Community Bankers certificate of
incorporation, adoption of the merger agreement also requires
the affirmative vote of the holders of a majority of Community
Bankers outstanding shares of common stock issued in
Community Bankers initial public offering that are voted
at the annual meeting. Both requirements must be met for
adoption of the merger agreement. As of the record date, there
were 9,375,000 shares outstanding, including 7,500,000
outstanding shares that were issued in the initial public
offering. Because a majority vote of all outstanding shares is
required to adopt the merger agreement, your failure to vote
will have the same effect as a vote against the merger proposal. |
|
|
|
In addition, for the merger to be consummated, the holders of
less than 20% of the outstanding shares of common stock issued
in the Community Bankers initial public offering
(1,499,999 shares) must have voted against the merger and
thereafter exercised their right to convert their shares into
cash equal to a pro rata portion of the Community Bankers trust
account. |
|
|
|
TransCommunity. Approval of the merger
agreement requires the affirmative vote of the holders of a
majority of TransCommunitys outstanding shares of common
stock. As of the record date, there were 4,586,741 shares
outstanding. Because a majority vote of all outstanding shares
is required to approve the merger, your failure to vote will
have the same effect as a vote against the merger proposal. |
|
Q: |
|
What should I do now? |
|
A: |
|
After you have carefully read this joint proxy
statement/prospectus, please indicate on your proxy card how you
want to vote, and then date, sign and mail your proxy card in
the enclosed envelope as soon as possible so that your shares
will be represented at the meeting. If you date, sign and send
in a proxy card but do not indicate how you want to vote, your
proxy will be voted in favor of the merger proposal. |
1
|
|
|
Q: |
|
If my shares are held in street name by my
broker, will my broker vote my shares for me? |
|
A: |
|
It depends. A broker holding your shares in street
name must vote those shares according to any specific
instructions it receives from you. You should instruct your
broker how to vote your shares following the directions your
broker provides. If specific instructions are not received, in
certain limited circumstances your broker may vote your shares
in its discretion. On certain routine matters,
brokers have authority to vote their customers shares if
their customers do not provide voting instructions. When brokers
vote their customers shares on a routine matter without
receiving voting instructions, these shares are counted both for
establishing a quorum to conduct business at the meeting and in
determining the number of shares voted FOR or
AGAINST the routine matter. On
non-routine matters, brokers cannot vote the shares
on that proposal if they have not received voting instructions
from the beneficial owner of such shares. If you hold your
shares in street name, you can either obtain
physical delivery of the shares into your name, and then vote
your shares yourself, or request a legal proxy
directly from your broker and bring it to the annual or special
meeting, and then vote your shares yourself. In order to obtain
shares directly into your name, you must contact your brokerage
house representative. Brokerage firms may assess a fee for your
conversion; the amount of such fee varies from firm to firm. |
|
|
|
Community Bankers. If you do not provide your
broker with voting instructions, your broker may vote your
shares at its discretion with regard to the election of
Chris A. Bagley and Keith Walz to the board of directors
and ratification of the appointment of the independent public
accountants for the fiscal year ending December 31, 2007,
since these matters are routine. However, your broker may not
vote your shares, unless you provide voting instructions, with
regard to adoption of the merger agreement, adoption of the
amendments to the certificate of incorporation of Community
Bankers and the proposal to adjourn the annual meeting to allow
time for further solicitation of proxies in the event there are
insufficient votes present at the meeting to approve the
proposals, since these matters are not routine. Failure to
instruct your broker how to vote your shares will have the same
effect as a vote against the adoption of the merger agreement
and the adoption of the amendments to the certificate of
incorporation, but will have no effect on the election of Chris
A. Bagley and Keith Walz to Community Bankers board of
directors, the ratification of the appointment of the
independent public accountants for the fiscal year ending
December 31, 2007 or the proposal to adjourn the annual
meeting to allow time for further solicitation of proxies in the
event there are insufficient votes present at the meeting to
approve the proposals. |
|
|
|
TransCommunity. Your broker may not vote your
shares, unless you provide voting instructions, with regard to
approval of the merger proposal and the proposal to adjourn the
special meeting to allow time for further solicitation of
proxies in the event there are insufficient votes present at the
meeting to approve the merger proposal, since these matters are
not routine. Failure to instruct your broker how to vote your
shares will have the same effect as a vote against the merger
proposal, but will have no effect on the proposal to adjourn the
special meeting to allow time for further solicitation of
proxies in the event there are insufficient votes present at the
meeting to approve the merger proposal. |
|
Q: |
|
Can I change my vote after I have submitted my proxy? |
|
A: |
|
Yes. There are a number of ways you can change your
vote. First, you may send a written notice to the person to whom
you submitted your proxy stating that you would like to revoke
your proxy. Second, you may complete and submit a later-dated
proxy with new voting instructions. The latest vote actually
received by Community Bankers or TransCommunity prior to the
annual meeting or the special meeting, respectively, will be
your vote. Any earlier votes will be revoked. Third, you may
attend the annual meeting or the special meeting and vote in
person. Any earlier votes will be revoked. Simply attending the
annual meeting or the special meeting without voting, however,
will not revoke your proxy. If you have instructed a broker to
vote your shares, you must follow the directions you will
receive from your broker to change or revoke your proxy. |
2
|
|
|
Q: |
|
Is the merger between TransCommunity and Community Bankers
contingent upon Community Bankers closing its proposed merger
with BOE? |
|
A: |
|
No. Under the merger agreement it is not a condition
that Community Bankers complete the merger with BOE. However,
the merger between Community Bankers and BOE is contingent upon
closing of the merger between Community Bankers and
TransCommunity. |
|
Q: |
|
When do you expect to complete the merger? |
|
A: |
|
We presently expect to complete the merger in the second quarter
of 2008. However, we cannot assure you when or if the merger
will occur. We must first obtain the approval of Community
Bankers and TransCommunitys stockholders at the
annual meeting and special meeting, respectively, and receive
the necessary regulatory approvals. |
|
Q: |
|
Whom should I contact with questions about the merger? |
|
A: |
|
If you want additional copies of this joint proxy
statement/prospectus, or if you want to ask questions about the
merger, you should contact: |
|
|
|
Gary A. Simanson
|
|
Bruce B. Nolte
|
President and Chief Executive Officer
|
|
President and Chief Executive Officer
|
Community Bankers Acquisition Corp.
|
|
TransCommunity Financial Corporation
|
9912 Georgetown Pike,
Suite D-203
|
|
4235 Innslake Drive
|
Great Falls, Virginia 22066
|
|
Glen Allen, Virginia 23060
|
(703) 759-0751
|
|
(804) 934-9999
|
3
QUESTIONS
AND ANSWERS FOR COMMUNITY BANKERS STOCKHOLDERS
|
|
|
Q: |
|
Why is Community Bankers proposing the merger? |
|
A: |
|
Community Bankers was organized for the purpose of effecting a
business combination with an operating business in the banking
industry. Community Bankers believes that TransCommunity, a
registered financial holding company, is positioned for
significant growth in its current and expected future markets
and believes that a business combination with TransCommunity
will provide Community Bankers stockholders with an opportunity
to participate in a company with significant potential. In
addition, Community Bankers proposed merger with BOE will
further enhance the management expertise, operating efficiencies
and growth opportunities of the surviving corporation. Community
Bankers believes that the markets in which TransCommunity and
BOE operate are attractive markets to grow a community banking
franchise. |
|
Q: |
|
What is being proposed, other than the merger, to be voted on
at the Community Bankers annual meeting? |
|
A: |
|
Community Bankers stockholders are being asked to adopt
the staggered board amendment and the name change amendment to
the certificate of incorporation, elect each of Chris A. Bagley
and Keith Walz to the Community Bankers board of directors,
ratify the appointment of Community Bankers independent
public accountants for the fiscal year ending December 31,
2007, and authorize the board of directors to adjourn the annual
meeting to allow time for further solicitation of proxies in the
event there are insufficient votes present at the meeting to
approve the proposals. |
|
|
|
Unless Community Bankers and TransCommunity agree otherwise,
the merger will only be consummated if the stockholders of
Community Bankers adopt the staggered board amendment to the
certificate of incorporation. In addition, the staggered board
amendment and the name change amendment to the certificate of
incorporation will only be effected in the event and at the time
the merger with TransCommunity is consummated. |
|
Q: |
|
How do the Community Bankers insiders intend to vote their
shares? |
|
A: |
|
All of the Community Bankers insiders (including all of
Community Bankers officers, directors and initial
stockholders) have agreed to vote the 1,875,000 shares of
Community Bankers common stock acquired by them before Community
Bankers initial public offering (which constitute
approximately 39.9% of the shares required to approve the merger
under Delaware law), on the merger proposal consistent with the
majority of the votes cast on the merger by the holders of the
shares of common stock issued in the initial public offering.
They have further indicated that they will vote the shares held
by them in favor of the adoption of the amendments to the
certificate of incorporation, for the election of Chris A.
Bagley and Keith Walz to Community Bankers board of
directors, for the ratification of the appointment of the
independent public accountants for the fiscal year ending
December 31, 2007, and for the proposal to authorize the
board of directors to adjourn the annual meeting to allow time
for further solicitation of proxies in the event there are
insufficient votes present at the annual meeting to approve the
proposals. While the shares voted by the Community Bankers
insiders will count towards the voting and quorum requirements
under Delaware law, they will not count towards the voting
requirement under the certificate of incorporation because the
insiders shares were not issued in Community Bankers
initial public offering. |
|
Q: |
|
What will Community Bankers stockholders receive in the
proposed merger? |
|
A: |
|
Community Bankers stockholders will receive nothing in the
merger. Community Bankers stockholders will continue to hold the
same number of shares of Community Bankers common stock that
they owned prior to the merger. Community Bankers stockholders
do not have appraisal rights in connection with the merger under
applicable Delaware corporate law, but do have conversion rights
as described below. |
|
Q: |
|
How much of Community Bankers voting interests will
existing Community Bankers stockholders own upon completion of
the merger? |
|
A: |
|
It depends. The percentage of Community Bankers voting
interests that existing Community Bankers stockholders will own
after the merger will vary depending on whether: |
|
|
|
any TransCommunity stockholder exercises appraisal
rights;
|
4
|
|
|
|
|
any of Community Bankers 7,500,000 outstanding
warrants are exercised;
|
|
|
|
I-Bankers Securities, Inc., Maxim Group LLC and
Legend Merchant Group, Inc., the representatives of the
underwriters in Community Bankers initial public offering,
exercise any of their unit purchase options;
|
|
|
|
any holders of Community Bankers common stock issued
in Community Bankers initial public offering exercise
their right to convert their shares into cash equal to a pro
rata portion of the Community Bankers trust account; and
|
|
|
|
Community Bankers consummates its proposed merger
with BOE.
|
|
|
|
Depending on the scenario, Community Bankers stockholders
will own from 36.93% to 73.35% of Community Bankers voting
interests after the merger, based on the number of shares of
each of Community Bankers, TransCommunity and BOE issued and
outstanding as of the date of their respective merger
agreements. For a table outlining the effect of the various
scenarios on the percentage of Community Bankers voting
interests that existing Community Bankers stockholders will own
after the merger with TransCommunity is completed, see The
Merger Stock Ownership of Existing Community Bankers
and TransCommunity Stockholders After the Merger. |
|
Q: |
|
Do the Community Bankers stockholders have conversion
rights? |
|
A: |
|
Generally, yes. If you hold shares of common stock issued in
Community Bankers initial public offering, then you have
the right to vote against the merger proposal and demand that
Community Bankers convert such shares into cash equal to a pro
rata portion of the Community Bankers trust account. We
sometimes refer to these rights to vote against the merger
proposal and demand conversion of the shares into a pro rata
portion of the Community Bankers trust account as conversion
rights. |
|
Q: |
|
If I am a Community Bankers stockholder and have conversion
rights, how do I exercise them? |
|
A: |
|
If you wish to exercise your conversion rights, you must: |
|
|
|
affirmatively vote against the merger proposal in
person or by submitting your proxy card before the vote on the
merger proposal and checking the box that states
Against for proposal number 1; and
|
|
|
|
either:
|
|
|
|
|
|
o check
the box that states Exercise Conversion Rights on
the proxy card; or
|
|
|
|
o send
a letter to Community Bankers at 9912 Georgetown Pike,
Suite D-203,
Great Falls, VA 22066, stating that you are exercising your
conversion rights and demanding your shares of Community Bankers
common stock be converted into cash; and
|
|
|
|
|
|
o physically
tender, or if you hold your shares of Community Bankers common
stock in street name, cause your broker to
physically tender, your stock certificates representing shares
of Community Bankers common stock to Community Bankers; or
|
|
|
|
o deliver
your shares electronically using the Depository Trust
Companys DWAC (Deposit/Withdrawal At Custodian) System, to
Community Bankers transfer agent
by ,
2008.
|
|
|
|
|
|
For more information, see The Merger
Conversion Rights of Community Bankers Stockholders. |
|
|
|
Taking any action that does not include an affirmative vote
against the merger, including abstaining from voting on the
merger proposal, will prevent you from exercising your
conversion rights. However, voting against the merger proposal
does not obligate you to exercise your conversion rights. |
|
|
|
If you (1) initially vote for the merger proposal but then
wish to vote against it and exercise your conversion rights or
(2) initially vote against the merger proposal and wish to
exercise your conversion rights but do not check the box on the
proxy card providing for the exercise of your conversion rights
or do not send a written request to Community Bankers to
exercise your conversion rights, or (3) initially vote
against the merger proposal but later wish to vote for it, you
may request Community Bankers to send you another proxy card on |
5
|
|
|
|
|
which you may indicate your intended vote and, if that vote is
against the merger proposal, exercise your conversion rights by
checking the box provided for such purpose on the proxy card. |
|
|
|
You may make such request by contacting Community Bankers at the
phone number or address listed on the Community Bankers Notice
of Annual Meeting of Stockholders. Any corrected or changed
proxy card or written demand of conversion rights must be
received by Community Bankers prior to the annual meeting. |
|
|
|
Prior to exercising your conversion rights you should verify the
market price of Community Bankers common stock. You may receive
higher proceeds from the sale of your common stock in the public
market than from exercising your conversion rights, if the
market price per share is higher than the amount of cash that
you would receive upon exercise of your conversion rights. |
|
|
|
Any request to exercise your conversion rights, once made, may
be withdrawn at any time up to immediately prior to the vote on
the merger proposal at the annual meeting (or any adjournment or
postponement thereof). Furthermore, if you deliver your shares
for conversion and subsequently decide prior to the annual
meeting not to elect conversion, you may simply request that the
transfer agent return the certificate (physically or
electronically) to you. |
|
|
|
Please note, however, that once the vote on the merger proposal
is held at the annual meeting, you may not withdraw your request
to exercise your conversion rights and request the return of
your shares. If the merger is not consummated, your shares will
be automatically returned to you. |
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If the merger is completed and you have properly exercised your
conversion rights, then you will be entitled to receive a pro
rata portion of the Community Bankers trust account, including a
pro rata portion of the interest earned on the funds in the
trust account less interest released to Community Bankers for
working capital or to pay taxes, calculated as of the record
date for determination of stockholders entitled to vote on the
merger. As of the record date, there was approximately
$ in the trust account, so you
will be entitled to convert each share of common stock that you
hold into approximately $ . If you
properly exercise your conversion rights, then you will be
exchanging your shares of Community Bankers common stock for
cash equal to a pro rata portion of the Community Bankers trust
account and will no longer own these shares. |
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What are the federal income tax consequences of exercising my
conversion rights? |
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There will be no federal income tax consequences to
non-converting stockholders as a result of the merger. Since
Community Bankers stockholders will not be exchanging or
otherwise disposing of their shares of Community Bankers common
stock pursuant to the merger, Community Bankers stockholders
will continue to hold their shares of Community Bankers common
stock and will not recognize any gain or loss as a result of the
merger. However, for those Community Bankers stockholders who
exercise their conversion rights and convert their shares of
Community Bankers common stock into the right to receive a pro
rata portion of the Community Bankers trust account, such
stockholders will generally be required to treat the transaction
as a sale of the shares and recognize gain or loss upon the
conversion. Such gain or loss will be measured by the difference
between the amount of cash you receive and your tax basis in
your converted shares. See The Merger Certain
Federal Tax Consequences to Community Bankers
Stockholders. |
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Will I lose my warrants or will they be converted to shares
of common stock if the merger is consummated or if I exercise my
conversion rights? |
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No. Neither consummation of the merger with TransCommunity
nor exercise of your conversion rights will result in the loss
of your warrants. Your warrants will continue to be outstanding
following consummation of the merger whether or not you exercise
your conversion rights. However, in the event that Community
Bankers does not consummate the merger with TransCommunity by
June 7, 2008, Community Bankers will be required to
liquidate and any Community Bankers warrants you own will expire
without value. |
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What happens to the funds deposited in the Community Bankers
trust account after completion of the merger? |
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Upon consummation of the merger, the funds deposited in the
Community Bankers trust account will be released to Community
Bankers, and a portion of the funds remaining in the trust
account after payment of |
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amounts, if any, to Community Bankers stockholders requesting
and exercising their conversion rights, will be used to pay
expenses associated with the merger, to make capital
contributions, to repurchase Community Bankers common stock
and/or warrants or to engage in subsequent acquisitions
following Community Bankers initial business combination. |
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What happens if the merger is not consummated or is
terminated? |
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If Community Bankers does not effect the merger with
TransCommunity by June 7, 2008, Community Bankers must
dissolve and liquidate. In any liquidation, the funds held in
the trust account, plus any interest earned thereon (less any
taxes due on such interest), together with any remaining net
assets not held in trust, will be distributed pro rata to the
holders of Community Bankers common stock issued in the initial
public offering. Holders of Community Bankers common stock
issued prior to the initial public offering have waived any
right to any liquidation distribution with respect to those
shares. |
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In addition, if the merger is not consummated, Community
Bankers certificate of incorporation will not be amended
pursuant to the proposals to adopt the amendments to the
certificate of incorporation. |
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Should the merger agreement be terminated due to a material
breach of such agreement by Community Bankers, then a
termination fee of $500,000 would be payable by Community
Bankers to TransCommunity. Further, if either party terminates
because the stockholders of the other party fail to approve the
merger or if either party terminates because the transactions
contemplated are not consummated by May 31, 2008, and
another acquisition transaction, involving a change in control,
is announced and results in a definitive agreement or a
consummated acquisition transaction with the terminating party
within 12 months of termination, then the party entering
into the definitive agreement or consummating the acquisition
transaction will owe the other party a termination fee of
$500,000. If a party terminates the agreement due to a material
breach of the other party or the failure of the other party to
recommend the merger to its stockholders, the termination fee of
$500,000 is payable upon termination. In the case of a
termination involving a competing acquisition transaction, the
termination fee of $500,000 is payable upon the earlier of the
execution of a definitive agreement or the consummation of the
transaction. In those cases where a competing acquisition
transaction with a third party is consummated, an additional
termination fee of $1,200,000 will also be payable upon
consummation of the acquisition transaction. |
7
QUESTIONS
AND ANSWERS FOR TRANSCOMMUNITY STOCKHOLDERS
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Why is TransCommunity proposing the merger? |
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We believe that the proposed merger will provide substantial
benefits to TransCommunity stockholders. The TransCommunity
board of directors believes the merger provides TransCommunity
stockholders with liquidity, capital raising and strategic and
growth opportunities, such as the proposed merger with BOE, that
would not have been readily available to TransCommunity on a
stand-alone basis. To review the TransCommunity reasons for the
transaction in greater detail, see The Merger
TransCommunitys Reasons for the Merger. |
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What will TransCommunity stockholders receive in the
merger? |
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Each issued and outstanding share of TransCommunity common stock
you own will be converted into 1.4200 shares of Community
Bankers common stock, subject to possible adjustment as
described in this joint proxy statement/prospectus. In addition,
holders of outstanding options for TransCommunity common stock
will receive options exercisable for of Community Bankers common
stock. The number of shares underlying the options and the
exercise price of the options will be adjusted to reflect the
1.4200 exchange ratio. |
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Will TransCommunity stockholders be taxed on the Community
Bankers common stock that they receive in exchange for their
TransCommunity shares? |
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No. We expect the merger to qualify as a reorganization for
United States federal income tax purposes. If the merger
qualifies as a reorganization for United States federal income
tax purposes, TransCommunity stockholders will not recognize any
gain or loss to the extent TransCommunity stockholders receive
Community Bankers common stock in exchange for their
TransCommunity shares. We recommend that TransCommunity
stockholders carefully read the complete explanation of the
material United States federal income tax consequences of the
merger beginning on page , and that
TransCommunity stockholders consult their tax advisors for a
full understanding of the tax consequences of their
participation in the merger. |
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How much of Community Bankers voting interests will
TransCommunity stockholders own upon completion of the
merger? |
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It depends. The percentage of TransCommunitys voting
interests that existing TransCommunity stockholders will own
after the merger will vary depending on whether: |
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any TransCommunity stockholder exercises appraisal
rights;
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any of Community Bankers 7,500,000 outstanding
warrants are exercised;
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I-Bankers Securities, Inc., Maxim Group LLC and
Legend Merchant Group, Inc., the representatives in Community
Bankers initial public offering, exercise any of their
unit purchase options;
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any holders of Community Bankers common stock issued
in Community Bankers initial public offering exercise
their right to convert their shares into cash equal to a pro
rata portion of the Community Bankers Trust account; and
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Community Bankers consummates its proposed merger
with BOE.
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Depending on the scenario, TransCommunity will own from 20.76%
to 45.27% of Community Bankers voting interests after the
merger, based on the number of shares of each of Community
Bankers, TransCommunity and BOE issued and outstanding as of the
date of their respective merger agreements. For a table
outlining the effect of the various scenarios on the percentage
of Community Bankers voting interests that existing
TransCommunity stockholders will own after the merger with
TransCommunity is completed, see The Merger
Stock Ownership of Existing Community Bankers and TransCommunity
Stockholders After the Merger. |
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Will I have appraisal rights in the merger? |
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Yes. You have the right to assert appraisal rights with respect
to the merger and demand in writing that Community Bankers pay
the fair value of your shares of TransCommunity common stock
under applicable provisions of Virginia law. In order to
exercise and perfect appraisal rights, generally you must: |
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not vote any shares owned by you in favor of the
merger;
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deliver written notice of your intent to demand
payment for your shares to TransCommunity before the vote is
taken on the merger at the special meeting;
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complete, sign and return the form to be sent to you
pursuant to
Section 13.1-734
of the Virginia Stock Corporation Act; and
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if you hold certificated shares, deposit your
TransCommunity common stock certificates in accordance with the
instructions in the form.
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Payment for your shares will be made only if the merger is
completed. A copy of the applicable Virginia statutory
provisions is included in this joint proxy statement/prospectus
as Appendix C, and a more detailed description of the
procedures to demand and perfect appraisal rights is included in
the section entitled The Merger Appraisal
Rights of TransCommunity Stockholders beginning on
page . |
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What are the federal income tax consequences of exercising my
appraisal rights? |
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If you exercise your appraisal rights and receive a cash payment
with respect to your shares of TransCommunity common stock and
have held your shares of TransCommunity common stock as a
capital asset, you will recognize capital gain or loss equal to
the difference between your tax basis in those shares and the
amount of cash you received in exchange for those shares. |
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Should I send in my stock certificates now? |
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No. You should not send in your stock certificates at this
time. Promptly after the effective time of the merger, you will
receive transmittal materials with instructions for surrendering
your TransCommunity shares. You should follow the
instructions in the post-closing letter of transmittal regarding
how and when to surrender your stock certificates. |
9
SUMMARY
This summary highlights selected information from this joint
proxy statement/prospectus. It may not contain all of the
information that is important to you. To better understand the
merger and its potential impact on you, we urge you to read this
entire document carefully, including the appendices, exhibits
and enclosures. Each item in this summary includes a page
reference directing you to a more complete discussion of the
item.
The
Companies (page )
Community
Bankers.
Community
Bankers Acquisition Corp.
9912 Georgetown Pike,
Suite D-203
Great Falls, Virginia 22066
(703) 759-0751
Community Bankers is a blank check company. Community Bankers
was organized under the laws of the State of Delaware on
April 6, 2005. As a Targeted Acquisition
CorporationSM,
or
TACSM,
Community Bankers was formed to effect a merger, capital stock
exchange, asset acquisition or other similar business
combination with an operating business in the banking industry.
Community Bankers consummated its initial public offering on
June 8, 2006, raising approximately $60 million,
approximately $59 million of which is currently held in a
trust account at J.P. Morgan Chase Bank. Shares of
Community Bankers common stock trade on the American Stock
Exchange under the symbol BTC.
In addition to the merger agreement relating to the merger of
Community Bankers with TransCommunity, Community Bankers has
entered into an agreement and plan of merger, dated as of
December 13, 2007, with BOE. BOE is a bank holding company
incorporated under the laws of Virginia and is the holding
company of Bank of Essex. Bank of Essex operates eight
full-service offices, two in Tappahannock, and one each in
Manquin, Mechanicsville, West Point, Glen Allen, Burgess and
Callao, Virginia, respectively. Bank of Essex had deposits of
$241.0 million, loans of $213.5 million, assets of
$294.8 million and equity of $29.3 million, at
September 30, 2007.
TransCommunity.
TransCommunity
Financial Corporation
4235 Innslake Drive
Glen Allen, Virginia 23060
(804) 934-9999
TransCommunity is a registered financial holding company
incorporated under the laws of Virginia and is the holding
company for TransCommunity Bank, N.A. TransCommunity is
headquartered in Glen Allen, Virginia. TransCommunity Bank
operates five full service offices in its four operating
divisions in Goochland, Powhatan, Louisa and Rockbridge
Counties, Virginia. TransCommunity Bank had deposits of
$192.0 million, loans of $189.0 million, assets of
$223.0 million and equity of $29.9 million, at
September 30, 2007.
Recent
Developments (page )
Community
Bankers.
On February 15, 2008, Community Bankers announced its results of
operations for the period from April 1, 2007 until December 31,
2007. For the period from April 1, 2007 to
December 31, 2007, interest income on its trust fund
investments, including interest allocable to shares subject to
possible conversion, amounted to $1,933,962. This resulted in
net income for the period from April 1, 2007 to
December 31, 2007 of $1,105,034 or net income per share,
basic and diluted, of $0.12 and $0.09, respectively. The
aggregate amount of cash and United States treasury securities
held in the trust fund as of December 31, 2007, was
$58,452,512.
BOE.
On February 4, 2008, BOE announced its results of operations for
the fourth quarter of 2007. Net income for the fourth quarter of
2007 was $596,000, a decrease of $317,000, or 34.7%, from net
income of $913,000 for the same period in 2006. The decrease to
net income for the fourth quarter of 2007 compared to the same
period in 2006
10
was due to a December 2006 sale of a former branch banking
facility. This nonrecurring item caused gain on sale of other
properties to be $477,000 in the fourth quarter of 2006 compared
to $0 for the same period in 2007. Additionally, there was an
increase of $187,000 in noninterest expenses, from
$2.2 million in the fourth quarter of 2006 to
$2.4 million in the fourth quarter 2007. Offsetting these
decreases to net income was an increase of 8.9%, or $209,000, in
net interest income. Net interest income was $2.6 million
for the fourth quarter 2007 compared to $2.4 million for
the fourth quarter of 2006. Also, there was an increase of
$55,000, or 11.5%, in noninterest income, from $479,000 in the
fourth quarter of 2006, to $534,000 for the same period in 2007.
Income tax expense declined 42.0%, or $84,000, from $200,000 in
the fourth quarter of 2006 to $116,000 in the fourth quarter of
2007. Additionally, strong asset quality resulted in no
additional expense in provision for loan losses for the fourth
quarter of both years. On December 31, 2007 loans past due 90
days or more and accruing interest was $17,000 and loans not
accruing interest totaled $96,000. For the year ending December
31, 2007 charged-off loans were $272,000 against recoveries of
$461,000. Earnings per common share were $0.49 for the fourth
quarter in 2007 compared to $0.75 for the same period in 2006.
For the year ended December 31, 2007, BOE reported net income of
$2.608 million, compared to net income of $3.1 million for
2006, a decrease of $515,000, or 16.5%. This decrease in
earnings was primarily the result of an increase of $876,000, or
11.1%, in noninterest expenses. Salaries was the largest
component of this increase, $432,000, which increased primarily
from the addition of staff that was hired and trained in 2007 to
operate two new full service offices of Bank of Essex in
Northumberland County, Virginia.
The year 2007 was the first full year of operations for
BOEs corporate headquarters and branch banking facility
that opened in June 2006, accounting for the majority of
increases in occupancy expenses of $159,000. Gain on sale of
other properties decreased $467,000 from 2006 to 2007 due to the
sale of bank property referred to above. Additionally, legal and
professional fees increased $236,000 in 2007 compared to 2006 as
a result of BOEs due diligence process prior to announcing
the merger agreement with Community Bankers. Offsetting these
decreases to net income was an increase of $237,000, or 2.4%, in
net interest income, from $9.8 million in 2006 to
$10.0 million in 2007. Noninterest income increased
$204,000, or 11.4%, from $1.8 million in 2006 to
$2.0 million in 2007. Also improving net income was a
95.2%, or $119,000, reduction in provision for loan losses and a
33.5%, or $292,000, decrease in income tax expense for 2007
compared to 2006. Earnings per common share were $2.15 for the
full year 2007 compared to $2.58 for the same period in 2006.
Average diluted shares outstanding increased by 5,143 during
2007.
Loans, net of allowance for loan losses, increased 12.6%, or
$24.5 million, and were $219.0 million on December 31,
2007. Total deposits grew 5.9%, or $13.7 million, to end
2007 at $244.6 million.
TransCommunity.
Net income for the year ended December 31, 2007 was
$2.5 million, or $0.54 per share (basic and diluted),
versus net income of $117 thousand, or $0.03 per share for the
same period during 2006.
Results for 2007 were significantly affected by recognition at
year-end of a deferred tax asset totaling $3.3 million,
arising primarily from recognition by TransCommunity of the net
operating loss carry forwards generated since
TransCommunitys inception. TransCommunity determined the
timing and amount of the recognition of the deferred tax asset
in accordance with FAS 109, which states all
available evidence, both positive and negative, should be
considered to determine whether, based on the weight of that
evidence, a valuation allowance is needed. The pending
merger with Community Bankers was not a factor in
TransCommunitys determination to recognize the deferred
tax asset.
The primary positive factor that contributed to the decision to
recognize the deferred tax asset was the completion of
TransCommunitys 2007 restructuring pursuant to which
TransCommunitys former four subsidiary banks were
consolidated into one charter and the resulting anticipated
future profitability. TransCommunity spent approximately
$500,000 consolidating the charters and operations of the banks
during 2007, and projects future recurring annual savings
related to the restructuring to be approximately $800,000. This
restructuring was completed and the arrangements for the related
cost savings were finalized in the first part of the fourth
quarter of 2007.
The negative factors that TransCommunity considered were
TransCommunitys history of operating losses and the fact
that the amount of net operating losses that can be utilized in
any one year is limited to approximately $800,000.
11
Based on the totality of the evidence, TransCommunity believes
that it was appropriate to recognize the deferred tax asset for
future periods commencing in the fourth quarter of 2007. In
addition, based on anticipated taxable income, TransCommunity
believes the entire deferred tax asset will be realized before
the related net operating losses begin to expire in 2022, and
accordingly recorded the entire deferred tax asset. As a result
of recognizing this deferred tax asset, TransCommunity expects
to incur tax expense related to income earned in 2008 and
subsequent years.
Without recognition of this deferred tax asset, performance for
2007 would have been a loss of $829 thousand, versus net income
of $117 thousand for 2006. Inclusive of the deferred tax asset,
the return on average assets for 2007 was 1.16% compared to .06%
for 2006. Return on average equity for 2007 was 8.23% compared
to 0.39% for 2006.
During 2007, total assets grew by 20%, led by strong growth in
the loan portfolio of 36%. Although TransCommunitys
employee headcount remained constant during 2007, noninterest
expenses grew 19% to $10.6 million, reflecting one-time
costs associated with the consolidation of TransCommunitys
four banking charters, and centralization of many back-room
operational functions.
TransCommunitys net interest margin for 2007 was 5.13%
versus 5.14% for 2006. Although TransCommunity was able to
maintain its historic high level of net interest margin during
2007, this key profitability indicator is expected to decline in
2008 as a result of the actions of the Federal Reserve Board to
lower interest rates.
During 2007, as part of the consolidation of its bank charters,
TransCommunity centralized its credit administration function,
and hired its first chief credit officer. Following
consolidation, the new chief credit officer performed a full
review of the entire loan portfolio. This review, plus several
credit downgrades in the final quarter of the year, resulted in
an increase in the allowance for loan losses during 2007 of $1.6
Million. At December 31, 2007 the allowance for loan losses
stands at $3.0 million, or 1.48% of total loans. At
December 31, 2006, the allowance for loan losses was
$2,100,000, or 1.36% of total loans.
At December 31, 2007, total assets were $238.2 million
versus $198.4 million at December 31, 2006. Loans, net
of the allowance for loan losses, equaled $202.4 million,
as compared with $149.3 million at year-end 2006. Total
deposits at December 31, 2007 were $203.6 million,
representing growth of 23.4% from $165.0 million at
year-end 2006.
The
Merger (page )
The merger agreement is attached as Appendix A to this
joint proxy statement/prospectus. You should read the merger
agreement because it is the legal document that governs the
merger. The merger agreement provides for the merger of
TransCommunity with and into Community Bankers. Following the
merger:
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the board of directors of the surviving corporation will be
comprised of ten directors; six directors will be nominated by
TransCommunity, one of which shall serve as chairman of
Community Bankers upon consummation of the merger, and four
directors will be nominated by Community Bankers;
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the management of TransCommunity will continue in their existing
roles as management of Community Bankers;
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the current president and chief executive officer of Community
Bankers would become its chief strategic officer; and
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TransCommunity Bank, will become a subsidiary bank of Community
Bankers, with its existing board of directors and senior
management.
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As a result of the merger, each share of TransCommunity stock
will be converted into 1.4200 shares of Community Bankers
common stock, subject to possible adjustment as described in
this joint proxy statement/prospectus. Community Bankers common
stock is listed on the American Stock Exchange under the symbol
BTC. TransCommunity common stock is quoted on the
OTC Bulletin Board under the symbol TCYF.OB.
We cannot complete the merger unless, among other things, we
obtain the necessary government approvals and unless the
stockholders of each of Community Bankers and TransCommunity
approve the merger proposal.
Upon consummation of the merger with TransCommunity, the funds
currently held in the trust account, less any amounts paid to
stockholders who exercise their conversion rights and the
deferred underwriting compensation, will be released to
Community Bankers. Community Bankers intends to pay any
additional expenses related to the merger and hold the remaining
funds as capital at the holding company level pending use for
general corporate and strategic purposes. Such purposes could
include increasing the capital of TransCommunity Bank, future
mergers
12
and acquisitions, branch construction, asset purchases, payment
of dividends, repurchases of shares of Community Bankers common
stock and general corporate purposes. Until such capital is
fully leveraged or deployed, Community Bankers may not be able
to successfully deploy such capital and Community Bankers
return on equity could be negatively impacted.
The
Proposed Merger with BOE (page )
Subsequent to entering into the merger agreement, Community
Bankers has also entered into a merger agreement with BOE. We
anticipate that Community Bankers merger with BOE would be
consummated concurrent with or promptly following Community
Bankers merger with TransCommunity.
The merger agreement by and between Community Bankers and BOE
provides for the merger of BOE with and into Community Bankers.
The merger agreement with BOE is a material contract entered
into by Community Bankers and consented to by TransCommunity. If
the merger with BOE is consummated, the management, operations
and finances of Community Bankers will be significantly impacted
as described below. A copy of the merger agreement with BOE is
attached as Appendix F.
In the event Community Bankers consummates its merger with BOE,
the Community Bankers board of directors would be expanded to 14
members, to include an additional six directors to be nominated
by BOE and with two directors nominated by Community Bankers
resigning. Alexander F. Dillard, the current chairman of the
board of BOE, would be chairman of the surviving corporation,
with Troy A. Peery, Jr., the current chairman of the board of
TransCommunity, and Gary A. Simanson, the current president and
chief executive officer of Community Bankers, each serving as
vice chairman. Chris A. Bagley and Keith Walz would resign as
members of the board of directors after consummation of the
merger with BOE.
The president and chief executive officer of TransCommunity,
Bruce B. Nolte, would become the chief executive officer of the
surviving corporation through December 31, 2009. The
president and chief executive officer of BOE, George M.
Longest, Jr., would become the president of the surviving
corporation and chief executive officer of the surviving bank
and, commencing on January 1, 2010, would become president
and chief executive officer of the surviving corporation and
would remain the chief executive of the surviving bank. For more
information on management following the merger with BOE, see
The Merger Management and Operations After the
Merger.
Following the merger with BOE, TransCommunity Bank would be
merged with and into Bank of Essex.
As a result of the proposed merger, each share of BOE common
stock will be converted into 5.7278 shares of Community
Bankers common stock; provided, if the daily average closing
price for Community Bankers common stock for the
20 consecutive days of trading in such stock ending five
days before the closing date is less than $7.42, Community
Bankers will increase the exchange ratio to the quotient
obtained by dividing $42.50 by such daily average closing price.
For more information, see The Merger The
Proposed Merger between Community Bankers and BOE.
Community Bankers and BOE will be preparing a separate joint
proxy statement/prospectus relating to the merger with BOE which
will be mailed to Community Bankers and BOE stockholders in
connection with the special meetings of the stockholders of
Community Bankers and BOE at which a proposal to approve the
merger with BOE will be considered.
The merger with TransCommunity is an initial business
combination under Community Bankers certificate of
incorporation and therefore must be completed prior to the
closing of the merger with BOE. As Community Bankers must
dissolve and liquidate if the merger with TransCommunity is not
completed by June 7, 2008, it would not be advisable to complete
the merger with BOE prior to completing the merger with
TransCommunity. As a result, the voting requirement relating to
an initial business combination will not apply to
the vote on the merger with BOE and only the voting requirements
under Delaware law, requiring the affirmative vote of the
holders of a majority of the outstanding shares of Community
Bankers common stock entitled to vote on the merger with
BOE (including both shares issued in the initial public offering
and shares issued before the initial public offering), will
apply. For more information, see The Merger
The Proposed Merger between Community Bankers and BOE.
Reasons
for the Merger (page )
Community Bankers. In reaching its decision to
approve the merger agreement and recommend the merger to its
stockholders, the Community Bankers board of directors reviewed
various financial data and due diligence and evaluation
materials and made an independent determination of fair market
value. In addition, in reaching its
13
decision to approve the merger agreement, the board of directors
considered a number of factors, both positive and negative. It
believes that the non-exhaustive list of factors below strongly
supports its determination to approve the merger agreement and
recommendation that its stockholders adopt the merger agreement.
The positive factors included:
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the markets in which TransCommunity operates;
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the growth prospects associated with TransCommunity;
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the balance sheet
make-up and
product mix, including the loan and deposit mix of
TransCommunity;
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opportunities to grow existing revenue streams and create new
revenue streams associated with TransCommunity;
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the competitive position of TransCommunity within its operating
markets;
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the industry dynamics, including barriers to entry;
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the experience of TransCommunitys board of directors and
management, including Bruce B. Nolte, the current president and
chief executive officer of TransCommunity who will become
president and chief executive officer of Community Bankers in
the merger, including their recent experience in consolidating
TransCommunitys subsidiary banks charters and
existing non-core business lines;
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acquisition opportunities in the industry;
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the opportunity for further consolidation and cost savings in
the banking industry;
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the valuation of comparable companies;
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the companies similar community banking philosophies;
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the financial results of TransCommunity, including potential for
revenue growth, enhanced operating margins and operating
efficiencies; and
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Keefe, Bruyette & Woods fairness opinion that
the merger is fair to Community Bankers from a financial point
of view.
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Negative factors that Community Bankers board of directors
considered included:
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TransCommunitys poor earnings history;
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the disruption that TransCommunity had experienced with its
management and board of directors;
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the reputational risk that these issues could raise;
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TransCommunitys ability to successfully integrate its
subsidiary banks; and
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whether other banks would be attracted to join the franchise,
although there were and are no plans, arrangements, agreements
or understandings other than Community Bankers proposed
merger with BOE.
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After reviewing all of these factors, the Community Bankers
board of directors unanimously determined that the merger
proposal and the transactions contemplated thereby are in the
best interests of Community Bankers and unanimously recommended
that Community Bankers stockholders vote at the annual
meeting to adopt the merger agreement.
In addition, Community Bankers board knew and considered
the financial interests of certain Community Bankers directors
and executives when it approved the merger agreement. These
financial interests are addressed in greater detail under the
heading The Merger Certain Benefits of
Directors and Officers of Community Bankers and
TransCommunity.
TransCommunity. In reaching its decision to
approve the merger agreement and recommend the merger to its
stockholders, the TransCommunity board of directors relied
heavily on a special committee comprised of three independent
directors who have substantial experience in financial and
strategic matters involving public companies. The board also
consulted with TransCommunity management, engaged legal and
financial advisors, reviewed various financial data, due
diligence and evaluation materials, and made an independent
determination that the proposed merger with Community Bankers
was fair to TransCommunitys stockholders from a financial
14
point of view. The board of directors considered a number of
factors, positive and negative, in determining whether to
recommend that TransCommunitys stockholders approve the
merger agreement. The positive factors included:
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the premium over the companys prevailing stock price to be
received by TransCommunitys stockholders (see The
Merger Background of the Merger);
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the value of the consideration TransCommunitys
stockholders will receive relative to the projected book value
and earnings per share of TransCommunity common stock (see
The Merger Opinion of TransCommunitys
Financial Advisor);
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Sandler ONeills opinion that the consideration
TransCommunitys stockholders will receive as a result of
the merger is fair from a financial point of view;
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the fact that TransCommunitys stockholders will receive
shares in a larger company traded on the American Stock
Exchange, which will potentially provide greater liquidity for
TransCommunity stockholders to sell their shares quickly and
efficiently than under the existing OTC Bulletin Board
system;
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the fact that the exchange ratio is fixed in the event that
Community Bankers stock price increases before closing,
but is adjustable in the event that Community Bankers
stock price decreases, thereby affording TransCommunitys
stockholders a combination of upside participation and downside
protection (see The Merger Merger
Consideration);
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the additional capital to support a larger bank;
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the potential for the combined company to attract merger
candidates that TransCommunity would not be likely to attract on
its own;
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the proposed merger would be a strategic merger of equals in
which the combined companies may achieve a level of growth that
neither company could achieve on its own;
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the financial terms of recent business combinations in the
financial services industry and a comparison of the multiples of
selected combinations with the terms of the merger;
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the skills and experience offered by the Community Bankers
management and board of directors;
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the anticipated compatibility of management and business
philosophy of Community Bankers and TransCommunity;
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the projected positive value of Community Bankers shares
offered to TransCommunitys stockholders in relation to the
estimated market value, book value, and earnings per share of
TransCommunity common stock (see The Merger
Opinion of TransCommunitys Financial Advisor);
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the competitive and regulatory environment for financial
institutions generally; and
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the fact that the merger will enable TransCommunitys
stockholders to exchange their shares of common stock in a
tax-free transaction.
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The negative factors included:
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the dilution of ownership rights of TransCommunitys
stockholders (see The Merger Stock Ownership
of Existing Community Bankers and TransCommunity Stockholders
After the Merger);
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the reduction in the level of control that TransCommunitys
stockholders would have in the surviving corporation;
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no special purposes acquisition company transactions have been
completed in the banking industry;
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TransCommunity was enjoying progress with its strategic plan,
including recently consolidating its subsidiary banks into one
subsidiary; and
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potential stockholder opposition to the merger.
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After reviewing all of these factors, the TransCommunity board
of directors unanimously determined that the merger proposal and
the transactions contemplated thereby are in the best interests
of TransCommunity and unanimously recommended that
TransCommunitys stockholders vote at the special meeting
to approve the merger proposal.
15
TransCommunitys board of directors knew and considered the
financial interests of certain TransCommunity directors and
executives when it approved the merger agreement. These
financial interests are addressed in greater detail under the
heading The Merger Certain Benefits of
Directors and Officers of Community Bankers and
TransCommunity.
Regulatory
Approvals (page )
We cannot complete the merger unless we obtain the approval of
the Board of Governors of the Federal Reserve System, or the
Federal Reserve, and the Bureau of Financial Institutions of the
Virginia State Corporation Commission. Community Bankers filed
applications with the Federal Reserve and with the Bureau of
Financial Institutions of the Virginia State Corporation
Commission on January 18, 2008. As of the date of this
joint proxy statement/prospectus, we have not yet received the
required regulatory approvals. Although we expect to obtain the
necessary approvals in a timely manner, we cannot be certain
when, or if, they will be received.
We cannot complete the merger with BOE unless we obtain the
approval of the Federal Reserve and the Bureau of Financial
Institutions of the Virginia State Corporation Commission.
Community Bankers filed applications for approval to merge with
BOE with the Federal Reserve and with the Bureau of Financial
Institutions of the Virginia State Corporation Commission on
January 25, 2008. As of the date of this joint proxy
statement/prospectus, we have not yet received the required
regulatory approvals for the merger with BOE. Although we expect
to obtain the necessary approvals to merger with BOE to in a
timely manner, we cannot be certain when, or if, they will be
received.
Community
Bankers Annual Meeting (page )
Community Bankers will hold its annual meeting of stockholders
on ,
2008,
at .m.,
local time,
at .
At the annual meeting, Community Bankers stockholders will
be asked to vote to approve the merger proposal, adopt the
amendments to the certificate of incorporation, elect each of
Chris A. Bagley and Keith Walz to the board of directors, ratify
the appointment of Community Bankers independent public
accountants for the fiscal year ending December 31, 2007,
and authorize the board of directors to adjourn the annual
meeting to allow time for further solicitation of proxies in the
event there are insufficient votes present in person or
represented by proxy at the annual meeting to approve the
proposals.
Community
Bankers Stockholders Meeting Record Date and Voting
(page )
If you owned shares of Community Bankers common stock at the
close of business
on ,
2008, Community Bankers record date, you are entitled to
vote at the annual meeting. On the record date, there were
9,375,000 shares of Community Bankers stock outstanding.
You will have one vote at the meeting for each share of
Community Bankers stock you owned on the record date.
Pursuant to Delaware law, adoption of the merger agreement
requires the affirmative vote of the holders of a majority of
the outstanding shares of Community Bankers common stock
entitled to vote at the annual meeting. Community Bankers
certificate of incorporation also requires the affirmative vote
of the holders of a majority of Community Bankers outstanding
shares of common stock issued in Community Bankers initial
public offering and voted at the annual meeting. Both
requirements must be met for adoption of the merger agreement.
In addition, for the merger to be consummated, the holders of
less than 20% of the outstanding shares of common stock
(1,499,999 shares) issued in Community Bankers
initial public offering must have voted against the merger and
thereafter exercised their rights to convert their shares into
cash equal to a pro rata portion of Community Bankers
trust account.
Adoption of the amendments to the certificate of incorporation
requires the affirmative vote of a majority of the shares of
Community Bankers outstanding common stock entitled to
vote at the annual meeting. Election of each of Chris A. Bagley
and Keith Walz to the board of directors and ratification of the
appointment of Community Bankers independent public
accountants for the fiscal year ending December 31, 2007
each requires the affirmative vote of the holders of a majority
of the shares of Community Bankers common stock present in
person or represented by proxy and entitled to vote at the
annual meeting. Authorization for the board of directors to
adjourn the annual meeting until a later date requires the
affirmative vote of the holders of a majority of the shares of
Community Bankers common stock present in person or represented
by proxy and entitled to vote at the annual meeting, whether or
not a quorum is present.
16
As
of ,
2008, Community Bankers insiders (including all of
Community Bankers directors, executive officers, initial
stockholders and their affiliates) beneficially owned
approximately 20% of the outstanding shares of Community Bankers
common stock. All of Community Bankers insiders have
agreed to vote their shares of Community Bankers common stock,
acquired prior to the initial public offering (which constitute
approximately 39.9% percent of the shares required to
approve the merger under Delaware law), consistent with the
majority of the votes cast by the holders of the shares of
Community Bankers common stock issued in the initial public
offering as to the merger proposal and have indicated they will
vote in favor of each of the other proposals to be considered at
the annual meeting. While the shares voted by the Community
Bankers insiders will count towards the voting and quorum
requirements under Delaware law, they will not count towards the
voting requirement under the certificate of incorporation
because the insiders shares were not issued in Community
Bankers initial public offering.
The
Board of Directors of Community Bankers Recommends Stockholder
Approval (page )
The board of directors of Community Bankers has unanimously
approved each of the proposals to be brought before the annual
meeting, believes that the merger, the amendments to the
certificate of incorporation, the election of the directors
named in this joint proxy statement/prospectus, the ratification
of the appointment of the independent public accountants for the
fiscal year ending December 31, 2007, and authorizing the
board of directors to adjourn the annual meeting are each in the
best interest of Community Bankers and its stockholders, and
recommends that the Community Bankers stockholders vote
FOR approval of each of the proposals.
The
Financial Advisor for Community Bankers Believes the Merger
Proposal Consideration is Fair to Community Bankers
(page )
Keefe, Bruyette & Woods, Inc. has served as financial
advisor to Community Bankers in connection with the merger
proposal and has given an opinion to the Community Bankers board
of directors that, as of September 5, 2007, the date the
Community Bankers board of directors voted on the merger
proposal, the consideration Community Bankers will pay for the
TransCommunity common stock is fair to Community Bankers from a
financial point of view. A copy of the opinion delivered by
Keefe, Bruyette & Woods, Inc. is attached to this
joint proxy statement/prospectus as Appendix D. Community
Bankers stockholders should read the opinion completely to
understand the assumptions made, matters considered, and
limitations of the review undertaken by Keefe,
Bruyette & Woods, Inc. in providing its opinion.
TransCommunitys
Special Meeting (page )
TransCommunity will hold its special meeting of stockholders
on ,
2008,
at .m.,
local time,
at .
At the special meeting, TransCommunitys stockholders will
be asked to vote to approve the merger proposal and the proposal
to authorize the board of directors to adjourn the special
meeting to allow time for further solicitation of proxies in the
event there are insufficient votes at the special meeting,
represented in person or by proxy, to approve the merger
proposal.
TransCommunity
Stockholders Meeting Record Date and Voting
(page )
If you owned shares of TransCommunity common stock at the close
of business
on ,
2008, the TransCommunity record date, you are entitled to vote
on the merger proposal. On the record date, there were
4,586,741 shares of TransCommunity stock outstanding. You
will have one vote at the meeting for each share of
TransCommunity stock you owned on the record date. The
affirmative vote of the holders of a majority of TransCommunity
outstanding shares of common stock is required to approve the
merger proposal. Approval of the proposal to authorize the board
of directors to adjourn the special meeting until a later date
requires the affirmative vote of a majority of the votes
entitled to be cast at the special meeting, represented in
person or by proxy, even though less than a quorum. As
of ,
2008, TransCommunitys current directors, executive
officers, and their affiliates beneficially owned
approximately % of the outstanding
shares of TransCommunity common stock. Each of TransCommunity
directors and executive officers has agreed, subject to several
conditions, to vote his or her shares of TransCommunity common
stock in favor of the merger proposal.
17
The
Board of Directors of TransCommunity Recommends Stockholder
Approval (page )
The board of directors of TransCommunity has unanimously
approved the merger proposal, believes that the merger proposal
is in the best interest of TransCommunity and its stockholders,
and recommends that the TransCommunity stockholders vote
FOR approval of the merger proposal.
The
Financial Advisor for TransCommunity Has Rendered the Opinion
that the Merger Proposal Consideration is Fair to
TransCommunitys Stockholders from a Financial Point of
View (page )
Sandler ONeill & Partners, L.P. has served as
financial advisor to TransCommunity in connection with the
merger proposal and has given an opinion to the TransCommunity
board of directors that, as of December 12, 2007, the date
the TransCommunity board of directors voted on the merger
proposal, the consideration to be received in the transaction
was fair to TransCommunitys stockholders from a financial
point of view, including the pro forma effects of Community
Bankers proposed merger with BOE (the BOE
Transaction) on the combined entity. A copy of the opinion
delivered by Sandler ONeill is attached to this joint
proxy statement/prospectus as Appendix E.
TransCommunitys stockholders should read the opinion
completely to understand the assumptions made, matters
considered, and limitations of the review undertaken by Sandler
ONeill in providing its opinion.
Certain
Benefits of Directors and Officers of Community Bankers
(page )
When considering the recommendations of the Community Bankers
board of directors, you should be aware that some directors and
officers have interests in the merger proposal that differ from
the interests of other stockholders:
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four of the five members of the board of directors of Community
Bankers will continue to serve as members of the board of
Community Bankers following the merger;
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following the merger Gary A. Simanson, the current president and
chief executive officer of Community Bankers, will become the
vice chairman of the board of directors and chief strategic
officer of Community Bankers, at a salary of $270,000, pursuant
to an employment agreement that will be effective upon
completion of the merger;
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if the merger is not approved and Community Bankers is required
to liquidate, all the shares of common stock and all the
warrants held by its directors and officers, which, as of the
record date, for the shares, were worth
$
per share and
$ in
the aggregate and, for the warrants, were worth
$
per warrant and
$ in
the aggregate, will be worthless; and
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if Community Bankers liquidates prior to the consummation of a
business combination, Gary A. Simanson, its president and chief
executive officer, and David Zalman, a stockholder, will be
personally liable to ensure that the trust account is not
reduced by claims of Community Bankers vendors and service
providers for services rendered or products sold in the event of
Community Bankers dissolution and liquidation.
Messrs. Simanson and Zalman will not be liable for and will
not pay any termination fees that may be payable by Community
Bankers to TransCommunity or BOE under the respective merger
agreements. These termination fees may be as little as $500,000
or as much as $1,700,000, and if sufficient operating funds are
unavailable, the termination fees will not be paid out of the
trust account. See Information About Community
Bankers Liquidation If No Business Combination
and The Merger Expenses and Termination
Fees.
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Each board member was aware of these and other interests and
considered them before approving and adopting the merger
proposal.
Certain
Benefits of Directors and Officers of TransCommunity
(page )
When considering the recommendations of the TransCommunity board
of directors, you should be aware that some directors and
officers have interests in the merger proposal that differ from
the interests of other stockholders, including the following:
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following the merger, six members of the board of directors of
TransCommunity, will join the board of directors of Community
Bankers and Troy A. Peery, Jr., the chairman of
TransCommunity, will become the chairman of Community Bankers;
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18
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following the merger with TransCommunity without considering the
merger with BOE, which will impact certain management positions,
Bruce B. Nolte will become president and chief executive officer
of Community Bankers, and Patrick J. Tewell,
TransCommunitys chief financial officer, will become chief
financial officer of Community Bankers. In addition, M. Andrew
McLean will continue to be the president of TransCommunity Bank
and Richard C. Stonbraker will continue to be the chief lending
officer of TransCommunity Bank;
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following the merger, the existing directors of TransCommunity
Bank will remain on the board of directors of TransCommunity
Bank;
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following the merger, Community Bankers will generally indemnify
and provide liability insurance for up to three years following
the merger to the present directors and officers of
TransCommunity and TransCommunity Bank, subject to certain
exceptions;
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for the
12-month
period following the merger, Community Bankers will adopt
TransCommunitys benefit plans and will furnish those
employees of TransCommunity who become employees of Community
Bankers or a Community Bankers subsidiary benefits under the
TransCommunity benefit plans;
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following the merger, the stock options held by the officers and
directors of TransCommunity will be converted into options to
purchase common stock of Community Bankers, with adjustments to
the number of shares and the exercise price to reflect the
exchange ratio; and
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following the merger, the restricted stock held by the officers
and directors of TransCommunity will be converted into and
become rights with respect to Community Bankers common stock.
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Each board member was aware of these and other interests and
considered them before approving and adopting the merger
proposal.
Federal
Income Tax Consequences (page )
We have structured the merger so that it will be considered a
reorganization for United States federal income tax purposes. If
the merger is a reorganization for United States federal income
tax purposes, TransCommunitys stockholders generally will
not recognize any gain or loss on the exchange of shares of
TransCommunity common stock for shares of Community Bankers
common stock. Any gain or loss which is recognized will be a
capital gain or loss, provided that such shares were held as
capital assets of the TransCommunity stockholder at the
effective time of the merger.
If you are a Community Bankers stockholder and exercise your
conversion rights or if you are a TransCommunity stockholder and
exercise your appraisal rights, you will generally be required
to treat the exchange of your shares for cash as a sale of the
shares and recognize gain or loss in connection with such sale.
Determining the actual tax consequences of the merger to a
TransCommunity stockholder may be complex. These tax
consequences will depend on each stockholders specific
situation and on factors not within our control.
TransCommunitys stockholders should consult their own tax
advisors for a full understanding of the tax consequences of
their participation in the merger.
Comparative
Rights of Stockholders (page )
The rights of Community Bankers stockholders are currently
governed by Delaware corporate law and Community Bankers
certificate of incorporation and bylaws. The rights of
TransCommunitys stockholders are currently governed by
Virginia corporate law and TransCommunitys articles of
incorporation and bylaws. Upon consummation of the merger, the
stockholders of TransCommunity will become stockholders of
Community Bankers and the certificate of incorporation, as
proposed to be amended and restated, and bylaws of Community
Bankers and Delaware law will govern their rights. Community
Bankers certificate of incorporation and bylaws differ
somewhat from those of TransCommunity. Material differences
include:
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Community Bankers bylaws provide that any director may be
removed, with or without cause, by holders of a majority of the
shares entitled to vote at the election of directors; in
comparison TransCommunitys articles of incorporation and
bylaws provide that directors only may be removed for cause with
the affirmative vote of at least two-thirds of the outstanding
shares entitled to vote.
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19
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Community Bankers bylaws provide that the election of
directors is determined by a vote of the holders of a majority
of the shares represented in person or by proxy and entitled to
vote, at a meeting of stockholders at which a quorum is present;
in comparison TransCommunitys bylaws provide that all
elections are determined by a plurality of the votes cast, in
person or by proxy, at a meeting of stockholders at which a
quorum is present.
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Community Bankers bylaws provide that stockholder action
may be taken by written consent, without prior notice and
without a vote, if the written consent is signed by the holders
of outstanding stock having at least the minimum number of votes
that would be necessary to take such action at a meeting at
which all shares entitled to vote thereon were present and
voted; in comparison TransCommunitys bylaws provide that
stockholder action may be taken by written consent if the action
is unanimous.
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Community Bankers bylaws provide that special meetings of
the stockholders may be called by a majority of the board of
directors or by the Chairman, the Chief Executive Officer or the
President and will be called by the Secretary at the request in
writing of stockholders owning a majority of the shares of
capital stock of Community Bankers issued and outstanding and
entitled to vote; in comparison TransCommunitys bylaws
provide that a special meeting of the stockholders will be held
only on the call of the Chairman of the board of directors, the
Chief Executive Officer or the board of directors.
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Community Bankers has elected not to be governed by
Section 203 of the DGCL, which limits engaging in a
business combination with any interested stockholder; in
comparison TransCommunity is subject to
13.1-725.1
and related provisions of the Virginia Stock Corporation Act
known as the Affiliated Transaction Statute, which
limits engaging in a business combination with any interested
stockholder. TransCommunity is also subject to
13.1-728.4
of the Virginia Stock Corporation Act, which provides that
certain notice and informational filings and special stockholder
meetings and voting procedures must occur prior to consummation
of a proposed control share acquisition.
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Termination
of the Merger Agreement (page )
Notwithstanding the approval of the merger proposal by the
Community Bankers and TransCommunity stockholders, Community
Bankers and TransCommunity can mutually agree at any time to
terminate the merger agreement before completing the merger.
Either Community Bankers or TransCommunity can also terminate
the merger agreement:
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if the other party is in breach of any of its representations or
warranties under the merger agreement and fails to cure the
violation and the breach relates to an inaccuracy that, without
considering any qualification in such representation, is likely
to have a material adverse effect on the breaching party;
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if required regulatory approval is denied by final nonappealable
action of a regulatory authority or if any action taken by such
authority is not appealed within the time limit for appeal;
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if any law or order permanently restraining, enjoining, or
otherwise prohibiting the consummation of the merger has become
final and nonappealable;
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if the approval of the stockholders of Community Bankers and
TransCommunity is not obtained or the holders of 20% or more of
the outstanding shares of Community Bankers common stock issued
in Community Bankers initial public offering vote against
the merger proposal and exercise their right to convert their
shares into cash equal to a pro rata portion of the Community
Bankers trust account;
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if we do not complete the merger by May 31, 2008;
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if a partys board of directors fails to reaffirm its
approval upon the other partys request for such
reaffirmation of the merger or if the partys board of
directors resolves not to reaffirm the merger; or
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if the Community Bankers or the TransCommunity board of
directors withdraws, modifies, or changes in a manner adverse to
the other party, its recommendation that the stockholders
approve the merger in certain instances where failure to do so
would likely result in a breach of the board of directors
respective fiduciary duties.
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20
Stock
Ownership of Existing Community Bankers and TransCommunity
Stockholders After the Merger
(page )
The table below outlines the effect of the various scenarios on
the percentage of Community Bankers voting interests that
existing Community Bankers and TransCommunity stockholders will
own after the merger with TransCommunity is completed, based on
the number of shares of each of Community Bankers,
TransCommunity and BOE issued and outstanding as of the date of
their respective merger agreements. Depending on the scenario,
Community Bankers stockholders will own from 36.93% to
73.35% of Community Bankers voting interests after the
merger, and TransCommunity will own from 20.76% to 45.27% of
Community Bankers voting interests after the merger. The
table assumes that none of the TransCommunity stockholders
exercised appraisal rights and that Community Bankers
existing stockholders continue to own the warrants to be
exercised. The unit purchase option refers to the unit purchase
option to purchase 525,000 units (each unit comprised of
one share of common stock and one warrant to purchase one share
of common stock) held by I-Bankers Securities, Inc., Maxim Group
LLC and Legend Merchant Group, Inc., the representatives of the
underwriters in Community Bankers initial public offering.
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The 525,000
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Warrants
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525,000
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Included in
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Units
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the Units
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Issuable
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issuable
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19.99% of
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Community
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Upon
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Upon
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Community
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Bankers
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Exercise of
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Exercise of
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Bankers
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7,500,000
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the Unit
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the Unit
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The Merger
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Percent Ownership
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Conversion
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Warrants
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Purchase
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Purchase
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with BOE
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Community
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Rights are
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are
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Option are
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Option are
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has been
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Bankers
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TransCommunity
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BOE
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Total
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Exercised
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Exercised
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Exercised
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Exercised
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Completed
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73.35%
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26.65%
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0.00%
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100.00%
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X
|
|
X
|
|
X
|
|
|
|
72.76%
|
|
|
|
27.24%
|
|
|
0.00%
|
|
100.00%
|
|
|
|
X
|
|
X
|
|
|
|
|
|
72.15%
|
|
|
|
27.85%
|
|
|
0.00%
|
|
100.00%
|
|
|
|
X
|
|
|
|
|
|
|
|
71.61%
|
|
|
|
28.39%
|
|
|
0.00%
|
|
100.00%
|
|
X
|
|
X
|
|
X
|
|
X
|
|
|
|
70.94%
|
|
|
|
29.06%
|
|
|
0.00%
|
|
100.00%
|
|
X
|
|
X
|
|
X
|
|
|
|
|
|
70.24%
|
|
|
|
29.76%
|
|
|
0.00%
|
|
100.00%
|
|
X
|
|
X
|
|
|
|
|
|
|
|
61.55%
|
|
|
|
38.45%
|
|
|
0.00%
|
|
100.00%
|
|
|
|
|
|
X
|
|
X
|
|
|
|
60.32%
|
|
|
|
39.68%
|
|
|
0.00%
|
|
100.00%
|
|
|
|
|
|
X
|
|
|
|
|
|
59.01%
|
|
|
|
40.99%
|
|
|
0.00%
|
|
100.00%
|
|
|
|
|
|
|
|
|
|
|
|
57.81%
|
|
|
|
42.19%
|
|
|
0.00%
|
|
100.00%
|
|
X
|
|
|
|
X
|
|
X
|
|
|
|
57.13%
|
|
|
|
20.76%
|
|
|
22.11%
|
|
100.00%
|
|
|
|
X
|
|
X
|
|
X
|
|
X
|
|
56.40%
|
|
|
|
21.11%
|
|
|
22.49%
|
|
100.00%
|
|
|
|
X
|
|
X
|
|
|
|
X
|
|
56.33%
|
|
|
|
43.67%
|
|
|
0.00%
|
|
100.00%
|
|
X
|
|
|
|
X
|
|
|
|
|
|
55.65%
|
|
|
|
21.48%
|
|
|
22.88%
|
|
100.00%
|
|
|
|
X
|
|
|
|
|
|
X
|
|
54.98%
|
|
|
|
21.80%
|
|
|
23.22%
|
|
100.00%
|
|
X
|
|
X
|
|
X
|
|
X
|
|
X
|
|
54.73%
|
|
|
|
45.27%
|
|
|
0.00%
|
|
100.00%
|
|
X
|
|
|
|
|
|
|
|
|
|
54.17%
|
|
|
|
22.19%
|
|
|
23.64%
|
|
100.00%
|
|
X
|
|
X
|
|
X
|
|
|
|
X
|
|
53.34%
|
|
|
|
22.59%
|
|
|
24.07%
|
|
100.00%
|
|
X
|
|
X
|
|
|
|
|
|
X
|
|
43.66%
|
|
|
|
27.28%
|
|
|
29.06%
|
|
100.00%
|
|
|
|
|
|
X
|
|
X
|
|
X
|
|
42.40%
|
|
|
|
27.89%
|
|
|
29.71%
|
|
100.00%
|
|
|
|
|
|
X
|
|
|
|
X
|
|
41.07%
|
|
|
|
28.53%
|
|
|
30.39%
|
|
100/00%
|
|
|
|
|
|
|
|
|
|
X
|
|
39.89%
|
|
|
|
29.11%
|
|
|
31.00%
|
|
100.00%
|
|
X
|
|
|
|
X
|
|
X
|
|
X
|
|
38.44%
|
|
|
|
29.81%
|
|
|
31.75%
|
|
100.00%
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
36.93%
|
|
|
|
30.54%
|
|
|
32.53%
|
|
100.00%
|
|
X
|
|
|
|
|
|
|
|
X
|
|
|
|
X |
|
- denotes that event occurred |
21
Conversion
Rights (page )
If you hold shares of common stock issued in Community
Bankers initial public offering (whether such shares were
acquired pursuant to such initial public offering or
afterwards), then you have the right to vote against the merger
proposal and demand that Community Bankers convert such shares
into cash equal to a pro rata portion of the Community Bankers
trust account in which a substantial portion of the net proceeds
of Community Bankers initial public offering are held
calculated as of the record date. If you wish to exercise your
conversion rights, you must:
|
|
|
|
|
affirmatively vote against the merger proposal in person or by
submitting your proxy card before the vote on the merger
proposal and checking the box that states Against
for proposal number 1; and
|
|
|
|
either:
|
|
|
|
|
°
|
check the box that states Exercise Conversion Rights
on the proxy card; or
|
|
|
°
|
send a letter to Community Bankers at 9912 Georgetown Pike,
Suite D-203,
Great Falls, VA 22066, stating that you are exercising your
conversion rights and demanding your shares of Community Bankers
common stock be converted into cash; and
|
|
|
|
|
°
|
physically tender, or if you hold your shares of Community
Bankers common stock in street name, cause your
broker to physically tender, your stock certificates
representing shares of Community Bankers common stock to
Community Bankers; or
|
|
|
°
|
deliver your shares electronically using the Depository Trust
Companys DWAC (Deposit/Withdrawal At Custodian) System, to
Community Bankers transfer agent
by ,
2008.
|
The DWAC delivery process can be accomplished, whether you are a
record holder or your shares are held in street
name, within a day, by simply contacting the transfer
agent or your broker and requesting delivery of your shares
through the DWAC System. There is a nominal cost associated with
this tendering process and the act of certificating the shares
or delivering them through the DWAC system. The transfer agent
will typically charge the stockholder or the tendering broker
$35, and your broker may or may not pass this cost on to you.
Taking any action that does not include an affirmative vote
against the merger, including abstaining from voting on the
merger proposal, will prevent you from exercising your
conversion rights. However, voting against the merger proposal
does not obligate you to exercise your conversion rights.
If the merger is not consummated, no shares will be converted to
cash. For more information regarding your conversion rights, see
The Merger Conversion Rights of Community
Bankers Stockholders on page of this
joint proxy statement/prospectus.
Appraisal
Rights (page )
If you are a TransCommunity stockholder, you have the right to
assert appraisal rights with respect to the merger and demand in
writing that Community Bankers pay the fair value of your shares
of TransCommunity common stock under applicable provisions of
Virginia law. In order to exercise and perfect appraisal rights,
generally you must:
|
|
|
|
|
not vote any shares owned by you in favor of the merger;
|
|
|
|
deliver written notice of your intent to demand payment for your
shares to TransCommunity before the vote is taken on the merger
at the special meeting;
|
|
|
|
complete, sign and return the form to be sent to you pursuant to
Section 13.1-734
of the Virginia Stock Corporation Act; and
|
|
|
|
if you hold certificated shares, deposit your TransCommunity
common stock certificates in accordance with the instructions in
the form.
|
22
A copy of the applicable Virginia statutory provisions is
included in this joint proxy statement/prospectus as
Appendix C, and a more detailed description of the
procedures to demand and perfect appraisal rights is included in
the section entitled The Merger Appraisal
Rights of TransCommunity Stockholders beginning on
page .
The
Merger is Expected to Occur in the second quarter of 2008
(page )
The merger will occur shortly after all of the conditions to its
completion have been satisfied or waived. Currently, we
anticipate that the merger will occur in the second quarter of
2008. However, we cannot assure you when or if the merger will
occur. We must first obtain the approval of the Community
Bankers stockholders and TransCommunitys
stockholders at the annual meeting and special meeting,
respectively, and all the necessary regulatory approvals.
Accounting
Treatment (page )
The merger will be accounted for using the purchase method of
accounting, with Community Bankers being treated as the
acquiring entity for accounting purposes. Under the purchase
method of accounting, the assets and liabilities of
TransCommunity as of the effective time of the merger will be
recorded at their respective fair values and added to those of
Community Bankers.
Completion
of the Merger is Subject to Certain Conditions
(page )
Completion of the merger is subject to a number of conditions,
including the approval of the merger proposal by the Community
Bankers and TransCommunity stockholders and the receipt of all
the regulatory consents and approvals that are necessary to
permit the completion of the merger. Certain conditions to the
merger may be waived by Community Bankers or TransCommunity, as
applicable.
Comparative
Market Value of Securities
(page )
The following table sets forth the closing price per share of
Community Bankers common stock and the closing price per share
of TransCommunity common stock on September 5, 2007 (the
last business day preceding the public announcement of the
merger)
and ,
2008 (the most recent practicable trading date prior to the
mailing this joint proxy statement/prospectus). The table also
presents the equivalent market value per share of TransCommunity
common stock based on the exchange ratio of 1.4200 shares
of Community Bankers common stock for each share of
TransCommunity common stock. You are urged to obtain current
market quotations for shares of Community Bankers and
TransCommunity common stock before making a decision with
respect to the merger. Community Bankers common stock is listed
on the American Stock Exchange under the symbol BTC,
and TransCommunity common stock is quoted on the OTC
Bulletin Board under the symbol TCYF.OB.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equivalent Price
|
|
|
|
|
|
|
Per Share of
|
|
|
Community Bankers
|
|
TransCommunity
|
|
TransCommunity
|
|
|
Common Stock
|
|
Common Stock
|
|
Common Stock(1)
|
|
September 5, 2007
|
|
$
|
7.42
|
|
|
$
|
7.25
|
|
|
$
|
10.54
|
|
,
2008
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
(1) |
|
The equivalent prices per share of TransCommunity common stock
have been calculated by multiplying the closing price per share
of Community Bankers common stock on each of the two dates by
the exchange ratio of 1.4200. |
Because the market price of Community Bankers common stock is
subject to fluctuation, the market value of the shares of
Community Bankers common stock that you may receive in the
merger may increase or decrease prior to and following the
merger. You are urged to obtain current market quotations for
Community Bankers common stock.
23
RISK
FACTORS
If the merger is consummated, TransCommunity stockholders
will receive shares of Community Bankers common stock in
exchange for their shares of TransCommunity common stock. An
investment in Community Bankers common stock is subject to a
number of risks and uncertainties, many of which also apply to
an existing investment in TransCommunity common stock. Risks and
uncertainties relating to general economic conditions are not
summarized below. Those risks, among others, are highlighted on
page under the heading A Warning About
Forward-Looking Statements.
However, there are a number of other risks and uncertainties
relating to Community Bankers and your decision on the merger
proposal that you should consider in addition to the risks and
uncertainties associated with financial institutions generally.
Many of these risks and uncertainties could affect Community
Bankers future financial results and may cause Community
Bankers future earnings and financial condition to be less
favorable than expected. This section summarizes those risks.
Risks
Related to the Business of TransCommunity
TransCommunity
has a limited operating history upon which to base any estimate
of its future success.
TransCommunity was organized in 2001, and it and its subsidiary,
TransCommunity Bank, have limited operating histories. As a
consequence, there is limited historical financial information
on which to base an evaluation of TransCommunitys current
business or to make any estimate of its future performance.
Many
of the loans in TransCommunitys loan portfolio have been
originated in the last five years, which may not be
representative of credit defaults in the future.
Approximately 96% of TransCommunity Banks loans have been
originated in the past five years and have a short term
maturity. In general, loans do not begin to show signs of credit
deterioration or default until they have been outstanding for
some period of time. As a result, a portfolio of older loans
will usually behave more predictably than a newer portfolio.
Because TransCommunitys loan portfolio is relatively new
with short term maturities, the current level of delinquencies
and defaults may not be representative of the level that will
prevail in the event TransCommunity makes loans with longer
maturity periods. If delinquencies and defaults increase,
TransCommunity may be required to increase its provision for
loan losses, which would adversely affect its results of
operations and financial condition.
TransCommunitys
concentrations of loans may create a greater risk of loan
defaults and losses.
TransCommunity has a substantial amount of loans secured by real
estate in the central Virginia area, and substantially all of
its loans are to borrowers in that area. Additionally, at
September 30, 2007, approximately 80% of its loan portfolio
consisted of commercial and residential construction loans,
commercial real estate loans, commercial business loans and
commercial lines of credit. These types of loans typically have
a higher risk of default than other types of loans, such as
fixed-rate single family residential mortgage loans. In
addition, the repayments of these loans, which generally have
larger balances than single family mortgage loans, often depend
on the successful operation of a business or the sale or
development of the underlying property, and as a result are more
likely to be adversely affected by deteriorating conditions in
the real estate market or the economy in general. These
concentrations expose TransCommunity to the risk that adverse
developments in the real estate market, or in general economic
conditions in the central Virginia/Richmond metropolitan area,
could increase the levels of nonperforming loans and
charge-offs, and reduce loan demand. In that event,
TransCommunity would likely experience additional losses.
Additionally, if, for any reason, economic conditions in the
area deteriorate, or there is significant volatility or weakness
in the economy or any significant sector of the areas
economy, TransCommunitys ability to develop its business
relationships may be diminished, the quality and collectibility
of its loans may be adversely affected, the value of collateral
may decline and loan demand may be reduced.
If
TransCommunitys allowance for loan losses becomes
inadequate, its results of operations may be adversely
affected.
TransCommunity maintains an allowance for loan losses that it
believes is adequate to absorb the estimated losses in its loan
portfolio. Through periodic review of the loan portfolio,
management determines the amount of the allowance for loan
losses by considering, among other factors, general market
conditions, credit quality of the loan portfolio and
24
performance of TransCommunity customers relative to their
financial obligations with TransCommunity. The amount of future
losses is susceptible to changes in economic, operating and
other conditions, including changes in interest rates that may
be beyond its control, and these future losses may exceed its
current estimates. There is no precise method for predicting
credit losses since any estimate of loan losses is necessarily
subjective and the accuracy depends on the outcome of future
events. As a result, charge-offs in future periods may exceed
its allowance for loan losses and additional increases in the
allowance for loan losses would be required. If TransCommunity
needs to make significant and unanticipated increases in its
loan loss allowance in the future, its results of operations and
financial condition would be materially adversely affected at
that time.
The
markets for TransCommunitys services are highly
competitive, and TransCommunity faces substantial
competition.
The banking business is highly competitive. TransCommunity
competes with other commercial banks, savings and loan
associations, credit unions, finance companies, mutual funds,
insurance companies and brokerage and investment banking firms
soliciting business from residents of and businesses located in
its markets. Many of its competitors enjoy competitive
advantages, including greater financial resources, a wider
geographic presence or more accessible branch office locations,
the ability to offer additional services, more favorable pricing
alternatives and lower origination and operating costs. Failure
to compete effectively to attract new and to retain existing
customers could result in a decrease in loans TransCommunity
originates and could negatively affect its results of operations.
In attracting deposits, TransCommunity competes with insured
depository institutions such as banks, savings institutions and
credit unions, as well as institutions offering uninsured
investment alternatives, including money market funds.
Traditional banking institutions, as well as entities intending
to transact business online, are increasingly using the Internet
to attract deposits without geographic or physical limitations.
In addition, many non-bank competitors are not subject to the
same extensive regulations that govern TransCommunity. These
competitors may offer higher interest rates on deposits than
TransCommunity offers, which could result in either
TransCommunity attracting fewer deposits or increasing its
interest rates in order to attract deposits. Increased deposit
competition could raise TransCommunitys cost of funds and
could adversely affect its ability to generate the funds
necessary for its lending operations, which would negatively
affect its results of operations.
Changes
in interest rates could have an adverse effect on
TransCommunitys income.
TransCommunitys profitability depends to a large extent
upon its net interest income. Net interest income is the
difference between interest income on interest-earning assets,
such as loans and investments, and interest expense on
interest-bearing liabilities, such as deposits and borrowings.
TransCommunitys net interest income will be adversely
affected if market interest rates change so that the interest it
pays on deposits and borrowings increases faster than the
interest it earns on loans and investments. Changes in interest
rates also affect the value of its loans. An increase in
interest rates could adversely affect borrowers ability to
pay the principal or interest on existing loans or reduce their
ability to borrow more money. This may lead to an increase in
TransCommunitys nonperforming assets or a decrease in loan
originations, either of which could have a material and negative
effect on TransCommunitys results of operations. A
decrease in interest rates could also negatively impact earnings
in the event TransCommunitys loans reprice more quickly
than its sources of funds. TransCommunitys loans are
primarily variable rate assets and TransCommunity relies
substantially on fixed-rate certificates of deposits for its
funding sources.
Interest rates are highly sensitive to many factors that are
partly or completely outside of its control, including
governmental monetary policies, domestic and international
economic and political conditions and general economic
conditions such as inflation, recession, unemployment and money
supply. Fluctuations in market interest rates are neither
predictable nor controllable and may have a material and
negative effect on TransCommunitys business, financial
condition and results of operations.
TransCommunity
is subject to significant government regulations that affect its
operations and may result in higher operating costs or increased
competition for TransCommunity.
TransCommunitys success will depend not only on
competitive factors, but also on state and federal regulations
affecting financial and bank holding companies generally.
TransCommunity is subject to extensive
25
regulation by the Board of Governors of the Federal Reserve
System, the Office of Comptroller of the Currency and, to a
lesser extent, the Bureau of Financial Institutions of the
Virginia State Corporation Commission. Supervision, regulation
and examination of banks and bank holding companies by bank
regulatory agencies are intended primarily for the protection of
depositors rather than stockholders. These agencies examine
financial and bank holding companies and commercial banks,
establish capital and other financial requirements and approve
new branches, acquisitions or other changes of control.
TransCommunitys ability to establish new banks or branches
or make acquisitions is conditioned on receiving required
regulatory approvals from the applicable regulators.
Regulations now affecting TransCommunity may change at any time,
and these changes could affect it in unpredictable and adverse
ways. Such changes could subject TransCommunity to additional
costs, limit the types of financial services and products it may
offer, increase the ability of non-banks to offer competing
financial services and products,
and/or
assist competitors that are not subject to similar regulation,
among other things. Failure to comply with laws, regulations or
policies could result in sanctions by regulatory agencies, civil
money penalties and damage to TransCommunitys reputation,
which could have a material adverse effect on its business,
financial condition and results of operation.
TransCommunitys
success will depend significantly upon general economic
conditions in central Virginia and nationally.
TransCommunitys success will depend significantly upon
general economic conditions in central Virginia as well as
national economic conditions affecting Virginia. Any prolonged
economic downturn or recession affecting central Virginia could
impair borrowers ability to repay existing loans,
potentially causing an increase in TransCommunitys
nonperforming assets and charge-offs; deter customers from
incurring more debt, possibly decreasing loan originations; or
cause customers to draw down their savings, potentially
decreasing deposits. In that event, TransCommunity may
experience lower earnings or losses, impaired liquidity and the
erosion of capital. Such an economic downturn or recession could
result from a variety of causes, including natural disasters, a
prolonged downturn in various industries upon which the economy
of central Virginia depends, or a national recession.
In addition, one of the focal points of TransCommunitys
business is serving the banking and financial services needs of
small to medium-sized businesses. These businesses generally
have fewer financial resources in terms of capital or borrowing
capacity relative to larger entities. As such, the businesses of
many of TransCommunitys customers and their ability to
repay outstanding loans may be more sensitive to changes in
general economic conditions than larger entities. As a
consequence, TransCommunitys results of operations and
financial condition could be adversely affected by weakening
economic conditions in central Virginia and nationally.
TransCommunity
could be negatively impacted by recent developments in the
mortgage industry.
Industry concerns over asset quality have increased nationally
due in large part to issues related to subprime mortgage
lending, declining real estate activity and general economic
concerns. The markets in which TransCommunity currently operates
remain stable and to date there has been no significant
deterioration in the quality of TransCommunitys loan
portfolio. In addition TransCommunity closed Main Street
Mortgage, its former mortgage brokerage subsidiary, in late
2006. Management will continue to monitor delinquencies, risk
rating changes, charge-offs and other indicators of risk in
TransCommunitys portfolio, but even with these efforts,
TransCommunity may be impacted by negative developments in the
mortgage industry and the real estate markets.
Concentrations
in loans secured by real estate may increase credit losses,
which would have a negative affect on TransCommunitys
financial results.
Many of TransCommunitys loans are secured by real estate
(both commercial and residential) in TransCommunitys
market area. A variety of loans secured by real estate are
offered, including commercial lines of credit, commercial term
loans, real estate, construction, home equity, consumer and
other loans. At September 30, 2007, approximately 76% of
TransCommunitys loans were secured by real estate. A major
change in the real estate market, such as deterioration in value
of the property, or in the local or national economy, could
adversely affect TransCommunitys customers ability
to pay these loans, which in turn could adversely impact
TransCommunity.
26
TransCommunity
depends on the services of key personnel, and a loss of any of
those personnel could disrupt its operations and could have a
material adverse effect on its operations.
TransCommunity is a customer-focused and relationship-driven
organization. Its growth and success has been in large part
driven by the personal customer relationships maintained by its
executives. TransCommunity depends on the performance of its
management at the holding company as well as the presidents of
each of its bank divisions. Although TransCommunity has entered
into change in control agreements with certain of its officers,
and Community Bankers intends to enter into employment
agreements with certain TransCommunity executive officers, which
would become effective at the effective time of the merger,
these officers and other key employees may leave the employ of
the surviving corporation and seek opportunities elsewhere.
Moreover, TransCommunitys does not maintain key man life
insurance on any of its executive officers. The loss of services
of one or more of these key employees could have a material
adverse impact on TransCommunitys operations.
Failure
to maintain effective systems of internal and disclosure
controls could have a material adverse effect on
TransCommunitys results of operation and financial
condition.
Effective internal and disclosure controls are necessary for
TransCommunity to provide reliable financial reports and
effectively prevent fraud and to operate successfully as a
public company. If TransCommunity cannot provide reliable
financial reports or prevent fraud, its reputation and operating
results would be harmed. As part of TransCommunitys
ongoing monitoring of internal control it may discover material
weaknesses or significant deficiencies in its internal control
as defined under standards adopted by the Public Company
Accounting Oversight Board, or PCAOB, that require remediation.
TransCommunity has discovered a material weakness and
significant deficiency in its internal control over financial
reporting. The material weakness relates to
TransCommunitys accounting and documentation for loans
participated to third parties, and the significant deficiency
relates to TransCommunitys accounting and record
generation and maintenance for loan origination costs and for
amortizing fees. TransCommunity has adopted and implemented
measures in connection with its efforts to improve internal
control processes, including reviewing and modifying certain
loan operating policies to provide guidance on daily operations,
providing additional training to loan personnel, hiring a new
chief credit officer and centralizing the credit administration
function.
Despite efforts to strengthen its internal and disclosure
controls, TransCommunity may identify additional other internal
or disclosure control deficiencies in the future. Any failure to
maintain effective controls or timely effect any necessary
improvement of its internal and disclosure controls could, among
other things, result in losses from fraud or error, harm its
reputation or cause investors to lose confidence in its reported
financial information, all of which could have a material
adverse effect on its results of operation and financial
condition.
The
success of TransCommunitys future recruiting efforts will
impact its ability to grow.
The implementation of TransCommunitys business strategy
will require it to continue to attract, hire, motivate and
retain skilled personnel to develop new customer relationships
as well as new financial products and services. Many experienced
banking professionals employed by TransCommunitys
competitors are covered by agreements not to compete or solicit
their existing customers if they were to leave their current
employment. These agreements make the recruitment of these
professionals more difficult. The market for these people is
competitive, and TransCommunity may not be successful in
attracting, hiring, motivating or retaining them. The success of
TransCommunitys recruiting efforts may impact its ability
to grow and its future profitability.
TransCommunity
does not expect to pay regular dividends for the foreseeable
future.
In the event the merger is not consummated, TransCommunity does
not expect to pay dividends on its common stock for at least
several years. In the event the merger is consummated,
TransCommunity does plan to pay a one-time special dividend in
the amount of $0.25 per share to TransCommunity stockholders,
which dividend would be paid immediately prior to the closing of
the merger. Consequently, if the merger is not consummated, the
return on TransCommunitys stock, if any, may be limited to
capital appreciation for an indefinite period.
TransCommunitys future dividend policy will depend in
large part on the earnings of its subsidiary bank, capital
requirements, financial condition and other factors considered
relevant by its Board of Directors. Additionally, TransCommunity
is a separate legal entity from its subsidiary bank and does not
have significant operations or revenues of its own.
TransCommunity substantially depends on dividends from its
subsidiary bank to pay its operating expenses. The
27
availability of dividends from the subsidiary bank is limited by
various statutes and regulations. In the event that its
subsidiary bank is not permitted to pay dividends due to federal
or state regulations, TransCommunity may not be able to pay its
operating expenses. Consequently, any future inability to
receive dividends from its subsidiary bank could adversely
affect TransCommunitys business, financial condition,
results of operations and cash flows.
If Community Bankers merger with BOE is consummated,
Community Bankers expects to pay regular dividends to its
stockholders. Subject to board and regulatory approval,
Community Bankers expects to pay quarterly cash dividends in an
amount not less than the quotient obtained by dividing $0.22 by
the BOE exchange ratio for the foreseeable future.
Changes
in accounting standards could impact reported
earnings.
The accounting standard setters, including the Financial
Accounting Standards Board, or the FASB, the Securities and
Exchange Commission, or the SEC, and other regulatory bodies,
periodically change the financial accounting and reporting
standards that govern the preparation of consolidated financial
statements. These changes can materially impact how
TransCommunity records and reports its financial condition and
results of operations. In some instances, TransCommunity could
be required to apply a new or revised standard retroactively,
resulting in the restatement of prior period financial
statements.
Risks
Related To The Merger
To
implement its growth strategy following the merger, Community
Bankers must successfully identify opportunities for expansion
and successfully integrate its new operations into its existing
operating platform.
Following the merger, Community Bankers intends to continue to
implement TransCommunitys current growth strategy of
entering underserved or over-consolidated markets in Virginia by
opportunistically acquiring or merging with other banking
institutions, such as BOE, or establishing new branches of
TransCommunity Bank or any successor bank subsidiary such as
Bank of Essex. If following the merger, Community Bankers is
unable to consummate its merger with BOE and identify additional
attractive markets to enter or suitable acquisition or merger
candidates, an important component of our growth strategy may be
lost. Additionally, any future expansion or acquisition efforts
may entail substantial costs and may not produce the revenue,
earnings or synergies that Community Bankers had anticipated.
Any future expansion or acquisitions that Community Bankers
undertakes, such as the proposed merger with BOE, will involve
operational risks and uncertainties. Acquired companies may have
unforeseen liabilities, exposure to asset quality problems, key
employee and customer retention problems and other problems that
could negatively affect Community Bankers.
Community Bankers may not be able to successfully integrate the
operations, management, products and services of the entities
that it acquires, including those of TransCommunity and BOE, or
otherwise establishes. The integration process may also require
significant time and attention from its management that
Community Bankers would otherwise direct at servicing existing
business and developing new business. Community Bankers
failure to successfully integrate any entities that it acquires,
including those of TransCommunity and BOE, or otherwise
establishes into its existing operations may increase its
operating costs significantly and adversely affect its business
and earnings.
Community
Bankers working capital could be reduced if Community
Bankers stockholders exercise their right to convert their
shares into cash equal to a pro rata portion of the Community
Bankers trust account.
Pursuant to Community Bankers certificate of
incorporation, holders of shares issued in Community
Bankers initial public offering may vote against the
merger and demand that Community Bankers convert their shares
into cash equal to a pro rata portion of the Community Bankers
trust account. Community Bankers will not consummate the merger
if holders of 20% or more of the shares of common stock issued
in its initial public offering exercise these conversion rights.
To the extent the merger is consummated and holders of less than
20% of the common stock issued in Community Bankers
initial public offering have demanded to convert their shares,
working capital available to Community Bankers following the
merger will be reduced by the amount paid out of the trust to
stockholders exercising their conversion rights. Additionally,
if holders demand to convert their shares, there may be a
corresponding reduction in the value of each share of common
stock of Community Bankers. As
of ,
2008, assuming the merger proposal is adopted, the maximum
amount of funds that could be disbursed to Community
28
Bankers stockholders upon the exercise of the conversion
rights would be approximately $ ,
or approximately % of the funds
currently held in trust as of the record date for the Community
Bankers annual meeting.
A
substantial number of Community Bankers shares will be
issued in the merger and will be eligible for future resale in
the public market after the merger, which could result in
dilution and have an adverse effect on the market price of those
shares.
If the merger is consummated, assuming the exchange ratio is not
adjusted, up to 6,956,213 shares of Community Bankers
common stock will be issued to the former stockholders of
TransCommunity common stock, and warrants to purchase
7,500,000 shares of common stock issued in connection with
Community Bankers initial public offering will become
exercisable at $5.00 per share on the date the merger is
consummated, as described under Description of Securities
of Community Bankers on page . Thus, if
the merger is consummated, assuming the exchange ratio is not
adjusted, Community Bankers will have approximately
16,331,213 shares of common stock outstanding. This number
of shares of Community Bankers common stock was determined by
adding the product of the exchange ratio of 1.4200 and
4,898,741, which is the maximum number of shares of
TransCommunity common stock that may be outstanding prior to the
effective time of the merger (including 312,000 shares
subject to options), to 9,375,000, the number of shares of
Community Bankers common stock outstanding on the Community
Bankers record date. Community Bankers has issued to
I-Bankers Securities, Inc., Maxim Group LLC and Legend Merchant
Group, Inc., the representatives of the underwriters in
Community Bankers initial public offering, unit purchase
options to acquire 525,000 units, including 525,000
warrants. Moreover, 1,875,000 shares of Community Bankers
common stock purchased by stockholders prior to its initial
public offering will be released from escrow on June 2,
2009 and thereby be eligible for resale in the public market
subject to compliance with applicable law. Consequently, at
various times after completion of the merger, a substantial
number of additional shares of Community Bankers common stock
will be eligible for resale in the public market. Sales of
substantial numbers of such shares in the public market could
adversely affect the market price of such shares and of the
warrants.
Furthermore, in connection with Community Bankers proposed
merger with BOE, Community Bankers would issue up to
6,937,779 shares of Community Bankers common stock to the
former stockholders of BOE common stock. Thus, if the merger
with BOE is also consummated, assuming the exchange ratio in
either merger is not adjusted, Community Bankers will have
approximately 23,268,992 shares of common stock
outstanding. This number of shares of Community Bankers common
stock was determined by adding the product of the exchange ratio
of 5.7278 and 1,240,605, which is the maximum number of shares
of BOE common stock that may be outstanding prior to the
effective time of the merger (including 29,359 shares
subject to options), to 16,331,213, the maximum number of shares
of Community Bankers common stock could have outstanding after
consummation of the merger with TransCommunity. The combined
companies would result in 23,268,992 shares of Community
Bankers outstanding.
In addition, Gary A. Simanson, president and chief executive
officer of Community Bankers, and David Zalman, a stockholder,
agreed as part of Community Bankers initial public
offering, pursuant to an agreement with the representatives of
the underwriters in the initial public offering, that they or
their affiliates or designees, would purchase up to 1,000,000
warrants in the aggregate in open market transactions at market
prices not to exceed $0.80 per warrant. Under this agreement,
the representatives of the underwriters also agreed to place an
irrevocable order for the purchase by them, or their affiliates
or designees, of up to 500,000 warrants in the aggregate under
identical terms and conditions as the purchases by
Mr. Simanson and Mr. Zalman. As a result of the
agreement, Community Bankers Acquisition LLC, an affiliate of
Mr. Simanson, acquired an aggregate of 349,724 warrants and
the representatives of the underwriters acquired an aggregate of
300,000 warrants. Warrants acquired by any of these parties
pursuant to these purchases cannot be sold or transferred in the
open market until after the consummation of a business
combination and are not callable by Community Bankers while held
by the purchasers. Accordingly, after the merger, 7,500,000
warrants will become exercisable which could result in dilution
and an adverse effect on the market price of Community
Bankers shares.
Community
Bankers existing stockholders will incur immediate and
substantial dilution of their ownership and voting interests
upon completion of the merger.
Community Bankers existing stockholders voting
interest would be diluted from 100% to as little as 36.93% or as
much as 73.35% after the merger, assuming that no TransCommunity
stockholders exercise appraisal rights,
29
based on the number of shares of each of Community Bankers,
TransCommunity and BOE issued and outstanding as of the date of
their respective merger agreements. Factors that would affect
the percentage of Community Bankers voting interests that
existing Community Bankers stockholders would own after the
merger include:
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whether any of Community Bankers 7,500,000 outstanding
warrants are exercised;
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whether the 525,000 units issuable to the representatives
of the underwriters in Community Bankers initial public
offering upon exercise of their unit purchase options are issued;
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whether any Community Bankers stockholders exercise their right
to convert their shares into cash equal to a pro rata portion of
the Community Bankers trust account; and
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whether Community Bankers consummates its proposed merger with
BOE;
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For a table outlining the effect of the various scenarios on the
percentage of Community Bankers voting interests that
existing Community Bankers stockholders will own after the
merger with TransCommunity is completed, see The
Merger Stock Ownership of Existing Community Bankers
and TransCommunity Stockholders After the Merger.
If the
mergers benefits do not meet the expectations of financial
or industry analysts, the market price of Community Bankers
common stock may decline.
The market price of Community Bankers common stock may decline
as a result of the merger if:
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Community Bankers does not achieve the perceived benefits of the
merger as rapidly, or to the extent anticipated by, financial or
industry analysts;
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Community Bankers is unable to consummate the proposed merger
with BOE and achieve the perceived benefits of combining the two
banks; or
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the effect of the merger on Community Bankers financial
results is not consistent with the expectations of financial or
industry analysts.
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Accordingly, investors may experience a loss as a result of a
decline in the market price of Community Bankers common stock
following the merger. A decline in the market price of Community
Bankers common stock also could adversely affect its ability to
issue additional securities and its ability to obtain additional
financing in the future. In addition, if the daily average
closing price for Community Bankers common stock for the
20 consecutive days of trading in such stock ending five days
before the closing date is less than $7.42, Community Bankers
will increase the exchange ratio to the quotient obtained by
dividing $10.5364 by such daily average closing price resulting
in Community Bankers issuing more shares of Community Bankers
common stock to the TransCommunity stockholders.
The
financial statements included in this proxy statement/prospectus
do not take into account the consequences of a failure to
complete a business combination by June 7,
2008.
The financial statements included in this joint proxy
statement/prospectus have been prepared assuming that Community
Bankers would continue as a going concern. As discussed in
Note 1 to the Notes to the Community Bankers Financial
Statements for the year ended March 31, 2007, Community
Bankers is required to complete the merger with TransCommunity
by June 7, 2008. The possibility of such business
combination not being consummated raises substantial doubt as to
Community Bankers ability to continue as a going concern
and the financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
If you
are a TransCommunity Stockholder, you will likely not have an
opportunity to vote on Community Bankers merger with
BOE.
Under the terms of the merger agreement by and between Community
Bankers and BOE, and subject to its terms and conditions, BOE
will become a wholly-owned subsidiary of Community Bankers and
each share of BOE common stock outstanding will be exchanged for
5.7278 shares of Community Bankers common stock (subject to
possible adjustment in association with the daily average
closing price for Community Bankers common stock for the
20 consecutive days of trading in such stock ending five
days before the closing date). As we anticipate the merger with
BOE would be consummated concurrent with or promptly following
the merger with TransCommunity, it is unlikely current
TransCommunity stockholders would become holders of Community
Bankers common stock in time to be eligible to vote for or
against the merger with BOE. Even if current TransCommunity
stockholders are eligible to vote
30
for or against the merger with BOE, current TransCommunity
stockholders would not have the right to assert appraisal rights
with respect to the merger with BOE and would not be able to
demand that they be paid the fair value of their shares of
Community Bankers received in the merger between TransCommunity
and Community Bankers, in connection with the merger with BOE.
For more information concerning the merger with BOE, see
The Merger The Proposed Merger Between
Community Bankers and BOE and the final proxy
statement/prospectus that Community Bankers will file with the
SEC in connection with the proposed merger with BOE.
If you
are a Community Bankers stockholder and do not vote your shares
against the merger at the annual meeting or give instructions to
your broker to do so, you will not be eligible to convert your
shares of common stock into cash equal to a pro rata portion of
the Community Bankers trust account upon consummation of the
merger.
Pursuant to Community Bankers certificate of
incorporation, a holder of shares of Community Bankers common
stock issued in its initial public offering may, if the
stockholder votes against the merger and the merger is
consummated, demand that Community Bankers convert such shares
into cash equal to a pro rata portion of the Community Bankers
trust account. This demand must be made in writing to Community
Bankers or the proxy solicitor prior to the vote on the merger
proposal at the annual meeting. If so demanded and the merger is
consummated, Community Bankers will convert each share of common
stock into a pro rata portion of the Community Bankers trust
account in which a substantial portion of the net proceeds of
Community Bankers initial public offering are held, plus
all interest earned thereon. If you exercise your conversion
rights, then you will be exchanging your shares of common stock
for cash and will no longer own these shares. If the merger with
TransCommunity is not completed by June 7, 2008, then these
shares will not be converted into cash and Community Bankers
will need to liquidate. Shares that are voted for the merger or
are broker non-voted or where the stockholder abstains from
voting shall not in any event be eligible to be converted into
cash upon completion of the merger.
Risks
Related To Community Bankers
If the
holders of 20% or more of the common stock issued in Community
Bankers initial public offering decide to vote against the
proposed merger and convert their shares to cash, Community
Bankers will have to liquidate, stockholders may receive less
than their initial investment and Community Bankers
warrants will expire without value.
Under the terms of Community Bankers certificate of
incorporation, if holders of 20% or more of the shares issued in
its initial public offering vote against the merger and exercise
their right to convert their shares of Community Bankers common
stock into cash equal to a pro rata portion of the Community
Bankers trust account, Community Bankers will be unable to
complete the merger and will have to dissolve and liquidate. In
any liquidation, the net proceeds of Community Bankers initial
public offering held in the Community Bankers trust account plus
the deferred underwriting compensation, plus any interest earned
thereon not released to Community Bankers for working capital or
to pay income taxes, will be distributed pro rata to the holders
of Community Bankers common stock issued in its initial public
offering. If Community Bankers must liquidate its assets, the
per-share liquidation to its stockholders will be approximately
$ , plus interest accrued thereon
until the date of any liquidation, as
of ,
2008. Furthermore, there will be no distribution with respect to
Community Bankers outstanding warrants and, accordingly, the
warrants will expire without value.
If
Community Bankers is unable to complete the merger with
TransCommunity and must dissolve and liquidate, third parties
may bring claims against Community Bankers and, as a result, the
proceeds held in trust could be reduced and the per share
liquidation price received by stockholders could be less than
$ per share.
If Community Bankers does not effect the merger with
TransCommunity by June 7, 2008, Community Bankers must
dissolve and liquidate and third parties may bring claims
against Community Bankers. Although Community Bankers has
prepaid certain of its material legal, printing, accounting,
administrative and financial advisory fees and intends to prepay
or obtain waiver agreements from vendors and service providers
it may engage in the future for any material amounts whereby
such parties will waive any right, title, interest or claim of
any kind they may have in or to any monies held in the trust
account, such persons may seek recourse against the trust
account notwithstanding such agreements. Furthermore, a court
might not uphold the validity of such agreements. Accordingly,
the proceeds held in trust could be subject to claims that could
take priority over those of Community
31
Bankers common stockholders. Additionally, if Community Bankers
is forced to file a bankruptcy case or an involuntary bankruptcy
case is filed against Community Bankers that is not dismissed,
the proceeds held in the trust account could be subject to
applicable bankruptcy law, and may be included in its bankruptcy
estate and subject to the claims of third parties with priority
over the claims of its stockholders. To the extent any
bankruptcy or other claims deplete the trust account, Community
Bankers may not be able to return to its common stockholders a
per share liquidation price of at least
$ per share.
If
Community Bankers does not consummate the business combination
with TransCommunity by June 7, 2008 and must dissolve and
liquidate, payments from the trust account to its common
stockholders may be delayed.
If Community Bankers does not effect the merger with
TransCommunity by June 7, 2008, Community Bankers must
dissolve and liquidate. In such event, Community Bankers
anticipates that its board of directors will convene and adopt a
specific plan of dissolution and liquidation, which it will then
vote to recommend to its stockholders. At such time it will also
cause to be prepared a preliminary proxy statement setting out
such plan of dissolution and liquidation as well as the
boards recommendation of such plan. Community Bankers will
promptly file its preliminary proxy statement with the SEC and
then will mail the definitive proxy statement once it is legally
permitted to do so (which could be after a lengthy SEC review)
and convene a meeting of its stockholders at which they will
vote on its plan of dissolution and liquidation. Community
Bankers expects that all costs associated with the
implementation and completion of its plan of dissolution and
liquidation will be funded by any remaining net assets not held
in the trust account although there may not be sufficient funds
for such purpose. Community Bankers will not liquidate the trust
account unless and until its stockholders approve its plan of
dissolution and liquidation. Accordingly, the foregoing
procedures may result in substantial delays in its liquidation
and the distribution to its public stockholders of the funds in
its trust account and any remaining net assets as part of its
plan of dissolution and liquidation.
Community
Bankers stockholders may be held liable for claims by
third parties against Community Bankers to the extent of
distributions received by them.
If Community Bankers does not effect the merger with
TransCommunity by June 7, 2008, it will dissolve and
liquidate. Community Bankers anticipates that its liquidation
will occur pursuant to Section 281(b) of the Delaware
General Corporation Law, or the DGCL. Under the DGCL,
stockholders may be held liable for claims by third parties
against a corporation to the extent of distributions received by
them in a dissolution. If a corporation following its
dissolution complies with the statutory procedures set forth in
Section 280 of the DGCL, intended to ensure that the
corporation makes reasonable provision for all claims against
it, any liability of stockholders with respect to a liquidating
distribution is limited to the lesser of such stockholders
pro rata share of the claim or the amount distributed to the
stockholder, and any liability of the stockholder would be
barred after the third anniversary of the dissolution. The
procedures in Section 280 include a
60-day
notice period during which any third-party claims can be brought
against the corporation, a
90-day
period during which the corporation may reject any claims
brought, and an additional
150-day
waiting period before any liquidating distributions may be made
to stockholders. However, it is Community Bankers
intention to seek approval of its stockholders to make
liquidating distributions to its public stockholders as soon as
reasonably practicable following its dissolution in accordance
with Section 281(b) of the Delaware statute. Therefore,
Community Bankers stockholders could potentially be liable
for any claims to the extent of distributions received by them
in a dissolution and any liability of its stockholders may
extend beyond the third anniversary of such dissolution.
Community Bankers may not properly assess all claims that may be
potentially brought against it. As a result, Community Bankers
stockholders could potentially be liable for any claims to the
extent of distributions received by them in a dissolution (but
no more) and any liability of Community Bankers
stockholders may extend well beyond the third anniversary of
such dissolution. Accordingly, third parties may seek to recover
from Community Bankers stockholders amounts owed to them by
Community Bankers.
Additionally, if Community Bankers is forced to file a
bankruptcy case or an involuntary bankruptcy case is filed
against it that is not dismissed, any distributions received by
stockholders in Community Bankers dissolution might be
viewed under applicable debtor/creditor
and/or
bankruptcy laws as either a preferential transfer or
a fraudulent conveyance. As a result, a bankruptcy
court could seek to recover all amounts received by Community
32
Bankers stockholders in its dissolution. Furthermore, because
Community Bankers intends to distribute the proceeds held in the
trust account to its public stockholders as soon as possible
after its dissolution, this may be viewed or interpreted as
giving preference to Community Bankers public stockholders over
any potential creditors with respect to access to or
distributions from its assets. Also, the members of Community
Bankers board of directors may be viewed as having
breached their fiduciary duties to Community Bankers
creditors
and/or may
have acted in bad faith, and thereby exposing Community
Bankers directors and Community Bankers to claims of
punitive damages, by paying public stockholders from the trust
account prior to addressing the claims of creditors
and/or
complying with certain provisions of the DGCL with respect to
Community Bankers dissolution and liquidation. Therefore,
it is possible that claims will be brought against Community
Bankers for these reasons.
33
A WARNING
ABOUT FORWARD-LOOKING STATEMENTS
This joint proxy statement/prospectus contains forward-looking
statements with respect to the financial condition, results of
operations, plans, objectives, future performance, and business
of Community Bankers following the merger. These statements are
preceded by, followed by, or include the words
believes, expects,
anticipates, or estimates, or similar
expressions. Many possible events or factors could affect the
future financial results and performance of Community Bankers
following the merger. This could cause the results or
performance of Community Bankers to differ materially from those
expressed in the forward-looking statements. You should consider
these important factors when you vote on the merger proposal.
Factors that may cause actual results to differ materially
from those contemplated by the forward-looking statements
include the following:
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we may experience delays in closing the merger whether due to
inability to obtain stockholder or regulatory approval or
otherwise;
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we could lose key personnel or spend a greater amount of
resources attracting, retaining and motivating key personnel
than we have in the past;
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competition among depository and other financial institutions
may increase significantly;
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changes in the interest rate environment may reduce operating
margins;
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general economic conditions, either nationally or in Virginia,
may be less favorable than expected resulting in, among other
things, a deterioration in credit quality and an increase in
credit risk-related losses and expenses;
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loan losses may exceed the level of allowance for loan losses of
the surviving corporation;
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the rate of delinquencies and amount of charge-offs may be
greater than expected;
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the rates of loan growth and deposit growth may not increase as
expected;
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legislative or regulatory changes may adversely affect our
businesses;
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Community Bankers may not find suitable merger or acquisition
candidates in addition to TransCommunity and BOE or find other
suitable ways in which to invest its excess capital;
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Community Bankers must successfully integrate
TransCommunitys operations and, potentially the operations
of BOE, with its existing operating platforms if the merger is
consummated;
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Costs related to the merger and the proposed merger with BOE may
reduce Community Bankers working capital;
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We may fail to obtain the required approvals of Community
Bankers or BOE stockholders for the proposed merger with BOE;
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Community Bankers may fail to close the merger and may be forced
to dissolve and liquidate;
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Community Bankers may fail to close the proposed merger with
BOE; and
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Community Bankers may fail to receive the necessary regulatory
approvals for the merger with BOE.
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The forward-looking statements are based on current expectations
about future events. Although Community Bankers believes that
the expectations reflected in the forward-looking statements are
reasonable, Community Bankers cannot guarantee you that these
expectations actually will be achieved. Community Bankers is
under no duty to update any of the forward-looking statements
after the date of this joint proxy statement/prospectus to
conform those statements to actual results. In evaluating these
statements, you should consider various factors, including the
risks outlined in the section entitled Risk Factors,
beginning on page .
34
SELECTED
HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
Selected
Financial Data of Community Bankers
The following table presents for Community Bankers, selected
consolidated financial data for the year ended March 31,
2007, and the period April 6, 2005 to March 31, 2006,
and the six-month periods ended September 30, 2007 and
September 30, 2006. On October 29, 2007, Community
Bankers board of directors acted pursuant to Community
Bankers bylaws to change Community Bankers fiscal
year-end from March 31 to December 31, commencing with the
nine-months ending December 31, 2007. The information is
based on the consolidated financial statements of Community
Bankers included in this joint proxy statement/prospectus.
You should read the following tables in conjunction with the
consolidated financial statements of Community Bankers described
above and with the notes to them.
Historical results are not necessarily indicative of results to
be expected for any future period. In the opinion of the
management of Community Bankers, all adjustments (which include
only normal recurring adjustments) necessary to arrive at a fair
statement of interim results of operations of Community Bankers
have been included. With respect to Community Bankers, results
for the six-month period ended September 30, 2007, are not
necessarily indicative of results which may be expected for any
other interim period or for the year as a whole.
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For the Period
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from April 6,
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Six-Months
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Six-Months
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2005
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Ended
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Ended
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Year Ended
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(Inception) to
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September 30,
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September 30,
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March 31,
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March 31,
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2007
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2006
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2007
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2006
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(Unaudited)
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(Unaudited)
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(Audited)
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(Audited)
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Statements of Income Data:
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Interest on cash and short-term investments held in trust
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$
|
1,428,970
|
|
|
$
|
868,096
|
|
|
$
|
2,268,760
|
|
|
$
|
|
|
Operating costs
|
|
|
171,886
|
|
|
|
93,132
|
|
|
|
338,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
1,257,084
|
|
|
|
774,964
|
|
|
|
1,930,099
|
|
|
|
|
|
Provision for income taxes
|
|
|
477,692
|
|
|
|
294,486
|
|
|
|
806,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
779,392
|
|
|
$
|
480,478
|
|
|
$
|
1,124,099
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding-basic
|
|
|
9,375,000
|
|
|
|
7,520,455
|
|
|
|
7,997,740
|
|
|
|
1,807,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding-diluted
|
|
|
11,807,432
|
|
|
|
9,731,315
|
|
|
|
10,256,708
|
|
|
|
1,807,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share-basic
|
|
$
|
0.08
|
|
|
$
|
0.06
|
|
|
$
|
0.14
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share-diluted
|
|
$
|
0.07
|
|
|
$
|
0.05
|
|
|
$
|
0.11
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2007
|
|
|
March 31, 2007
|
|
|
March 31, 2006
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
(Audited)
|
|
|
Balance Sheets Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
59,021,312
|
|
|
$
|
58,812,412
|
|
|
$
|
436,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
2,344,692
|
|
|
|
2,915,185
|
|
|
|
390,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, subject to conversion, 1,499,250 shares at
conversion value
|
|
|
11,581,624
|
|
|
|
11,617,934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
45,094,996
|
|
|
|
44,279,293
|
|
|
|
46,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
59,021,312
|
|
|
$
|
58,812,412
|
|
|
$
|
436,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35
Selected
Financial Data of TransCommunity
The following table presents for TransCommunity, selected
consolidated financial data for the years ended
December 31, 2006, 2005, 2004, 2003, and 2002, and the
nine-month periods ended September 30, 2007 and
September 30, 2006. The information is based on the
consolidated financial statements of TransCommunity included in
this joint proxy statement/prospectus.
You should read the following tables in conjunction with the
consolidated financial statements of TransCommunity described
above and with the notes to them.
Historical results are not necessarily indicative of results to
be expected for any future period. In the opinion of the
management of TransCommunity, all adjustments (which include
only normal recurring adjustments) necessary to arrive at a fair
statement of interim results of operations of TransCommunity
have been included. With respect to TransCommunity, results for
the nine-month period ended September 30, 2007 are not
necessarily indicative of results which may be expected for any
other interim period or for the year as a whole.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Month Periods Ending September 30,
|
|
|
For the Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
|
(numbers in thousands, except Per Share Data)
|
|
|
Balance sheet data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
$
|
223,048
|
|
|
$
|
193,382
|
|
|
$
|
198,445
|
|
|
$
|
190,648
|
|
|
$
|
150,267
|
|
|
$
|
99,752
|
|
|
$
|
51,123
|
|
Investment securities
|
|
|
16,714
|
|
|
|
32,533
|
|
|
|
35,017
|
|
|
|
31,237
|
|
|
|
27,775
|
|
|
|
19,753
|
|
|
|
4,198
|
|
Loans
|
|
|
189,003
|
|
|
|
140,468
|
|
|
|
151,399
|
|
|
|
134,930
|
|
|
|
112,134
|
|
|
|
66,120
|
|
|
|
37,117
|
|
Allowance for loan losses
|
|
|
(2,663
|
)
|
|
|
(1,912
|
)
|
|
|
(2,065
|
)
|
|
|
(1,602
|
)
|
|
|
(1,401
|
)
|
|
|
(870
|
)
|
|
|
(527
|
)
|
Deposits
|
|
|
191,964
|
|
|
|
160,335
|
|
|
|
164,973
|
|
|
|
146,603
|
|
|
|
123,662
|
|
|
|
82,675
|
|
|
|
36,712
|
|
Other borrowed funds
|
|
|
0
|
|
|
|
1,601
|
|
|
|
2,017
|
|
|
|
12,787
|
|
|
|
10,946
|
|
|
|
1,699
|
|
|
|
1,448
|
|
Stockholders equity
|
|
|
29,932
|
|
|
|
30,428
|
|
|
|
30,553
|
|
|
|
30,370
|
|
|
|
14,939
|
|
|
|
14,901
|
|
|
|
12,471
|
|
Summary results of operations data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and dividend income
|
|
$
|
12,649
|
|
|
$
|
10,466
|
|
|
$
|
14,307
|
|
|
$
|
10,957
|
|
|
$
|
6,894
|
|
|
$
|
3,997
|
|
|
$
|
2,283
|
|
Interest expense
|
|
|
4,795
|
|
|
|
3,584
|
|
|
|
4,958
|
|
|
|
3,497
|
|
|
|
1,994
|
|
|
|
1,159
|
|
|
|
713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
7,884
|
|
|
|
6,882
|
|
|
|
9,349
|
|
|
|
7,460
|
|
|
|
4,900
|
|
|
|
2,838
|
|
|
|
1,570
|
|
Provision for loan losses
|
|
|
1,134
|
|
|
|
311
|
|
|
|
493
|
|
|
|
266
|
|
|
|
549
|
|
|
|
386
|
|
|
|
227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for loan losses
|
|
|
6,750
|
|
|
|
6,571
|
|
|
|
8,856
|
|
|
|
7,194
|
|
|
|
4,351
|
|
|
|
2,452
|
|
|
|
1,343
|
|
Noninterest income
|
|
|
832
|
|
|
|
768
|
|
|
|
1,011
|
|
|
|
791
|
|
|
|
762
|
|
|
|
282
|
|
|
|
175
|
|
Noninterest expense
|
|
|
8,272
|
|
|
|
6,684
|
|
|
|
8,933
|
|
|
|
9,334
|
|
|
|
7,401
|
|
|
|
4,909
|
|
|
|
2,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
(690
|
)
|
|
|
655
|
|
|
|
934
|
|
|
|
(1,349
|
)
|
|
|
(2,288
|
)
|
|
|
(2,175
|
)
|
|
|
(1,152
|
)
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
|
(690
|
)
|
|
|
655
|
|
|
|
919
|
|
|
|
(1,349
|
)
|
|
|
(2,288
|
)
|
|
|
(2,175
|
)
|
|
|
(1,152
|
)
|
Net loss from discontinued operations
|
|
|
(77
|
)
|
|
|
(651
|
)
|
|
|
(802
|
)
|
|
|
(423
|
)
|
|
|
(293
|
)
|
|
|
(62
|
)
|
|
|
(45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss )
|
|
$
|
(767
|
)
|
|
$
|
4
|
|
|
$
|
117
|
|
|
$
|
(1,772
|
)
|
|
$
|
(2,581
|
)
|
|
$
|
(2,237
|
)
|
|
$
|
(1,197
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share from continuing operations- basic
and diluted
|
|
$
|
(0.15
|
)
|
|
$
|
0.14
|
|
|
$
|
0.20
|
|
|
$
|
(0.41
|
)
|
|
$
|
(1.08
|
)
|
|
$
|
(1.19
|
)
|
|
$
|
(1.05
|
)
|
Net income (loss) per share basic and diluted
|
|
$
|
(0.17
|
)
|
|
$
|
0.00
|
|
|
$
|
0.03
|
|
|
$
|
(0.53
|
)
|
|
$
|
(1.22
|
)
|
|
$
|
(1.19
|
)
|
|
$
|
(1.05
|
)
|
Weighted average number of shares outstanding
|
|
|
4,587
|
|
|
|
4,582
|
|
|
|
4,582
|
|
|
|
3,315
|
|
|
|
2,114
|
|
|
|
1,887
|
|
|
|
1,143
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Month Periods Ending September 30,
|
|
|
For the Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
|
(numbers in thousands, except Per Share Data)
|
|
|
Operating ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) on average equity from continuing operations
|
|
|
(2.29
|
)%
|
|
|
2.17
|
%
|
|
|
3.08
|
%
|
|
|
(5.97
|
)%
|
|
|
(17.21
|
)%
|
|
|
(16.22
|
)%
|
|
|
(14.06
|
)%
|
Income (Loss) on average assets from continuing operations
|
|
|
(0.33
|
)%
|
|
|
0.34
|
%
|
|
|
0.49
|
%
|
|
|
(0.84
|
)%
|
|
|
(0.24
|
)%
|
|
|
(2.96
|
)%
|
|
|
(3.04
|
)%
|
Income (Loss) on average equity
|
|
|
(2.55
|
)%
|
|
|
0.01
|
%
|
|
|
0.39
|
%
|
|
|
(7.84
|
)%
|
|
|
(19.42
|
)%
|
|
|
(16.22
|
)%
|
|
|
(14.06
|
)%
|
Income (Loss) on average assets
|
|
|
(0.37
|
)%
|
|
|
0.00
|
%
|
|
|
0.06
|
%
|
|
|
(1.04
|
)%
|
|
|
(2.07
|
)%
|
|
|
(2.96
|
)%
|
|
|
(3.04
|
)%
|
Net interest margin
|
|
|
5.32
|
%
|
|
|
5.10
|
%
|
|
|
5.14
|
%
|
|
|
4.68
|
%
|
|
|
4.23
|
%
|
|
|
4.16
|
%
|
|
|
4.43
|
%
|
Loan to deposit ratio:
|
|
|
98.46
|
%
|
|
|
87.61
|
%
|
|
|
91.78
|
%
|
|
|
92.15
|
%
|
|
|
90.68
|
%
|
|
|
79.98
|
%
|
|
|
101.10
|
%
|
Asset quality ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses to nonperforming loans
|
|
|
255.81
|
%
|
|
|
427.77
|
%
|
|
|
214.86
|
%
|
|
|
970.91
|
%
|
|
|
0.00
|
%
|
|
|
703.52
|
%
|
|
|
0.00
|
%
|
Allowance for loan losses to total loans
|
|
|
1.41
|
%
|
|
|
1.36
|
%
|
|
|
1.36
|
%
|
|
|
1.19
|
%
|
|
|
1.25
|
%
|
|
|
1.32
|
%
|
|
|
1.42
|
%
|
Net charge-offs to average loans
|
|
|
0.37
|
%
|
|
|
0.09
|
%
|
|
|
0.02
|
%
|
|
|
0.05
|
%
|
|
|
0.02
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
Nonperforming assets to total loans
|
|
|
0.55
|
%
|
|
|
0.32
|
%
|
|
|
0.63
|
%
|
|
|
0.12
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
Capital ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average equity to average assets
|
|
|
14.41
|
%
|
|
|
15.86
|
%
|
|
|
15.79
|
%
|
|
|
13.28
|
%
|
|
|
10.67
|
%
|
|
|
18.24
|
%
|
|
|
21.62
|
%
|
Leverage ratio
|
|
|
13.62
|
%
|
|
|
15.94
|
%
|
|
|
15.86
|
%
|
|
|
17.59
|
%
|
|
|
11.58
|
%
|
|
|
19.72
|
%
|
|
|
30.42
|
%
|
Tier 1 risk-based capital ratio
|
|
|
13.85
|
%
|
|
|
18.22
|
%
|
|
|
17.16
|
%
|
|
|
18.91
|
%
|
|
|
13.75
|
%
|
|
|
20.29
|
%
|
|
|
46.12
|
%
|
Total risk-based capital ratio
|
|
|
15.09
|
%
|
|
|
19.37
|
%
|
|
|
18.32
|
%
|
|
|
19.92
|
%
|
|
|
15.10
|
%
|
|
|
21.44
|
%
|
|
|
47.37
|
%
|
37
Selected
Financial Data of BOE
The following table presents for BOE, selected consolidated
financial data for the years ended December 31, 2006, 2005,
2004, 2003 and 2002 and the nine-month periods ended
September 30, 2007 and September 30, 2006. The
information is based on the consolidated financial statements of
BOE included in this joint proxy statement/prospectus.
You should read the following tables in conjunction with the
consolidated financial statements of BOE described above and
with the notes to them.
Historical results are not necessarily indicative of results to
be expected for any future period. In the opinion of the
management of BOE, all adjustments (which include only normal
recurring adjustments) necessary to arrive at a fair statement
of interim results of operations of BOE have been included. With
respect to BOE, results for the nine-month period ended
September 30, 2007, are not necessarily indicative of
results which may be expected for any other interim period or
for the year as a whole.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Month Periods Ending September 30,
|
|
|
For the Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
|
(numbers in thousands, except Per Share Data)
|
|
|
STATEMENT OF INCOME INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$
|
13,847
|
|
|
$
|
12,348
|
|
|
$
|
16,734
|
|
|
$
|
14,343
|
|
|
$
|
12,875
|
|
|
$
|
13,071
|
|
|
$
|
13,741
|
|
Interest expense
|
|
|
6,417
|
|
|
|
4,946
|
|
|
|
6,972
|
|
|
|
4,469
|
|
|
|
3,606
|
|
|
|
4,073
|
|
|
|
5,695
|
|
Net interest income
|
|
|
7,430
|
|
|
|
7,402
|
|
|
|
9,762
|
|
|
|
9,874
|
|
|
|
9,269
|
|
|
|
8,998
|
|
|
|
8,046
|
|
Provision for loan losses
|
|
|
|
|
|
|
125
|
|
|
|
125
|
|
|
|
240
|
|
|
|
305
|
|
|
|
700
|
|
|
|
1,208
|
|
Noninterest income
|
|
|
1,423
|
|
|
|
1,289
|
|
|
|
2,251
|
|
|
|
1,601
|
|
|
|
1,627
|
|
|
|
1,384
|
|
|
|
1,078
|
|
Noninterest expense
|
|
|
6,378
|
|
|
|
5,684
|
|
|
|
7,893
|
|
|
|
7,262
|
|
|
|
6,882
|
|
|
|
6,627
|
|
|
|
5,766
|
|
Income taxes
|
|
|
463
|
|
|
|
672
|
|
|
|
872
|
|
|
|
872
|
|
|
|
823
|
|
|
|
648
|
|
|
|
368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
2,012
|
|
|
$
|
2,210
|
|
|
$
|
3,123
|
|
|
$
|
3,101
|
|
|
$
|
2,885
|
|
|
$
|
2,407
|
|
|
$
|
1,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER SHARE DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income, basic
|
|
$
|
1.66
|
|
|
$
|
1.84
|
|
|
$
|
2.60
|
|
|
$
|
2.60
|
|
|
$
|
2.43
|
|
|
$
|
2.04
|
|
|
$
|
1.52
|
|
Net income, diluted
|
|
|
1.66
|
|
|
|
1.83
|
|
|
|
2.58
|
|
|
|
2.58
|
|
|
|
2.42
|
|
|
|
2.03
|
|
|
|
1.51
|
|
Cash dividend
|
|
|
0.60
|
|
|
|
0.38
|
|
|
|
0.77
|
|
|
|
0.73
|
|
|
|
0.63
|
|
|
|
0.56
|
|
|
|
0.53
|
|
Book value at period end
|
|
|
24.23
|
|
|
|
23.34
|
|
|
|
23.22
|
|
|
|
21.90
|
|
|
|
20.76
|
|
|
|
19.37
|
|
|
|
18.12
|
|
Tangible book value at period end
|
|
|
23.87
|
|
|
|
22.88
|
|
|
|
22.78
|
|
|
|
21.36
|
|
|
|
20.10
|
|
|
|
18.61
|
|
|
|
17.25
|
|
BALANCE SHEET DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
294,767
|
|
|
$
|
278,088
|
|
|
$
|
281,378
|
|
|
$
|
261,931
|
|
|
$
|
237,126
|
|
|
$
|
231,840
|
|
|
$
|
228,111
|
|
Loans, net
|
|
|
213,500
|
|
|
|
187,354
|
|
|
|
194,491
|
|
|
|
180,207
|
|
|
|
157,471
|
|
|
|
158,381
|
|
|
|
161,722
|
|
Securities
|
|
|
54,143
|
|
|
|
58,490
|
|
|
|
60,516
|
|
|
|
56,581
|
|
|
|
58,788
|
|
|
|
53,147
|
|
|
|
46,568
|
|
Deposits
|
|
|
240,990
|
|
|
|
232,091
|
|
|
|
230,865
|
|
|
|
223,132
|
|
|
|
206,973
|
|
|
|
203,282
|
|
|
|
201,261
|
|
Stockholders equity
|
|
|
29,348
|
|
|
|
28,101
|
|
|
|
28,047
|
|
|
|
26,235
|
|
|
|
24,681
|
|
|
|
22,922
|
|
|
|
21,346
|
|
PERFORMANCE RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
|
0.94
|
%
|
|
|
1.09
|
%
|
|
|
1.15
|
%
|
|
|
1.24
|
%
|
|
|
1.23
|
%
|
|
|
1.04
|
%
|
|
|
0.80
|
%
|
Return on average equity
|
|
|
9.39
|
%
|
|
|
10.90
|
%
|
|
|
11.47
|
%
|
|
|
12.18
|
%
|
|
|
12.12
|
%
|
|
|
10.80
|
%
|
|
|
8.87
|
%
|
Net interest margin
|
|
|
4.03
|
%
|
|
|
4.23
|
%
|
|
|
4.23
|
%
|
|
|
4.55
|
%
|
|
|
4.54
|
%
|
|
|
4.45
|
%
|
|
|
4.13
|
%
|
Dividend payout
|
|
|
35.98
|
%
|
|
|
20.36
|
%
|
|
|
29.67
|
%
|
|
|
28.13
|
%
|
|
|
25.90
|
%
|
|
|
27.45
|
%
|
|
|
34.96
|
%
|
ASSET QUALITY RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses to period end loans
|
|
|
1.24
|
%
|
|
|
1.25
|
%
|
|
|
1.22
|
%
|
|
|
1.23
|
%
|
|
|
1.31
|
%
|
|
|
1.33
|
%
|
|
|
1.29
|
%
|
Allowance for loan losses to nonperforming assets
|
|
|
100.56
|
%
|
|
|
113.62
|
%
|
|
|
136.67
|
%
|
|
|
118.93
|
%
|
|
|
68.13
|
%
|
|
|
122.57
|
%
|
|
|
87.76
|
%
|
Nonperforming assets to total assets
|
|
|
0.80
|
%
|
|
|
0.74
|
%
|
|
|
0.62
|
%
|
|
|
0.72
|
%
|
|
|
1.29
|
%
|
|
|
0.75
|
%
|
|
|
1.06
|
%
|
Net chargeoffs to average loans
|
|
|
(0.17
|
)%
|
|
|
0.01
|
%
|
|
|
(0.01
|
)%
|
|
|
0.05
|
%
|
|
|
0.21
|
%
|
|
|
0.42
|
%
|
|
|
0.74
|
%
|
CAPITAL AND LIQUIDITY RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leverage
|
|
|
11.64
|
%
|
|
|
10.21
|
%
|
|
|
11.62
|
%
|
|
|
11.55
|
%
|
|
|
11.50
|
%
|
|
|
10.80
|
%
|
|
|
8.13
|
%
|
Tier 1 Risk-Based Capital
|
|
|
14.85
|
%
|
|
|
13.49
|
%
|
|
|
15.35
|
%
|
|
|
14.76
|
%
|
|
|
15.31
|
%
|
|
|
13.70
|
%
|
|
|
10.42
|
%
|
Total Risk-Based Capital
|
|
|
15.92
|
%
|
|
|
14.45
|
%
|
|
|
16.35
|
%
|
|
|
15.67
|
%
|
|
|
16.49
|
%
|
|
|
14.88
|
%
|
|
|
11.59
|
%
|
38
Selected
Unaudited Pro Forma Combined Financial Information
The following selected unaudited pro forma combined balance
sheet data combines the pro forma consolidated balance sheet of
Community Bankers and TransCommunity as of September 30,
2007 giving effect to the merger of Community Bankers and
TransCommunity pursuant to the merger agreement, as if the
merger had been consummated on September 30, 2007, and
combines the pro forma consolidated balance sheet of Community
Bankers, TransCommunity and BOE as of September 30, 2007,
giving effect to the merger of Community Bankers and
TransCommunity and the merger of Community Bankers and BOE, as
if the mergers had been consummated on September 30, 2007.
The following selected unaudited pro forma combined income
statement data combines the pro forma statements of income of
Community Bankers and the historical statements of operations of
TransCommunity for the six-month period ended September 30,
2007, and the year ended March 31, 2007, giving effect to
the merger, as if it had occurred at the beginning of all
periods presented and combine the pro forma statements of income
of Community Bankers and the historic statements of operations
of TransCommunity, and the historic statements of income of BOE
for the six-month period ended September 30, 2007, and the
year ended March 31, 2007, giving effect to both mergers,
as if they had occurred at the beginning of all periods
presented.
The selected unaudited pro forma combined balance sheet data at
September 30, 2007 and the selected unaudited pro forma
combined income statement data for the periods ended
September 30, 2007 and March 31, 2007 have been
prepared using two different levels of approval of the merger by
the Community Bankers stockholders, as follows:
|
|
|
|
|
Assuming Maximum Approval: This presentation assumes
that 100% of Community Bankers stockholders approve the
merger; and
|
|
|
|
Assuming Minimum Approval: This presentation assumes
that only 80.1% of Community Bankers stockholders approve the
merger.
|
We are providing this information to aid you in your analysis of
the financial aspects of the merger. The summary unaudited pro
forma combined financial data described above should be read in
conjunction with the historical financial statements of
Community Bankers, TransCommunity and BOE and the related notes
thereto. The unaudited pro forma information is not necessarily
indicative of the financial position or results of operations
that may have actually occurred had the merger taken place on
the dates noted, or the future financial position or operating
results of the combined company. For more information, see
Pro Forma Financial Information.
COMMUNITY
BANKERS ACQUISITION CORP.
TRANSCOMMUNITY FINANCIAL CORPORATION
BOE FINANCIAL SERVICES OF VIRGINIA, INC.
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2007
|
|
|
|
Assuming Maximum Approval
|
|
|
Assuming Minimum Approval
|
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
Combined (CBA
|
|
|
Combined (CBA,
|
|
|
Combined (CBA
|
|
|
Combined (CBA,
|
|
|
|
& TFC)
|
|
|
TFC & BOE
|
|
|
& TFC)
|
|
|
TFC & BOE)
|
|
|
|
(In thousands, except share and per share data)
|
|
|
Selected Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
$
|
305,292
|
|
|
$
|
625,635
|
|
|
$
|
293,710
|
|
|
$
|
614,053
|
|
Loans, net
|
|
|
186,412
|
|
|
|
399,613
|
|
|
|
186,412
|
|
|
|
399,613
|
|
Securities
|
|
|
16,670
|
|
|
|
70,762
|
|
|
|
16,670
|
|
|
|
70,762
|
|
Deposits
|
|
|
192,255
|
|
|
|
433,042
|
|
|
|
192,255
|
|
|
|
433,042
|
|
Borrowings
|
|
|
|
|
|
|
21,124
|
|
|
|
|
|
|
|
21,124
|
|
Stockholders equity
|
|
|
108,141
|
|
|
|
160,868
|
|
|
|
96,559
|
|
|
|
149,286
|
|
Shares outstanding
|
|
|
15,919,945
|
|
|
|
22,857,840
|
|
|
|
14,420,695
|
|
|
|
21,358,590
|
|
Per Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share
|
|
$
|
6.79
|
|
|
$
|
7.04
|
|
|
$
|
6.70
|
|
|
$
|
6.99
|
|
Capital Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital to risk weighted assets
|
|
|
43.35
|
%
|
|
|
28.78
|
%
|
|
|
37.84
|
%
|
|
|
26.13
|
%
|
Tier 1 capital to risk weighted assets
|
|
|
42.10
|
%
|
|
|
27.62
|
%
|
|
|
36.59
|
%
|
|
|
24.97
|
%
|
Tier 1 capital to average assets
|
|
|
32.86
|
%
|
|
|
21.61
|
%
|
|
|
28.56
|
%
|
|
|
19.53
|
%
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended
|
|
|
For the Six Months Ended
|
|
|
|
March 31, 2007(1)
|
|
|
September 30, 2007(2)
|
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
Combined (CBA
|
|
|
Combined (CBA,
|
|
|
Combined (CBA
|
|
|
Combined (CBA,
|
|
|
|
& TFC)
|
|
|
TFC & BOE
|
|
|
& TFC)
|
|
|
TFC & BOE)
|
|
|
|
(In thousands, except share and per share data)
|
|
|
Selected Income Statement Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$
|
16,567
|
|
|
$
|
33,418
|
|
|
$
|
9,557
|
|
|
$
|
18,770
|
|
Interest expense
|
|
|
4,812
|
|
|
|
11,886
|
|
|
|
2,942
|
|
|
|
7,221
|
|
Net interest income
|
|
|
11,755
|
|
|
|
21,532
|
|
|
|
6,615
|
|
|
|
11,549
|
|
Provision for loan losses
|
|
|
493
|
|
|
|
618
|
|
|
|
512
|
|
|
|
512
|
|
Net interest income after provision for loan losses
|
|
|
11,262
|
|
|
|
20,914
|
|
|
|
6,103
|
|
|
|
11,037
|
|
Noninterest income
|
|
|
1,011
|
|
|
|
3,261
|
|
|
|
563
|
|
|
|
1,552
|
|
Noninterest expense
|
|
|
9,272
|
|
|
|
17,165
|
|
|
|
5,870
|
|
|
|
10,114
|
|
Amortization of intangibles
|
|
|
711
|
|
|
|
1,924
|
|
|
|
355
|
|
|
|
961
|
|
Income from continuing operations before income taxes
|
|
|
2,290
|
|
|
|
5,087
|
|
|
|
441
|
|
|
|
1,514
|
|
Provision for income taxes
|
|
|
821
|
|
|
|
1,286
|
|
|
|
478
|
|
|
|
574
|
|
Net income (loss) from continuing operations
|
|
|
1,469
|
|
|
|
3,801
|
|
|
|
(37
|
)
|
|
|
940
|
|
Net (loss) from discontinued operations
|
|
|
(802
|
)
|
|
|
(802
|
)
|
|
|
(77
|
)
|
|
|
(77
|
)
|
Net income (loss)
|
|
|
667
|
|
|
|
2,999
|
|
|
|
(114
|
)
|
|
|
863
|
|
Per Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No conversions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share basic
|
|
$
|
0.05
|
|
|
$
|
0.14
|
|
|
$
|
(0.002
|
)
|
|
$
|
0.04
|
|
Net income (loss) per common share diluted
|
|
|
0.04
|
|
|
|
0.13
|
|
|
|
(0.002
|
)
|
|
|
0.04
|
|
Maximum conversions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share basic
|
|
$
|
0.05
|
|
|
$
|
0.15
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.04
|
|
Net income (loss) per common share diluted
|
|
|
0.04
|
|
|
|
0.14
|
|
|
|
(0.01
|
)
|
|
|
0.04
|
|
Weighted Average Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No conversions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
14,503,812
|
|
|
|
21,385,563
|
|
|
|
15,588,540
|
|
|
|
22,811,915
|
|
Diluted
|
|
|
16,762,780
|
|
|
|
23,698,699
|
|
|
|
18,320,972
|
|
|
|
25,282,855
|
|
Maximum conversions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
13,004,562
|
|
|
|
19,886,313
|
|
|
|
14,389,290
|
|
|
|
21,312,665
|
|
Diluted
|
|
|
15,263,530
|
|
|
|
22,199,449
|
|
|
|
16,821,722
|
|
|
|
23,783,605
|
|
|
|
|
(1) |
|
The year ended information for Community Bankers is as of
March 31, 2007; the year ended information for
TransCommunity and BOE is as of December 31, 2006. |
|
(2) |
|
The six month period is as of September 30, 2007 for
Community Bankers; the six month period is as of June 30,
2007 for TransCommunity and BOE. |
40
COMPARATIVE
PER SHARE DATA
The following table sets forth for Community Bankers common
stock, TransCommunity common stock and BOE common stock certain
historical, pro forma and pro forma-equivalent per share
financial information. The pro forma and pro forma-equivalent
per share information gives effect to the merger with
TransCommunity as if the merger had been effective at the
beginning of all periods presented and gives effect to the
mergers with TransCommunity and BOE as if both mergers had been
effective at the beginning of all periods presented. The pro
forma data in the tables assumes that the merger with
TransCommunity is accounted for as an acquisition by Community
Bankers of TransCommunity using the purchase method of
accounting and the merger with BOE is accounted for as an
acquisition by Community Bankers of BOE using the purchase
method of accounting. See The Merger
Accounting Treatment. The information in the following
table is based on, and should be read together with, the
historical and pro forma financial information that appears
elsewhere in this joint proxy statement/prospectus. See
Index to Financial Statements on
page F-1
and Pro Forma Financial Information on
page .
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Community
|
|
|
TransCommunity
|
|
|
|
|
|
|
|
|
BOE Financial
|
|
|
Pro Forma
|
|
|
|
|
|
|
Bankers
|
|
|
Financial
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Services of
|
|
|
Combined
|
|
|
Pro Forma
|
|
|
|
Acquisition
|
|
|
Corporation(2)
|
|
|
Combined
|
|
|
Equivalent (TFC)
|
|
|
Virginia,
|
|
|
(CBA, TFC &
|
|
|
Equivalent (BOE)
|
|
|
|
Corp.(1) (CBA)
|
|
|
(TFC)
|
|
|
(CBA & TFC)
|
|
|
(4)
|
|
|
Inc (BOE)
|
|
|
BOE)
|
|
|
(4)
|
|
|
Number of shares of common stock outstanding upon
consummation of the merger:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming no conversions
|
|
|
9,375,000
|
|
|
|
6,544,945
|
|
|
|
15,919,945
|
|
|
|
|
|
|
|
6,937,895
|
|
|
|
22,857,840
|
|
|
|
|
|
|
|
|
58.89
|
%
|
|
|
41.11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming maximum conversions
|
|
|
7,875,750
|
|
|
|
6,544,945
|
|
|
|
14,420,695
|
|
|
|
|
|
|
|
6,937,895
|
|
|
|
21,358,590
|
|
|
|
|
|
|
|
|
54.61
|
%
|
|
|
45.39
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share historical:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.14
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
$
|
2.60
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.11
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
$
|
2.58
|
|
|
|
|
|
|
|
|
|
Book value per share historical-Year End(2)
|
|
$
|
5.62
|
|
|
$
|
6.67
|
|
|
|
|
|
|
|
|
|
|
$
|
23.22
|
|
|
|
|
|
|
|
|
|
Dividends per share historical Year End:(2)(5)
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.77
|
|
|
|
|
|
|
|
|
|
Net Income (loss) per share historical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six month period:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.08
|
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
|
$
|
1.14
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.07
|
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
|
$
|
1.13
|
|
|
|
|
|
|
|
|
|
Book value per share historical September 30,
2007
|
|
$
|
5.73
|
|
|
$
|
6.53
|
|
|
|
|
|
|
|
|
|
|
$
|
24.23
|
|
|
|
|
|
|
|
|
|
Dividends per share historical for the six month
period(3)(5)
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.39
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share pro forma:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No conversions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
$
|
0.05
|
|
|
|
0.07
|
|
|
|
|
|
|
$
|
0.14
|
|
|
|
0.80
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
$
|
0.04
|
|
|
|
0.06
|
|
|
|
|
|
|
$
|
0.13
|
|
|
|
0.74
|
|
Maximum conversions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
$
|
0.05
|
|
|
|
0.07
|
|
|
|
|
|
|
$
|
0.15
|
|
|
|
0.86
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
$
|
0.04
|
|
|
|
0.06
|
|
|
|
|
|
|
$
|
0.14
|
|
|
|
0.80
|
|
For the six month period:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No conversions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
$
|
(0.002
|
)
|
|
|
(0.003
|
)
|
|
|
|
|
|
$
|
0.04
|
|
|
|
0.23
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
$
|
(0.002
|
)
|
|
|
(0.003
|
)
|
|
|
|
|
|
$
|
0.04
|
|
|
|
0.23
|
|
Maximum conversions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
$
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
$
|
0.04
|
|
|
|
0.23
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
$
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
$
|
0.04
|
|
|
|
0.23
|
|
Dividends per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No conversions
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
0.04
|
|
|
$
|
0.23
|
|
Maximum conversions
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
0.04
|
|
|
$
|
0.25
|
|
For the six month period:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No conversions
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
0.02
|
|
|
$
|
0.12
|
|
Maximum conversions
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
0.02
|
|
|
$
|
0.13
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Community
|
|
|
TransCommunity
|
|
|
|
|
|
|
|
|
BOE Financial
|
|
|
Pro Forma
|
|
|
|
|
|
|
Bankers
|
|
|
Financial
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Services of
|
|
|
Combined
|
|
|
Pro Forma
|
|
|
|
Acquisition
|
|
|
Corporation(2)
|
|
|
Combined
|
|
|
Equivalent (TFC)
|
|
|
Virginia,
|
|
|
(CBA, TFC &
|
|
|
Equivalent (BOE)
|
|
|
|
Corp.(1) (CBA)
|
|
|
(TFC)
|
|
|
(CBA & TFC)
|
|
|
(4)
|
|
|
Inc (BOE)
|
|
|
BOE)
|
|
|
(4)
|
|
|
Book value per share pro forma September 30,
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No conversions
|
|
|
|
|
|
|
|
|
|
$
|
6.79
|
|
|
|
9.65
|
|
|
|
|
|
|
$
|
7.04
|
|
|
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40.31
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Maximum conversions
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$
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6.70
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9.51
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$
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6.99
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40.03
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(1) |
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The year end is as of March 31, 2007 for Community Bankers;
the year end is as of December 31, 2007 for TransCommunity
and BOE. |
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(2) |
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The year ended information for Community Bankers is as of
March 31, 2007; the year ended information for
TransCommunity and BOE is as of December 31, 2006.
Historical book value per share for Community Bankers was
calculated by dividing total stockholders equity by total shares
outstanding (excluding shares subject to conversion). |
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(3) |
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The six month period is as of September 30, 2007 for
Community Bankers; the six month period is as of June 30,
2007 for TransCommunity and BOE. |
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(4) |
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Transcommunity stockholders will receive 1.42 shares of
Community Bankers common stock for each share of Transcommunity
stock. BOE stockholders will receive 5.7278 shares of
Community Bankers stock for each share of BOE stock. |
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(5) |
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If the Community Bankers merger with BOE is consummated,
Community Bankers expects to pay quarterly dividends in an
amount not less than the quotient of dividing $0.22 by the BOE
exchange ratio for the foreseeable future subject to board and
regulatory approval. |
COMMUNITY
BANKERS ANNUAL MEETING
General
The Community Bankers board of directors is providing this joint
proxy statement/prospectus to you in connection with its
solicitation of proxies for use at the annual meeting of
Community Bankers stockholders and at any adjournments or
postponements of the annual meeting.
Your vote is important. Please complete, date and sign the
accompanying proxy card and return it in the enclosed, postage
prepaid envelope. If your shares are held in street
name, you should instruct your broker how to vote by
following the directions provided by your broker.
Meeting
Date, Time, and Place and Record Date
Community Bankers will hold the annual meeting
on ,
2008,
at .m.,
local time,
at .
Only holders of Community Bankers common stock of record at the
close of business
on ,
2008, the Community Bankers record date, will be entitled to
receive notice of and to vote at the annual meeting. As of the
record date, there were 9,375,000 shares of Community
Bankers common stock outstanding and entitled to vote, with each
such share entitled to one vote.
Matters
to be Considered
At the annual meeting, Community Bankers stockholders will
be asked to:
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adopt the Agreement and Plan of Merger, dated as of
September 5, 2007, by and between Community Bankers and
TransCommunity, pursuant to which TransCommunity will merge with
and into Community Bankers and shares of TransCommunity common
stock will be converted into the right to receive
1.4200 shares of Community Bankers common stock, subject to
possible adjustment as described in this joint proxy
statement/prospectus and cash instead of fractional shares as
further described in this joint proxy statement/prospectus;
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adopt an amendment to the certificate of incorporation of
Community Bankers to reset the terms of the classes of Community
Bankers directors, effective upon consummation of the
merger;
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adopt an amendment to the certificate of incorporation of
Community Bankers to change the corporations name to
Community Bankers Trust Corporation, effective upon
consummation of the merger;
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vote on the election of each of Chris A. Bagley and Keith Walz
to the board of directors as Class I Directors to serve a
term for three years expiring at the 2010 annual meeting of
stockholders, or until a successor is elected and qualified (or,
if the merger described in the first proposal above is
consummated, until the effective date of the merger);
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ratify the appointment of Miller, Ellin & Company LLP
as independent public accountants for fiscal year ending
December 31, 2007; and
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authorize the board of directors to adjourn the annual meeting
to allow time for further solicitation of proxies in the event
there are insufficient votes, present in person or represented
by proxy at the annual meeting, to approve the proposals.
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Unless Community Bankers and TransCommunity agree otherwise, the
merger will only be consummated if the stockholders of Community
Bankers adopt the staggered board amendment to the certificate
of incorporation. In addition, the amendments to the certificate
of incorporation will only be effected in the event and at the
time the merger with TransCommunity is consummated.
Finally, Community Bankers stockholders may also be asked
to consider any other business that properly comes before the
annual meeting. Each copy of this joint proxy
statement/prospectus mailed to Community Bankers
stockholders is accompanied by a proxy card for use at the
annual meeting.
Vote
Required
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Pursuant to Delaware law, adoption of the merger agreement
requires the affirmative vote of the holders of a majority of
the outstanding shares of Community Bankers common stock
entitled to vote at the annual meeting. Pursuant to Community
Bankers certificate of incorporation, adoption of the
merger agreement also requires the affirmative vote of holders
of a majority of Community Bankers outstanding shares of common
stock issued in Community Bankers initial public offering
and voted at the meeting. Both requirements must be met for
adoption of the merger agreement. In addition, the holders of
less than 20% of the outstanding shares of common stock issued
in the Community Bankers initial public offering must have
voted against the merger and thereafter exercised their right to
convert their stock into cash equal to a pro rata portion of the
Community Bankers trust account.
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Adoption of the amendments to the certificate of incorporation
requires the affirmative vote of the holders of a majority of
the outstanding shares of Community Bankers common stock
entitled to vote at the annual meeting.
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Election of Chris A. Bagley and Keith Walz to the board of
directors and ratification of the appointment of the independent
public accountants each require the affirmative vote of the
holders of a majority of the shares of Community Bankers common
stock, present in person or represented by proxy and entitled to
vote at the annual meeting.
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Authorization for the board of directors to adjourn the annual
meeting requires the affirmative vote of the holders of a
majority of the shares of Community Bankers common stock,
present in person or represented by proxy and entitled to vote
at the annual meeting, whether or not a quorum is present.
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If not ratified, the appointment of Miller, Ellin &
Company will be reconsidered by the audit committee.
On the record date, there were 9,375,000 outstanding shares of
Community Bankers common stock, each of which is entitled to one
vote at the annual meeting. On that date, the Community Bankers
insiders (including all of Community Bankers officers,
directors and initial stockholders) beneficially owned a total
of approximately 20% of the outstanding shares of Community
Bankers common stock.
43
All of the Community Bankers insiders have agreed to vote the
shares of Community Bankers common stock acquired by them before
Community Bankers initial public offering (which
constitute approximately 39.9% of the shares required to
approve the merger under Delaware law), on the merger proposal
consistent with the majority of the votes cast by the holders of
the shares of common stock issued in the initial public
offering. They have further indicated that they will vote the
shares held by them in favor of the adoption of the amendments
to the certificate of incorporation, for the election of Chris
A. Bagley and Keith Walz to Community Bankers board of
directors, for the ratification of the appointment of the
independent public accountants for the fiscal year ending
December 31, 2007, and for the proposal to authorize the
board of directors to adjourn the annual meeting to allow time
for further solicitation of proxies in the event there are
insufficient votes present at the meeting to approve the
proposals. While the shares voted by the Community Bankers
insiders will count towards the voting and quorum requirements
under Delaware law, they will not count towards the voting
requirement under the certificate of incorporation because the
insiders shares were not issued in Community Bankers
initial public offering.
Quorum
The presence in person or representation by proxy, of shares of
Community Bankers common stock representing a majority of
Community Bankers outstanding shares entitled to vote at the
annual meeting is necessary in order for there to be a quorum at
the annual meeting. A quorum must be present in order for the
vote on the merger agreement, the amendments to the certificate
of incorporation, and the nominees for director. If there is no
quorum present at the opening of the meeting, the annual meeting
may be adjourned by the vote of a majority of the shares of
Community Bankers common stock, present in person or represented
by proxy and entitled to vote at the annual meeting.
Voting of
Proxies
Shares of common stock represented by properly executed proxies
received at or prior to the Community Bankers annual meeting
will be voted at the annual meeting in the manner specified by
the holders of such shares. If you are a stockholder of record
(that is, you hold stock certificates registered in your own
name), you may vote by following the instructions described on
your proxy card. If your shares are held in nominee or
street name, you will receive separate voting
instructions from your broker or nominee with your proxy
materials. If you hold your shares in street name,
you can either obtain physical delivery of the shares directly
into your name, and then vote your shares yourself, or request a
legal proxy directly from your broker and bring it
to the annual meeting, and then vote your shares yourself. In
order to obtain shares directly into your name, you must contact
your brokerage house representative. Brokerage firms may assess
a fee for your conversion; the amount of such fee varies.
Properly executed proxies that do not contain voting
instructions will be voted FOR
approval of the merger agreement, approval of the
amendments to the certificate of incorporation, election of
Chris A. Bagley and Keith Walz to the board of directors,
ratification of the appointment of the independent public
accountants for the fiscal year ending December 31, 2007,
and approval of the proposal to authorize adjournment.
Shares of any stockholder present in person or represented by
proxy (including broker non-votes, which generally occur when a
broker who holds shares in street name for a customer does not
have the authority to vote on certain non-routine matters
because its customer has not provided any voting instructions
with respect to the matter) at the annual meeting who abstains
from voting will be counted for purposes of determining whether
a quorum exists.
Abstaining from voting (including by way of a broker
non-vote), either in person or by proxy, will have the same
effect as a vote against the adoption of the merger agreement
and adoption of the amendments to the certificate of
incorporation, but will have no effect on the vote relating to
the election of directors, ratification of the appointment of
the independent public accountants for the fiscal year ending
December 31, 2007 or authorization to adjourn the annual
meeting. An abstention will not be considered a vote against the
merger proposal, and, if you abstain, you will be unable to
exercise any conversion rights. Accordingly, Community
Bankers board of directors urges its stockholders to
complete, date and sign the accompanying proxy card and return
it promptly in the enclosed, postage-paid envelope.
44
Revocability
of Proxies
The grant of a proxy on the enclosed proxy card does not
preclude you from voting in person or otherwise revoking your
proxy. If you are a stockholder of record, there are a number of
ways you can change your vote. First, you may send a written
notice to the person to whom you submitted your proxy stating
that you would like to revoke your proxy. Second, you may
complete and submit a later dated proxy with new voting
instructions. Third, you may attend the annual meeting and vote
in person. The latest vote actually received by Community
Bankers prior to or at the annual meeting will be your vote. Any
earlier votes will be revoked. Simply attending the annual
meeting without voting, however, will not revoke your proxy.
If you have instructed a broker to vote your shares, you must
follow the directions you will receive from your broker to
change or revoke your proxy.
Solicitation
of Proxies
Community Bankers will pay all of the costs of filing the
registration statement with the SEC (of which this joint proxy
statement/prospectus is a part) and of soliciting proxies in
connection with the annual meeting. Community Bankers will also
pay the costs associated with printing the copies of this joint
proxy statement/prospectus that are sent to Community Bankers
stockholders and the mailing fees associated with mailing this
joint proxy statement/prospectus to Community Bankers
stockholders. Solicitation of proxies may be made in person or
by mail, telephone, or facsimile, or other form of communication
by directors, officers, and employees of Community Bankers who
will not be specially compensated for such solicitation.
Nominees, fiduciaries, and other custodians will be requested to
forward solicitation materials to beneficial owners and to
secure their voting instructions, if necessary, and will be
reimbursed for the expenses incurred in sending proxy materials
to beneficial owners.
No person is authorized to give any information or to make any
representation not contained in this joint proxy
statement/prospectus and, if given or made, such information or
representation should not be relied upon as having been
authorized by Community Bankers, TransCommunity, or any other
person. The delivery of this joint proxy statement/prospectus
does not, under any circumstances, create any implication that
there has been no change in the business or affairs of Community
Bankers or TransCommunity since the date of this joint proxy
statement/prospectus.
Authorization
to Vote on Adjournment
At the annual meeting, you are being asked to grant authority to
the board of directors to adjourn the annual meeting to allow
time for further solicitation of proxies in the event there are
insufficient votes present in person or represented by proxy at
the annual meeting, to approve the proposals to be considered by
Community Bankers stockholders. If you do not specify whether
authority is granted or withheld, the proxy will be voted to
grant authority to adjourn. Community Bankers has no plans to
adjourn the annual meeting at this time, but intends to do so,
if needed, to promote stockholder interests.
Recommendation
of the Board of Directors
The Community Bankers board of directors has unanimously
determined that the proposals and the transactions contemplated
thereby are in the best interests of Community Bankers and its
stockholders. The members of the Community Bankers board of
directors unanimously recommend that the Community Bankers
stockholders vote at the annual meeting to adopt the merger
agreement, adopt the amendments to the certificate of
incorporation, elect Chris A. Bagley and Keith Walz to the board
of directors, ratify the appointment of the independent public
accountants and authorize the board of directors to adjourn the
annual meeting to allow time for further solicitation of proxies
in the event there are insufficient votes present in person or
represented by proxy at the annual meeting, to approve the
proposals.
In the course of reaching its decision to approve the merger
agreement and the transactions contemplated thereby, the
Community Bankers board of directors, among other things,
consulted with its legal advisors, Nelson Mullins
Riley & Scarborough LLP, regarding the legal terms of
the merger agreement and with its financial advisor,
45
Keefe, Bruyette & Woods, Inc., as to the fairness,
from a financial point of view, to Community Bankers, of the
consideration to be received by the holders of TransCommunity
common stock in the merger. For a discussion of the factors
considered by the Community Bankers board of directors in
reaching its conclusion, see The Merger
Community Bankers Reasons for the Merger and
The Merger Opinion of Community Bankers
Financial Advisor.
Community Bankers stockholders should note that Community
Bankers directors and officers have certain interests in,
and may derive benefits as a result of, the merger that are in
addition to their interests as stockholders of Community
Bankers. See The Merger Certain Benefits of
Directors and Officers of Community Bankers and
TransCommunity.
TRANSCOMMUNITY
SPECIAL MEETING
General
The TransCommunity board of directors is providing this joint
proxy statement/prospectus to you in connection with its
solicitation of proxies for use at the special meeting of
TransCommunitys stockholders and at any adjournments or
postponements of the special meeting.
Community Bankers is also providing this joint proxy
statement/prospectus to you as a prospectus in connection with
the offer and sale by Community Bankers of shares of its common
stock to stockholders of TransCommunity in the merger.
Your vote is important. Please complete, date and sign the
accompanying proxy card and return it in the enclosed, postage
prepaid envelope. If your shares are held in street
name, you should instruct your broker how to vote by
following the directions provided by your broker.
Meeting
Date, Time, and Place and Record Date
TransCommunity will hold the special meeting on
,
2008, at .m., local time,
at .
Only holders of TransCommunity common stock of record at the
close of business
on ,
2008, the TransCommunity record date, will be entitled to
receive notice of and to vote at the special meeting. As of the
record date, there were
shares
of TransCommunity common stock outstanding and entitled to vote,
with each such share entitled to one vote.
Matters
to be Considered
At the special meeting, TransCommunitys stockholders will
be asked to:
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approve the Agreement and Plan of Merger, dated as of
September 5, 2007, by and between Community Bankers and
TransCommunity, pursuant to which TransCommunity will merge with
and into Community Bankers and shares of TransCommunity common
stock will be converted into the right to receive
1.4200 shares of Community Bankers common stock, subject to
possible adjustment as described in this joint proxy
statement/prospectus and cash instead of fractional shares as
further described in this joint proxy
statement/prospectus; and
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authorize the board of directors to adjourn the special meeting
to allow time for further solicitation of proxies in the event
there are insufficient votes present at the special meeting, in
person or by proxy, to approve the merger agreement.
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Each copy of this joint proxy statement/prospectus mailed to
TransCommunitys stockholders is accompanied by a proxy
card for use at the special meeting.
Vote
Required
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Approval of the merger proposal requires the affirmative vote of
holders of a majority of the shares entitled to vote at the
TransCommunity special meeting.
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46
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Approval of the proposal to authorize adjournment requires the
affirmative vote of a majority of the votes entitled to be cast
at the special meeting represented in person or by proxy, even
though less than a quorum.
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On the record date, there were
outstanding shares of TransCommunity common stock, each of which
is entitled to one vote at the special meeting. On that date,
the directors and executive officers of TransCommunity and their
affiliates beneficially owned a total of approximately
% of
the outstanding shares of TransCommunity common stock. Each of
TransCommunitys directors and executive officers has
agreed, subject to several conditions, to vote his or her shares
of TransCommunity common stock in favor of the merger agreement.
Quorum
The presence, in person or by proxy, of shares of TransCommunity
common stock representing a majority of TransCommunity
outstanding shares entitled to vote at the special meeting is
necessary in order for there to be a quorum at the special
meeting. A quorum must be present in order for the vote on the
merger agreement to occur. If there is no quorum present at the
opening of the meeting, the special meeting may be adjourned by
the vote of a majority of shares voting on the motion to adjourn.
Voting of
Proxies
Shares of common stock represented by properly executed proxies
received at or prior to the TransCommunity special meeting will
be voted at the special meeting in the manner specified by the
holders of such shares. If you are a stockholder of record (that
is, you hold stock certificates registered in your own name),
you may vote by following the instructions described on your
proxy card. If your shares are held in nominee or street
name, you will receive separate voting instructions from
your broker or nominee with your proxy materials. If you hold
your shares in street name, you can either obtain
physical delivery of the shares directly into your name, and
then vote your shares yourself, or request a legal
proxy directly from your broker and bring it to the
special meeting, and then vote your shares yourself. In order to
obtain shares directly into your name, you must contact your
brokerage house representative. Brokerage firms may assess a fee
for your conversion; the amount of such fee varies.
Properly executed proxies which do not contain voting
instructions will be voted FOR
approval of the merger agreement and of the proposal to
authorize adjournment.
Shares of any stockholder represented in person or by proxy
(including broker non-votes, which generally occur when a broker
who holds shares in street name for a customer does not have the
authority to vote on certain non-routine matters because its
customer has not provided any voting instructions with respect
to the matter) at the special meeting who abstains from voting
will be counted for purposes of determining whether a quorum
exists.
Abstaining from voting (including by way of a broker
non-vote), either in person or by proxy, will have the same
effect as a vote against approval of the merger agreement.
Accordingly, the TransCommunity board of directors urges its
stockholders to complete, date and sign the accompanying proxy
card and return it promptly in the enclosed, postage-paid
envelope.
Revocability
of Proxies
The grant of a proxy on the enclosed proxy card does not
preclude you from voting in person or otherwise revoking your
proxy. If you are a stockholder of record, there are a number of
ways you can change your vote. First, you may send a written
notice to the person to whom you submitted your proxy stating
that you would like to revoke your proxy. Second, you may
complete and submit a later dated proxy with new voting
instructions. Third, you may attend the special meeting and vote
in person. The latest vote actually received by TransCommunity
prior to or at the special meeting will be your vote. Any
earlier votes will be revoked. Simply attending the special
meeting without voting, however, will not revoke your proxy.
If you have instructed a broker to vote your shares, you must
follow the directions you will receive from your broker to
change or revoke your proxy.
47
Solicitation
of Proxies
TransCommunity will pay all of the costs of soliciting proxies
in connection with the TransCommunity special meeting, except
that Community Bankers will pay the costs of filing the
registration statement with the SEC, of which this joint proxy
statement/prospectus is a part. TransCommunity will also pay
costs associated with the printing of the copies of this joint
proxy statement/prospectus that are sent to TransCommunity
stockholders and the mailing fees associated with mailing this
joint proxy statement/prospectus to TransCommunity stockholders.
Solicitation of proxies may be made in person or by mail,
telephone, or facsimile, or other form of communication by
directors, officers and employees of TransCommunity who will not
be specially compensated for such solicitation. Nominees,
fiduciaries, and other custodians will be requested to forward
solicitation materials to beneficial owners and to secure their
voting instructions, if necessary, and will be reimbursed for
the expenses incurred in sending proxy materials to beneficial
owners.
No person is authorized to give any information or to make any
representation not contained in this joint proxy
statement/prospectus and, if given or made, such information or
representation should not be relied upon as having been
authorized by TransCommunity, Community Bankers or any other
person. The delivery of this joint proxy statement/prospectus
does not, under any circumstances, create any implication that
there has been no change in the business or affairs of
TransCommunity or Community Bankers since the date of this joint
proxy statement/prospectus.
Authorization
to Vote on Adjournment
At the special meeting, you are being asked to grant authority
to the board of directors to adjourn the special meeting to
allow time for further solicitation of proxies in the event
there are insufficient votes represented in person or by proxy
at the special meeting, to approve the merger agreement. If you
do not specify whether authority is granted or withheld, the
proxy will be voted to grant authority to adjourn.
TransCommunity has no plans to adjourn the special meeting at
this time, but intends to do so, if needed, to promote
stockholder interests.
Recommendation
of the Board of Directors
The TransCommunity board of directors has unanimously determined
that the merger proposal and the transactions contemplated
thereby are in the best interests of TransCommunity and its
stockholders. The members of the TransCommunity board of
directors unanimously recommend that the TransCommunity
stockholders vote at the special meeting to approve the merger
proposal and the proposal to adjourn the special meeting to
allow time for further solicitation of proxies in the event
there are insufficient votes represented in person or by proxy
at the special meeting to approve the merger proposal.
In the course of reaching its decision to approve the merger
proposal and the transactions contemplated thereby, the
TransCommunity board of directors, among other things, consulted
with its legal advisors, Williams Mullen, regarding the legal
terms of the merger agreement and with its financial advisor,
Sandler ONeill, as to the fairness, from a financial point
of view, to TransCommunity stockholders of the consideration to
be received by the holders of TransCommunity common stock in the
merger. For a discussion of the factors considered by the
TransCommunity board of directors in reaching its conclusion,
see The Merger TransCommunitys Reasons
for the Merger and The Merger Opinion of
TransCommunitys Financial Advisor.
TransCommunitys stockholders should note that
TransCommunity directors and officers have certain interests in,
and may derive benefits as a result of, the merger that are in
addition to their interests as stockholders of TransCommunity.
See The Merger Certain Benefits of Directors
and Officers of Community Bankers and TransCommunity.
THE
MERGER
The descriptions of the terms and conditions of the merger
proposal, the merger agreement and any related documents in this
joint proxy statement/prospectus are qualified in their entirety
by reference to the copy of the merger agreement attached as
Appendix A to this joint proxy statement/prospectus, to the
registration statement, of which this joint proxy
statement/prospectus is a part, and to the exhibits to the
registration statement.
48
Structure
of the Merger
The merger agreement provides for the merger of TransCommunity
with and into Community Bankers. Community Bankers will be the
surviving corporation in the merger. TransCommunity Bank, a
wholly owned subsidiary of TransCommunity, will become a wholly
owned subsidiary of Community Bankers following the merger. Each
share of TransCommunity common stock issued and outstanding at
the effective time of the merger (except for shares held by
Community Bankers, TransCommunity and TransCommunity Bank that
are not held in a fiduciary capacity or as a result of
previously contracted for debts), will be converted into shares
of Community Bankers common stock and cash instead of fractional
shares, as described below. The directors of Community Bankers
will consist of four directors nominated by Community Bankers
and six directors nominated by TransCommunity. One of the
directors nominated by TransCommunity shall serve as chairman of
Community Bankers upon consummation of the merger.
Following the merger, the surviving corporation will file an
amended and restated certificate of incorporation substantially
in the form attached as Appendix B to this joint proxy
statement/prospectus, including the amendments being considered
by Community Bankers stockholders at the annual meeting,
assuming they are adopted. In addition, the text of sections A,
B, and D of Article SIXTH will be removed from the amended and
restated certificate of incorporation to reflect that, pursuant
to their terms, they are terminated automatically with no action
required by the board of directors or the stockholders in the
event an initial business combination, such as the merger with
TransCommunity, is consummated. In the event the Community
Bankers stockholders do not adopt the staggered board amendment
to the certificate of incorporation, the merger will not be
completed unless Community Bankers and TransCommunity agree
otherwise.
Background
of the Merger
In May 2007, Gary A. Simanson, Community Bankers president
and chief executive officer, contacted Bruce B. Nolte,
TransCommunitys president and chief executive officer, to
engage in a general conversation with respect to the banking
environment in Virginia and TransCommunitys challenges in
seeking to build a community banking focused franchise in
certain markets in Virginia and Mr. Simansons vision
of offering banks in Virginia a different alternative for
consolidating that could still maintain a local identity.
Mr. Simanson approached Mr. Nolte and TransCommunity
based on TransCommunitys history of seeking to establish
and operate separately chartered community banks in attractive
growth markets in Virginia, the above average growth rates of
TransCommunitys loans and deposits, the operating and
earnings challenges that TransCommunity had experienced in
seeking to implement its strategy, and the announcement by
TransCommunity that it would be streamlining its management and
board structure and consolidating its separate subsidiary banks
into one bank charter but still operating in each market as a
separate division with its own name and local market identity.
Following that initial contact, Messrs. Simanson and Nolte
met in person several times during June 2007 and continued these
discussions which led to preliminary discussions regarding a
possible business combination between the companies.
During these discussions, Community Bankers communicated to
TransCommunity that it was not interested in a simple
acquisition of TransCommunity. Community Bankers stated that its
interest was a strategic alliance combining the capital and
management skills at Community Bankers with the operating
banking platform and management skills of TransCommunity. Both
parties discussed that the ultimate goal of any combined company
would be to grow the company by acquisition in the Mid-Atlantic
region. In addition, Mr. Simanson indicated that, as part
of any potential combination, Community Bankers would be
willing to cede control of the board of directors of the
combined company and the position of board chairman to
TransCommunity. Community Bankers also stated that it would be
willing to allow the existing management team of TransCommunity
to run the combined company. The discussion also focused on the
possibility of stock as consideration in the transaction in
order to allow a maximum level of capital that would be
available for future acquisitions and to grow the franchise.
In early July 2007, Mr. Nolte concluded that a merger with
Community Bankers could be in the best interest of
TransCommunitys stockholders and notified Troy A.
Peery, Jr., the chairman of TransCommunitys board of
directors of the discussions with Mr. Simanson.
Messrs. Nolte, Peery and Simanson met on July 9, 2007,
to discuss a proposed business combination.
49
Also in early July 2007, Mr. Simanson advised the Community
Bankers board of directors of the nature and extent of the
discussions with TransCommunity and was authorized to continue
in further discussions and to seek the assistance of advisors as
he felt necessary.
On July 18, 2007, Messrs. Nolte and Peery met with the
executive committee of TransCommunitys board of directors
and the chairman of the boards strategic planning
committee to advise them of the discussions with Community
Bankers. Following a discussion of the structure and strategic
plan of Community Bankers and the discussions that had occurred
between the parties to date, the executive committee unanimously
agreed that a transaction with Community Bankers could be
in the best interests of TransCommunity and its stockholders.
The executive committee appointed a special committee, whose
members are Richard F. Bozard, Christopher G. Miller and Jack C.
Zoeller, all of whom are independent directors of
TransCommunity, to further evaluate and, if appropriate,
negotiate the details of a potential business combination with
Community Bankers.
On July 21, 2007, the TransCommunity special committee had
a lengthy meeting with Mr. Simanson without the presence of
TransCommunity management. On July 28, 2007, the special
committee reported its conclusions from this meeting to the
executive committee and unanimously recommended that
negotiations with Community Bankers be pursued. This
recommendation was based on the following conclusions of the
special committee:
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A merger with Community Bankers would offer a premium over the
present share value. In addition, TransCommunity stockholders
would likely have the opportunity to benefit from further
increases in value of the common stock that they would own in
the combined company, as Community Bankers pursued further
acquisitions following the merger with TransCommunity.
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The proposed growth strategy, which would be based on a series
of acquisitions executed with Mr. Simanson playing a lead
role, would allow TransCommunity to advance to a higher
threshold of growth than it would have been able to achieve on
its own.
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A merger with Community Bankers and the adoption of an
aggressive acquisition strategy would likely present a greater
and more immediate benefit to TransCommunitys stockholders
than if TransCommunity did not pursue a business combination.
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TransCommunity does not presently have the capital to pursue
such a growth strategy on its own. The additional capital
provided by Community Bankers would also help insulate the
company against any severe downturn in the real estate and
credit markets.
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A proposed valuation of about $10.50 per share for
TransCommunity common stock (the midpoint of the range of $9.50
to $11.50 discussed with Community Bankers) would be reasonable
in the context of a stock-for-stock strategic merger of equals.
TransCommunitys stockholders would still have the
opportunity to participate in additional increases in value as
stockholders of a combined entity and that current
TransCommunity directors would continue to constitute a majority
of the resulting board of directors.
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From an integration perspective, a merger with Community Bankers
would pose few challenges, because the combined company would
have only one operational banking platform, and there would be
no systems to convert and no conflicts among branch networks.
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Following his meeting with TransCommunitys special
committee, Mr. Simanson contacted Keefe,
Bruyette & Woods, Inc. to discuss how the market
might view a business combination between Community Bankers and
TransCommunity and the potential risk and benefits in pursuing
such a transaction. Some of the potential benefits were deemed
to be:
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the branch locations in attractive, fast-growing markets;
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that TransCommunity was consolidating its bank charters and back
room operations to achieve cost savings and that given the
earnings history of TransCommunity, the potential pricing would
be reasonable;
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culturally both companies strongly believed in a community
banking model; and
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a stock-for-stock transaction would provide for an extremely
well-capitalized company that would be well positioned to take
advantage of future opportunities.
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Some of the risks were deemed to be:
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TransCommunitys poor earnings history;
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the disruption that TransCommunity had experienced with its
management and board of directors;
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the reputational risk that these issues could raise;
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TransCommunitys ability to successfully integrate its
subsidiary banks; and
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whether other banks would be attracted to join the franchise,
although there were and are no plans, arrangements, agreements
or understandings other than Community Bankers proposed
merger with BOE.
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In late July 2007, Mr. Simanson conferred with Nelson
Mullins Riley & Scarborough LLP regarding the legal
aspects of the potential business combination between Community
Bankers and TransCommunity.
The executive committee of TransCommunitys board of
directors met on July 25, 2007. At that meeting, the
executive committee accepted the special committees
recommendation to pursue negotiations and engaged in a full
discussion of a potential business combination. The executive
committee also reviewed other possible strategic alternatives
for TransCommunity, including a possible sale of the company. In
light of its discussion, the executive committee voted
unanimously to pursue negotiations with Community Bankers, to
authorize the special committee to conduct such negotiations,
and to authorize the special committee to engage investment
bankers as necessary to assist with its efforts.
Over the next several weeks, the special committee of
TransCommunitys board of directors and Mr. Nolte
continued discussions with Mr. Simanson with respect to the
details of a potential business combination. These individuals
began to prepare a nonbinding, summary term sheet for such a
combination.
During Community Bankers regularly scheduled board meeting
on August 13, 2007, Mr. Simanson apprised the board of
the developments in the discussions with TransCommunity and that
he had engaged the legal services of Nelson Mullins
Riley & Scarborough LLP and would be engaging Keefe,
Bruyette & Woods, Inc. to formally advise on the
financial aspects of the proposed transaction.
On August 17, 2007, TransCommunitys board of
directors held a special meeting to consider a potential
transaction with Community Bankers. Among other things, the
board discussed the history of contacts and discussions with
Community Bankers, an overview of the terms of a possible
stock-for-stock transaction, the strategic implications of
completing a deal with Community Bankers and other potential
transactions that may be available to TransCommunity, valuations
of both Community Bankers and TransCommunity and some of the
complexities associated with acquisitions by blank
check companies. The board of directors also considered
the impact of a potential transaction on stockholders, employees
and management, the roles of the directors and management in the
combined entity, the use of outside experts and need for a
fairness opinion in this process.
Following a discussion at this meeting, TransCommunitys
board of directors ratified the appointment of the special
committee and unanimously authorized the special committee to
continue negotiations with Community Bankers on terms similar to
those presented at the board meeting. In addition, the board of
directors approved the engagement of Sandler
ONeill & Partners, LP to provide investment
banking advice and a fairness opinion on any transaction that
would be proposed following these negotiations. The board of
directors also formed a due diligence committee to undertake
customary due diligence activities to evaluate Community Bankers
and its management and board of directors.
Following this meeting, the special committee of
TransCommunitys board of directors and Mr. Nolte
continued negotiations with Mr. Simanson. The special
committee had numerous telephone and
e-mail
discussions and met in person with Mr. Nolte,
Mr. Peery, and the companys investment banker and
legal counsel to discuss the proposed terms of the transaction.
The parties also began to prepare a definitive merger agreement.
During the week of August 20, 2007, Community Bankers
reviewed the proposed terms with Keefe,
Bruyette & Woods, Inc., and management and the
board reviewed the terms of the draft documents. On the weekends
of August 24, 2007 and September 1, 2007, Community
Bankers conducted due diligence on TransCommunity.
51
On August 29, 2007, TransCommunitys board of
directors held its regular monthly meeting. At that meeting, the
special committee presented the board of directors with a
proposed term sheet for the proposed transaction with Community
Bankers. The proposed terms included Community Bankers as the
acquiring entity and a proposed merger consideration value of
$10.53 for each share of TransCommunity common stock. The
special committee also reported that both negotiations and due
diligence were still underway. In addition, a representative
from Williams Mullen, counsel to the company, discussed the
merger generally and the duties and responsibilities of the
board of directors. Sandler ONeill also gave a
presentation to the board of directors that evaluated the
economics of a transaction with Community Bankers, as then
contemplated.
Following these presentations, TransCommunitys board of
directors discussed alternatives available to the company and
unanimously concluded that the potential benefits of a
transaction with Community Bankers would be in the best
interests of TransCommunity and its stockholders. In addition,
the board of directors discussed the possibility that its
stockholders might not approve a potential transaction with
Community Bankers and unanimously concluded that, if it could
not obtain stockholder approval, TransCommunity would seek to
remain independent and would continue to pursue its current
organic growth strategy. The consensus of the board was that the
proposed strategic merger with Community Bankers was a unique
opportunity that should be pursued, but that this was not an
appropriate time to pursue an outright sale of the company,
because the earnings improvements attributable to the recent
consolidation and changes in management had not yet been
achieved and would take a year or more to be reflected in the
companys stock price.
The preliminary term sheet was not executed, however both
parties continued to review and negotiate the terms of the
merger and a definitive merger agreement.
On September 5, 2007, TransCommunitys board of
directors held another special meeting. At this meeting, the
board of directors received presentations from Williams Mullen
on the legal terms of the merger and the merger agreement and
from Sandler ONeill on the economics of the proposed
transaction. At the conclusion of its presentation, Sandler
ONeill advised the board that the proposed merger with
Community Bankers was fair to the stockholders of TransCommunity.
Following these presentations, and after a discussion,
TransCommunitys board of directors unanimously approved
the merger with Community Bankers and authorized Mr. Nolte
to execute the merger agreement.
On September 5, 2007, Community Bankers board of
directors held a special meeting. At this meeting, the board of
directors received presentations from Nelson Mullins
Riley & Scarborough LLP on the legal terms of the
merger and the merger agreement and from Keefe,
Bruyette & Woods, Inc. on the economics of the
proposed transaction. At the conclusion of its presentation,
Keefe, Bruyette & Woods, Inc. advised the board of
directors that the merger consideration with respect to the
proposed merger with TransCommunity was fair, from a financial
point of view, to Community Bankers.
Following these presentations, and after a discussion, Community
Bankers board of directors unanimously approved the merger
with TransCommunity and authorized Mr. Simanson to execute
the merger agreement.
Community Bankers and TransCommunity executed the merger
agreement on September 5, 2007.
Community Bankers and TransCommunity issued a joint press
release on September 6, 2007, announcing the transaction.
On December 12, 2007, Sandler ONeill issued an
updated fairness opinion, which supercedes its opinion of
September 5, 2007, that also reviewed the effect of the
proposed merger with BOE on the surviving corporation.
The
Proposed Merger between Community Bankers and BOE
In addition to the proposed merger of Community Bankers with
TransCommunity, Community Bankers has entered into an agreement
and plan of merger, dated as of December 13, 2007, with
BOE. BOE is a bank holding company incorporated under the laws
of Virginia and is the holding company of Bank of Essex. Bank of
Essex operates eight full-service offices, two in Tappahannock,
and one each in Manquin, Mechanicsville, West Point, Glen Allen,
Burgess and Callao, Virginia, respectively. Bank of Essex had
deposits of $241.0 million, loans of $213.5 million,
assets of $294.8 million and equity of $29.3 million,
at September 30, 2007. The merger agreement
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by and between Community Bankers and BOE provides for the merger
of BOE with and into Community Bankers with Community Bankers as
the surviving corporation. The headquarters of the surviving
corporation will be the current headquarters of TransCommunity.
Following the merger, TransCommunity Bank will merge with and
into Bank of Essex, which will remain headquartered in
Tappahannock and will be a wholly-owned subsidiary bank of
Community Bankers and will operate each bank division of Bank of
Essex under their current names. BOE has the right to terminate
the merger agreement if Community Bankers acquisition of
TransCommunity does not close.
Based on the respective companies balance sheets at
September 30, 2007, assuming no Community Bankers
stockholders exercise their conversion rights, by combining
Community Bankers with TransCommunity and BOE, the resulting
company would have approximately $625.6 million in assets,
$399.6 million in loans, $433.0 million in deposits
and have stockholders equity of approximately
$160.9 million. As a result of the proposed merger with
BOE, each share of BOE common stock will be converted into
5.7278 shares of Community Bankers common stock, subject to
possible adjustment. If the daily average closing price for
Community Bankers common stock for the 20 consecutive days
of trading in such stock ending five days before the closing
date is less than $7.42, Community Bankers will increase the
exchange ratio to the quotient obtained by dividing $42.50 by
such daily average closing price. The aggregate consideration to
be paid to the stockholders of BOE will be approximately
$52 million. Upon completion of Community Bankers
merger with BOE, each award, option, or other right to purchase
or acquire shares of BOE common stock pursuant to stock options,
stock appreciation rights, or stock awards granted by BOE under
BOEs stock incentive plans, equity compensation plans and
stock option plans, which are outstanding immediately prior to
the merger, whether or not exercisable, will be converted into
and become rights with respect to Community Bankers common
stock, and Community Bankers will assume each right, in
accordance with the terms of the relevant BOE stock plan and
stock option agreement.
In reaching its decision to approve the merger agreement with
BOE and recommend the merger with BOE to its stockholders, the
Community Bankers board of directors reviewed various financial
data and due diligence and evaluation materials and made an
independent determination of fair market value. In addition, in
reaching its decision to approve the merger agreement, the board
of directors considered a number of factors and believes that
the non-exhaustive list of factors below strongly supports its
determination to approve the merger agreement and recommendation
that its stockholders adopt the merger agreement:
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the attractive nature of the markets in which BOE operates and
its branch network;
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BOEs demonstrated deposit and loan growth and history of
consistent earnings;
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BOEs attractive balance sheet make-up and product mix,
including the loan and deposit mix of BOE and the compatibility
of that mix with TransCommunitys balance sheet;
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opportunities to grow existing revenue streams and create new
revenue streams associated with BOE and the strength of the
combined balance sheets, equity levels, and projected market
capitalization of Community Bankers, TransCommunity and BOE;
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the competitive position and market share of BOE within its
operating markets and the likely ability for Bank of Essex,
following its merger with TransCommunity Bank, to increase its
market share;
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the experience of BOEs board of directors and management,
including George M. Longest, Jr., the current president and
chief executive officer of BOE who will become president of
Community Bankers after the merger and chief executive officer
commencing on January 1, 2010;
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the potential operating efficiencies and management enhancements
of merging Bank of Essex with TransCommunity Bank, and the
compatibility of management of Community Bankers, TransCommunity
and BOE;
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the valuation of comparable companies and the reasonable pricing
of the transaction;
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the similar operating philosophies and community banking culture
of Community Bankers, TransCommunity and BOE;
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the all stock for stock nature of the merger consideration,
preserving capital for future growth and acquisitions;
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the attractiveness of the surviving corporation following the
merger to additional merger candidates;
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the strong desire of management and the board of directors of
BOE to stay involved in future growth of the company; and
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Keefe, Bruytette & Woods, Inc.s fairness opinion that
the merger is fair to Community Bankers from a financial point
of view.
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The board of directors of Community Bankers did not ascertain
any negative factors related to the proposed merger with BOE
other than the risk of the ability to successfully integrate BOE
with TransCommunity and achieve the associated cost savings and
efficiencies.
In reaching its decision to approve the merger agreement with
Community Bankers and recommend the merger to its stockholders,
the BOE board of directors consulted with BOE management, as
well as with its outside financial and legal advisors, reviewed
various financial data, due diligence and evaluation materials
and made an independent determination that the proposed merger
with Community Bankers was in the best interests of BOE and its
stockholders. The board of directors considered a number of
positive factors that it believes support its recommendation
that BOEs stockholders approve the merger agreement,
including:
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the premium over BOEs prevailing stock price to be
received by BOEs stockholders;
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the financial analysis and presentation of Feldman Financial,
and its oral opinion that, as of December 12, 2007, the
exchange ratio was fair, from a financial point of view, to
BOEs stockholders. For more information, see
Opinion of BOEs Financial Advisor;
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the fact that the exchange ratio is fixed in the event that
Community Bankers stock price increases before closing,
but is adjustable in the event that Community Bankers
stock price decreases, thereby affording BOEs stockholders
a combination of upside participation and downside protection;
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its belief that the surviving corporations increased size
and scale, including its significantly larger pro forma capital
base, would better position it to compete and grow its business
and to attract other high quality merger candidates;
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its belief that the surviving corporation will be positioned to
benefit from increased credit portfolio diversity and increased
lending capacity;
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the corporate governance provisions established for the merger,
including the composition of the surviving corporations
board of directors and the designation of key senior management
of the surviving corporation and their proposed employment
arrangements;
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its knowledge and analysis of the current competitive and
regulatory environment for financial institutions generally,
BOEs current competitive position and the other potential
strategic alternatives available to BOE, including remaining
independent, accelerating branch growth, making acquisitions,
developing or acquiring non-bank businesses and selling BOE to a
larger financial institution;
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the skills and experience offered by the Community Bankers
management;
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its review of Community Bankers financial condition and
TransCommunitys financial condition, earnings, business
operations and prospects, taking into account the results of
BOEs due diligence investigation of Community Bankers and
TransCommunity, and the anticipated compatibility of management
and shared business philosophy of Community Bankers,
TransCommunity, and BOE;
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the assessment of the likelihood that the merger would be
completed in a timely manner without unacceptable regulatory
conditions or requirements, including that no branch
divestitures would likely be required, and the ability of the
management team to successfully integrate and operate the
business of the surviving corporation after the merger; and
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the fact that the merger will enable BOEs stockholders to
exchange their shares of BOE, in a tax-free transaction, for
registered shares of common stock of a company that will have a
significantly larger pro forma market capitalization.
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The BOE board also considered the risks and potentially negative
factors outlined below, but concluded that the anticipated
benefits of combining with Community Bankers were likely to
outweigh substantially these risks and factors. The risks and
factors included:
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the dilution of ownership rights of BOEs stockholders;
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no special purposes acquisition company transactions have been
completed in the banking industry;
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the risk that Community Bankers may not be able to close the
proposed merger with TransCommunity due to potential stockholder
opposition;
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whether other banks would be attracted to join the franchise;
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the poor earnings history of TransCommunitiy;
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the possibility that the merger and the related integration
process could result in the loss of key employees, in the
disruption of BOEs on-going business, and in the loss of
customers; and
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the risks of the type and nature described under A Warning
about Forward-Looking Statements and Risk Factors.
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Under the merger agreement, each of Community Bankers and BOE
has agreed, except as otherwise contemplated by the merger
agreement or with the prior written consent of the other party,
and to cause its subsidiaries to:
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operate its business only in the usual, regular, and ordinary
course;
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use reasonable efforts to preserve intact its business
organization and assets and maintain its rights and franchises;
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use reasonable efforts to cause its representations and
warranties to be correct at all times;
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in the case of BOE only, use reasonable efforts to provide all
information requested by Community Bankers related to loans or
other transactions made by BOE with a value equal to or
exceeding $250,000;
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in the case of BOE only, consult with Community Bankers prior to
entering into or making any loans or other transactions with a
value equal to or exceeding $500,000; and
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take no action which would (1) adversely affect the ability
of any party to obtain any consents required for the
transactions contemplated by the merger agreement without
imposition of a condition or restriction which, in the
reasonable judgment of the board of directors of Community
Bankers or the board of directors of BOE, would so materially
adversely impact the economic or business benefits of the
transactions contemplated by the merger agreement as to render
inadvisable the consummation of the merger, or
(2) materially adversely affect the ability of either party
to perform its covenants and agreements under the merger
agreement.
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Consummation of Community Bankers merger with BOE is
subject to a number of conditions, including receipt of the
required stockholder approval from both Community Bankers and
BOE stockholders, regulatory (Federal Reserve Board and Virginia
State Corporation Commissions Bureau of Financial
Institutions) approvals, consummation of Community Bankers
merger with TransCommunity, as well as satisfaction of certain
other customary closing conditions. In the case of Community
Bankers, the holders of a majority of the outstanding shares of
Community Bankers common stock entitled to vote at the special
meeting of stockholders at which the merger is considered must
approve the merger.
The merger with TransCommunity is an initial business
combination under Community Bankers certificate of
incorporation and therefore must be completed prior to the
closing of the merger with BOE. As Community Bankers must
dissolve and liquidate if the merger with TransCommunity is not
completed by June 7, 2008, it would not be advisable to
complete the merger with BOE prior to completing the merger with
TransCommunity. As a result, the voting requirement relating to
an initial business combination will not apply to
the vote on the merger with BOE and only the voting requirement
under Delaware law, requiring the affirmative vote of the
holders of a majority of the outstanding shares of Community
Bankers common stock entitled to vote on the merger with
BOE
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(including both shares issued in the initial public offering and
shares issued before the initial public offering), will apply.
If Community Bankers merger with BOE is consummated,
Community Bankers expects to pay quarterly dividends to its
stockholders in an amount not less than the quotient obtained by
dividing $0.22 by the BOE exchange ratio.
Community
Bankers Reasons for the TransCommunity Merger
In reaching its decision to approve the merger agreement and
recommend the merger to its stockholders, the Community Bankers
board of directors reviewed various financial data and due
diligence and evaluation materials and made an independent
determination of fair market value. In addition, in reaching its
decision to approve the merger agreement, the board of directors
considered a number of factors, both positive and negative. It
believes that the non-exhaustive list of factors below strongly
supports its determination to approve the merger agreement and
recommendation that its stockholders adopt the merger agreement.
The positive factors included:
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the markets in which TransCommunity operates;
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the growth prospects associated with TransCommunity;
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the balance sheet
make-up and
product mix, including the loan and deposit mix of
TransCommunity;
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opportunities to grow existing revenue streams and create new
revenue streams associated with TransCommunity;
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the competitive position of TransCommunity within its operating
markets;
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the industry dynamics, including barriers to entry;
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the experience of the TransCommunitys board of directors
and management, including Bruce Nolte, the current president and
chief executive officer of TransCommunity who will become
president and chief executive officer of Community Bankers,
including their recent experience in consolidating
TransCommunitys subsidiary banks charters and
existing non-core business lines;
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acquisition opportunities in the industry;
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the opportunity for further consolidation and cost savings in
the banking industry;
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the valuation of comparable companies;
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the companies similar community banking philosophies;
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the financial results of TransCommunity, including potential for
revenue growth, enhanced operating margins and operating
efficiencies; and
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Keefe, Bruyette & Woods, Inc.s fairness opinion
that the merger is fair to Community Bankers from a financial
point of view.
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Negative factors that Community Bankers board of directors
considered included:
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TransCommunitys poor earnings history;
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the disruption that TransCommunity had experienced with its
management and board of directors;
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the reputational risk that these issues could raise;
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TransCommunitys ability to successfully integrate its
subsidiary banks; and
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whether other banks would be attracted to join the franchise,
although there were and are no plans, arrangements, agreements
or understandings other than Community Bankers proposed
merger with BOE.
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After reviewing all of these factors, the Community Bankers
board of directors unanimously determined that the merger
proposal and the transactions contemplated thereby are in the
best interests of Community Bankers and
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unanimously recommended that Community Bankers
stockholders vote at the annual meeting to adopt the merger
agreement.
In addition, Community Bankers board knew and considered
the financial interests of certain Community Bankers directors
and executives when it approved the merger agreement. These
financial interests are addressed in greater detail under the
heading Certain Benefits of Directors and
Officers of Community Bankers and TransCommunity.
The Community Bankers board of directors believes the merger
is in the best interests of Community Bankers and its
stockholders. The Community Bankers board of directors
recommends that Community Bankers stockholders vote
FOR the approval of the merger proposal and
the consummation of the transactions contemplated thereby.
Satisfaction
of 80% Requirement
Community Bankers represented in its prospectus relating to its
initial public offering that the initial business or businesses
acquired by Community Bankers in its initial business
combination would have a fair market value equal to at least 80%
of Community Bankers net assets at the time of the
transaction. Based on the financial analyses undertaken or
reviewed by Community Bankers board of directors generally
in evaluating and approving the merger agreement, Community
Bankers board of directors determined that the proposed
merger with TransCommunity meets this requirement. Community
Bankers did not seek or receive an independent valuation of the
fair market value of TransCommunity.
In determining whether the fair market value of TransCommunity
exceeds 80% of the net asset value held in trust, Community
Bankers first determined the net asset value of the funds held
in the trust account as of June 30, 2007, the most current
date available prior to entering into the merger agreement. As
of June 30, 2007, Community Bankers net asset value
was $55.7 million (the difference between the funds held in
the trust account of $57.8 million, less the deferred
payments to the underwriters of $2.1 million), 80% of which
was $44.6 million.
The fair market value of the total consideration to be given by
Community Bankers in the merger to TransCommunitys
stockholders is approximately $51.2 million, which is 92%
of Community Bankers net asset value as of June 30,
2007, and which includes $48.3 million for the outstanding
shares of TransCommunity (which is calculated by multiplying the
4,586,741 outstanding shares of TransCommunity by the exchange
ratio of 1.4200 and by $7.42, which is the closing price of
Community Bankers common stock on the day prior to announcement
of the merger) and $2.9 million for the stock options of
TransCommunity (which is calculated by multiplying the 275,275
stock options by 1.4200 and by $7.42). The board of directors of
Community Bankers considered TransCommunitys net loans,
deposits, book value, net income, revenues, prospects, budget,
previous non-recurring costs, historic trading price and peer
group, as well as comparable transactions and the analysis of
Keefe, Bruyette and Woods, Inc. in rendering its fairness
opinion in determining that the merger satisfied the 80%
requirement.
As of December 31, 2007, Community Bankers net asset
value was $56.4 million. Community Bankers does not
anticipate the net asset value of the funds held in the trust
account at the time the merger is completed will be materially
greater than those held in trust as of June 30, 2007.
Experience
of Board of Directors and Management in Performing Financial
Analyses
The Community Bankers board of directors has substantial
experience in evaluating and valuing banks. Gary A. Simanson,
Community Bankers president and chief executive officer,
has been managing director of First Capital Group, L.L.C., an
investment banking advisory firm specializing in bank mergers
and acquisitions, from March 1997 to the present. In such
capacity, Mr. Simanson has both initiated and advised on
bank merger and acquisition transactions around the country and
has spoken nationally on bank mergers and acquisitions. In
addition to serving as managing director of First Capital Group,
Mr. Simanson also served as Senior Vice President
concentrating in bank mergers and acquisitions and capital
markets with FTN Financial Capital Markets, a wholly owned
investment banking and financial services subsidiary of First
Horizon National Corporation (NYSE: FHS) from 1998 to 1999.
Eugene S. Putnam, Jr., Community Bankers chairman of
the board of directors, also has a long history of management in
the banking industry having worked at Crestar Financial
Corporation as senior vice
57
president serving in various capacities with responsibility for
corporate finance, treasury, mergers and acquisition financing,
capital planning, balance sheet management and investor
relations and then at SunTrust after its acquisition of Crestar
as senior vice president and director of investor relations and
corporate communications. From 2001 to 2003, Mr. Putnam was
executive vice president and chief financial officer at Sterling
Bancshares, Inc., a $3.5 billion bank holding company
headquartered in Houston, Texas. Keith Walz has held numerous
positions in the banking and private equity industry, serving in
various capacities with ABN AMRO Capital (USA), and currently
serves as managing partner at Kinsale Capital Partners, a
leveraged buy-out private equity investment firm. Chris Bagley
also has management experience in the banking industry and is
currently chief lending officer at Prosperity Bank, a
wholly-owned subsidiary of Prosperity Bancshares (Nasdaq
PRSP) a $6 billion bank holding company
headquartered in Houston, Texas.
Consequences
to Community Bankers if the Merger Proposal is Not
Approved
If the merger proposal is not approved by either the Community
Bankers stockholders or the TransCommunity stockholders, if 20%
or more of the Community Bankers stockholders properly elect to
convert their shares for cash equal to a pro rata portion of the
Community Bankers trust account, if required regulatory
approvals are denied or delayed or certain other closing
conditions are not met and are not waived, the merger will not
occur. In such an event: (1) the proceeds in the trust
account will be liquidated to holders of shares purchased in
Community Bankers initial public offering and
(2) Community Bankers will be dissolved in accordance with
Community Bankers amended and restated certificate of
incorporation upon stockholder approval of such dissolution and
liquidation.
In addition, if Community Bankers does not effect the merger
with TransCommunity by June 7, 2008, Community Bankers must
dissolve and liquidate. In any liquidation, the funds held in
the trust account, plus any interest earned thereon (less any
taxes due on such interest), together with any remaining net
assets not held in trust, will be distributed pro rata to the
holders of Community Bankers common stock issued in the initial
public offering. Holders of Community Bankers common stock
issued prior to the initial public offering have waived any
right to any liquidation distribution with respect to those
shares.
TransCommunitys
Reasons for the Merger
In reaching its decision to approve the merger agreement and
recommend the merger to its stockholders, the TransCommunity
board of directors relied heavily on a special committee
comprised of three independent directors who have substantial
experience in financial and strategic matters involving public
companies. The board also consulted with TransCommunity
management, engaged legal and financial advisors, reviewed
various financial data, due diligence and evaluation materials,
and made an independent determination that the proposed merger
with Community Bankers was fair to TransCommunitys
stockholders from a financial point of view. The board of
directors considered a number of factors, positive and negative,
in determining whether to recommend that TransCommunitys
stockholders approve the merger agreement. The positive factors
included:
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the premium over the companys prevailing stock price to be
received by TransCommunitys stockholders;
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the value of the consideration TransCommunitys
stockholders will receive relative to the projected book value
and earnings per share of TransCommunity common stock;
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Sandler ONeills opinion that the consideration
TransCommunitys stockholders will receive as a result of
the merger is fair from a financial point of view;
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the fact that TransCommunitys stockholders will receive
shares in a larger company traded on the American Stock
Exchange, which will potentially provide greater liquidity for
TransCommunity stockholders to sell their shares quickly and
efficiently than under the existing OTC Bulletin Board
system;
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the fact that the exchange ratio is fixed in the event that
Community Bankers stock price increases before closing,
but is adjustable in the event that Community Bankers
stock price decreases, thereby affording TransCommunitys
stockholders a combination of upside participation and downside
protection;
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the additional capital to support a larger bank;
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58
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the potential for the combined company to attract merger
candidates that TransCommunity would not be likely to attract on
its own;
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the proposed merger would be a strategic merger of equals in
which the combined companies may achieve a level of growth that
neither company could achieve on its own;
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the financial terms of recent business combinations in the
financial services industry and a comparison of the multiples of
selected combinations with the terms of the merger;
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the skills and experience offered by the Community Bankers
management and board of directors;
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the anticipated compatibility of management and business
philosophy of Community Bankers and TransCommunity;
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the projected positive value of Community Bankers shares
offered to TransCommunitys stockholders in relation to the
estimated market value, book value, and earnings per share of
TransCommunity common stock;
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the competitive and regulatory environment for financial
institutions generally; and
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the fact that the merger will enable TransCommunitys
stockholders to exchange their shares of common stock in a
tax-free transaction.
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The negative factors included:
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the dilution of ownership rights of TransCommunitys
stockholders;
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the reduction in the level of control that TransCommunitys
stockholders would have in the surviving corporation;
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no special purposes acquisition company transactions have been
completed in the banking industry;
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TransCommunity was enjoying progress with its strategic plan,
including recently consolidating its subsidiary banks into one
subsidiary; and
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potential stockholder opposition to the merger.
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After reviewing all of these factors, the TransCommunity board
of directors unanimously determined that the merger proposal and
the transactions contemplated thereby are in the best interests
of TransCommunity and unanimously recommended that
TransCommunitys stockholders vote at the special meeting
to approve the merger proposal.
TransCommunitys board of directors knew and considered the
financial interests of certain TransCommunity directors and
executives when it approved the merger agreement. These
financial interests are addressed in greater detail under the
heading Certain Benefits of Directors and
Officers of Community Bankers and TransCommunity.
The TransCommunity board of directors believes the merger is
in the best interests of TransCommunity and its stockholders.
The TransCommunity board of directors recommends that
TransCommunitys stockholders vote FOR
the approval of the merger proposal and the consummation of the
transactions contemplated thereby.
Opinion
of Community Bankers Financial Advisor
On September 5, 2007, Community Bankers executed an
engagement agreement with Keefe,
Bruyette & Woods, Inc. Keefe,
Bruyette & Woods, Inc.s engagement encompassed
assisting Community Bankers in analyzing, structuring,
negotiating and effecting a transaction with TransCommunity.
Community Bankers selected Keefe, Bruyette & Woods,
Inc. because Keefe, Bruyette & Woods, Inc. is a
nationally recognized investment-banking firm with substantial
experience in transactions similar to the merger and is familiar
with Community Bankers and its business. Community Bankers had
previously engaged Keefe, Bruyette & Woods, Inc. on
January 10, 2007, to advise on preliminary discussions
Community Bankers had held earlier with BOE concerning the
possibility of Community Bankers and BOE entering into a
business combination. As part of its
59
investment banking business, Keefe, Bruyette & Woods,
Inc. is continually engaged in the valuation of financial
businesses and their securities in connection with mergers and
acquisitions.
On September 5, 2007, the Community Bankers board of
directors held a meeting to evaluate the proposed merger of
TransCommunity with and into Community Bankers. At this meeting,
Keefe, Bruyette & Woods, Inc. reviewed the financial
aspects of the proposed merger and rendered a written opinion as
of such date to Community Bankers as to the fairness to
Community Bankers, from a financial point of view, of the
consideration to be paid in the merger.
The text of Keefe, Bruyette & Woods, Inc.s
written opinion is attached as Appendix D to this document
and is incorporated herein by reference. Community Bankers
stockholders are urged to read the opinion in its entirety for a
description of the procedures followed, assumptions made,
matters considered, and qualifications and limitations on the
review undertaken by Keefe, Bruyette & Woods, Inc.
Keefe, Bruyette & Woods, Inc.s opinion speaks
only as of the date of the opinion. The opinion is directed to
the Community Bankers board of directors and addresses only the
fairness, from a financial point of view, of the consideration
to be paid in the merger. It does not address the underlying
business decision to proceed with the merger and does not
constitute a recommendation to any Community Bankers stockholder
as to how the stockholder should vote at the Community Bankers
special meeting on the merger or any related matter.
In rendering its opinion, Keefe, Bruyette & Woods,
Inc.:
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reviewed, among other things,
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the merger agreement,
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Annual Reports to stockholders and Annual Reports on
Form 10-K
of TransCommunity,
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Quarterly Reports on
Form 10-Q
of TransCommunity,
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Annual Reports on
Form 10-K
of Community Bankers, and
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Quarterly Reports on
Form 10-Q
of Community Bankers;
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held discussions with members of senior management of Community
Bankers and TransCommunity regarding,
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past and current business operations,
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regulatory relationships,
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financial condition, and
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future prospects of the respective companies;
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reviewed the market prices, valuation multiples, publicly
reported financial condition and results of operations for
TransCommunity and compared them with those of certain publicly
traded companies that Keefe, Bruyette & Woods, Inc.
deemed to be relevant;
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compared the proposed financial terms of the merger with the
financial terms of certain other transactions that Keefe,
Bruyette & Woods, Inc. deemed to be relevant;
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evaluated the potential pro forma impact of the merger on
Community Bankers, and
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performed other studies and analyses that it considered
appropriate.
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In conducting its review and arriving at its opinion, Keefe,
Bruyette & Woods, Inc. relied upon and assumed the
accuracy and completeness of all of the financial and other
information provided to or otherwise made available to Keefe,
Bruyette & Woods, Inc. or that was discussed with, or
reviewed by or for Keefe, Bruyette & Woods, Inc., or
that was publicly available. Keefe, Bruyette & Woods,
Inc. did not attempt, or assume any responsibility, to verify
such information independently. Keefe, Bruyette &
Woods, Inc. relied upon the management of TransCommunity and
Community Bankers as to the reasonableness and achievability of
the financial and operating forecasts and projections, and
assumptions and bases for those projections, provided to Keefe,
Bruyette & Woods, Inc. Keefe, Bruyette &
Woods, Inc. assumed, without independent verification, that the
aggregate allowances for loan and lease
60
losses for TransCommunity are adequate to cover those losses.
Keefe, Bruyette & Woods, Inc. did not make or obtain
any evaluations or appraisals of any assets or liabilities of
TransCommunity or Community Bankers, nor did Keefe,
Bruyette & Woods, Inc. examine or review individual
credit files.
For purposes of rendering its opinion, Keefe,
Bruyette & Woods, Inc. assumed that, in all respects
material to its analyses:
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the merger will be completed substantially in accordance with
the terms set forth in the merger agreement;
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the representations and warranties of each party in the merger
agreement and in all related documents and instruments referred
to in the merger agreement are true and correct;
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each party to the merger agreement and all related documents
will perform all of the covenants and agreements required to be
performed by such party under such documents;
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all conditions to the completion of the merger will be satisfied
without any material waivers; and
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in the course of obtaining the necessary regulatory,
contractual, or other consents or approvals for the merger, no
restrictions, including any divestiture requirements,
termination or other payments or amendments or modifications
that may be imposed, will have a material adverse effect on the
future results of operations or financial condition of the
combined entity or the contemplated benefits of the merger,
including the cost savings, revenue enhancements and related
expenses expected to result from the merger.
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Keefe, Bruyette & Woods, Inc. further assumed that the
merger will be accounted for as a purchase transaction under
generally accepted accounting principles, and that the merger
will qualify as a tax-free reorganization for United States
federal income tax purposes. Keefe, Bruyette & Woods,
Inc.s opinion is not an expression of an opinion as to the
prices at which shares of TransCommunity common stock or
Community Bankers common stock will trade since the announcement
of the proposed merger or the actual value of the Community
Bankers common shares when issued pursuant to the merger, or the
prices at which the Community Bankers common shares will trade
following the completion of the merger.
In performing its analyses, Keefe, Bruyette & Woods,
Inc. made numerous assumptions with respect to industry
performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the
control of Keefe, Bruyette & Woods, Inc.,
TransCommunity and Community Bankers. Any estimates contained in
the analyses performed by Keefe, Bruyette & Woods,
Inc. are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than
suggested by these analyses. Additionally, estimates of the
value of businesses or securities do not purport to be
appraisals or to reflect the prices at which such businesses or
securities might actually be sold. Accordingly, these analyses
and estimates are inherently subject to substantial uncertainty.
In addition, the Keefe, Bruyette & Woods, Inc. opinion
was among several factors taken into consideration by the
Community Bankers board in making its determination to approve
the merger agreement and the merger. Consequently, the analyses
described below should not be viewed as determinative of the
decision of the Community Bankers board or management of
Community Bankers with respect to the fairness of the
consideration to be paid in the merger.
Summary
of Analyses by Keefe, Bruyette & Woods,
Inc.
The following is a summary of the material analyses presented by
Keefe, Bruyette & Woods, Inc. to the Community Bankers
board, in connection with its written fairness opinion. The
summary is not a complete description of the analyses underlying
the Keefe, Bruyette & Woods, Inc. opinion or the
presentation made by Keefe, Bruyette & Woods, Inc. to
the Community Bankers board, but summarizes the material
analyses performed and presented in connection with such
opinion. The preparation of a fairness opinion is a complex
analytic process involving various determinations as to the most
appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances.
Therefore, a fairness opinion is not readily susceptible to
partial analysis or summary description. In arriving at its
opinion, Keefe, Bruyette & Woods, Inc. did not
attribute any particular weight to any analysis or factor that
it considered, but rather made qualitative judgments as to the
significance and relevance of each analysis and factor. The
financial analyses summarized below include information
presented in tabular format. Accordingly, Keefe,
Bruyette & Woods, Inc. believes that its analyses and
the summary of its analyses must be considered as a whole and
that selecting portions of its analyses and factors or focusing
on the information presented below in tabular format, without
considering all analyses and factors or the
61
full narrative description of the financial analyses, including
the methodologies and assumptions underlying the analyses, could
create a misleading or incomplete view of the processes
underlying its analyses and opinion. The tables alone do not
provide a complete description of the financial analyses.
Summary of Proposal. TransCommunity
stockholders will receive 1.4200 shares of Community
Bankers common stock. Based on Community Bankers closing
stock price on September 4, 2007 of $7.42, the exchange
ratio represented a value of $10.54 per share to TransCommunity.
Selected Peer Group Analysis. Using publicly
available information, Keefe, Bruyette & Woods, Inc.
compared the financial performance, financial condition, and
market performance of TransCommunity to the following 22
depository institutions that Keefe, Bruyette & Woods,
Inc. considered comparable to TransCommunity:
Companies
included in TransCommunitys peer group:
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Virginia National Bank;
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Citizens Bancorp of Virginia, Inc.;
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First Capital Bancorp, Inc.;
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BOE Financial Services of Virginia, Inc.;
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Botetourt Bankshares, Inc.;
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Pinnacle Bankshares Corporation;
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Shore Financial Corporation;
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Bank of James Financial Group, Inc.;
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Heritage Bankshares, Inc.;
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Cardinal Bankshares Corporation;
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United Financial Banking Companies, Inc.;
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MainStreet BankShares, Inc.;
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Virginia Community Bankshares, Inc.;
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Pioneer Bankshares, Inc.;
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Bank of Virginia;
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Virginia Bank Bankshares, Incorporated;
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Bank of McKenney;
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Farmers Bank of Appomattox;
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SuffolkFirst Bank
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Citizens Community Bank
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MainStreet Bank
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River City Bank
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To perform this analysis, Keefe, Bruyette & Woods,
Inc. used financial information as of the three month period
ended June 30, 2007 if available, otherwise March 31,
2007 and for the three or twelve month period ended
June 30, 2007 if available, otherwise March 31, 2007.
Market price information was as of August 31, 2007. Certain
financial data prepared by Keefe, Bruyette & Woods,
Inc., and as referenced in the tables presented below may not
correspond to the data presented in TransCommunitys
historical financial statements, or to the data prepared by
Sandler ONeill presented under the section Opinion
of TransCommunitys Financial Advisor, as a result of
the
62
different periods, assumptions and methods used by Keefe,
Bruyette & Woods, Inc. to compute the financial data
presented.
Keefe, Bruyette & Woods, Inc.s analysis showed
the following concerning TransCommunitys financial
performance:
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TransCommunity
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TransCommunity
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TransCommunity
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Financial Performance
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Peer Group
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Peer Group
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Peer Group
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Measures:
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TransCommunity
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Median
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Maximum
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Minimum
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Latest Twelve Months Core Return on Average Equity
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(1.30
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)%
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9.64
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%
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14.10
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%
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(3.01
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)%
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Latest Twelve Months Core Return on Average Assets
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(0.20
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)%
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0.92
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%
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1.89
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%
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(0.51
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)%
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Most Recent Quarter Net Interest Margin
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|
5.35
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%
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4.08
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%
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5.47
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%
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|
2.90
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%
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Latest Twelve Months Efficiency Ratio
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|
93
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%
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|
|
69
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%
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101
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%
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|
54
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%
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Keefe, Bruyette & Woods, Inc.s analysis showed
the following concerning TransCommunitys financial
condition:
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TransCommunity
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TransCommunity
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TransCommunity
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Peer Group
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Peer Group
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Peer Group
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|
Financial Condition Measures:
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TransCommunity
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Median
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Maximum
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Minimum
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Tangible Equity / Tangible
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Assets
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|
13.98
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%
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|
10.94
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%
|
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|
16.01
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%
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|
9.12
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%
|
Loans / Deposits
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|
95
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%
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|
|
89
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%
|
|
|
105
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%
|
|
|
66
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%
|
Latest Twelve Months
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|
|
|
|
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|
|
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|
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|
Net Charge-offs / Avg. Loans
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|
0.35
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%
|
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|
0.02
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%
|
|
|
0.39
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%
|
|
|
(0.17
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)%
|
Loan Loss Reserves / Loans
|
|
|
117
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%
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|
|
106
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%
|
|
|
188
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%
|
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|
81
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%
|
Keefe, Bruyette & Woods, Inc.s analysis showed
the following concerning TransCommunitys market
performance:
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|
|
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|
|
TransCommunity
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|
|
TransCommunity
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|
|
TransCommunity
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|
|
|
|
|
|
Peer Group
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|
Peer Group
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|
Peer Group
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|
Market Performance Measures:
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TransCommunity
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Median
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Maximum
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Minimum
|
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|
Price to earnings multiple, based on Last Twelve Months
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|
NMx
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|
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|
16.3
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x
|
|
|
95.2
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x
|
|
|
10.1
|
x
|
GAAP estimated earnings
|
|
|
|
|
|
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|
|
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|
|
|
|
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|
Price to book multiple value
|
|
|
1.17
|
x
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|
1.23
|
x
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|
|
2.02
|
x
|
|
|
0.89
|
x
|
Price to tangible book multiple value
|
|
|
1.17
|
x
|
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|
1.23
|
x
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|
2.02
|
x
|
|
|
0.89
|
x
|
Selected Transaction Analysis. Keefe,
Bruyette & Woods, Inc. reviewed publicly available
information related to selected comparably sized acquisitions of
bank holding companies announced after January 1, 2005,
with
63
headquarters in Virginia, Maryland and North Carolina with
aggregate transaction values between $25 million and
$100 million. The transactions included in the group were:
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Acquiror:
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Acquired Company:
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|
Yadkin Valley Financial Corporation
|
|
Cardinal State Bank
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Bank of Carolinas Corporation
|
|
Randolph Bank & Trust Company
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Bradford Bancorp, Inc.
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|
Patapsco Bancorp, Inc.
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Gateway Financial Holdings, Inc.
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|
Bank of Richmond, N.A.
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Sandy Spring Bancorp, Inc.
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|
CN Bancorp, Inc.
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Sandy Spring Bancorp, Inc.
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|
Potomac Bank of Virginia
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Crescent Financial Corporation
|
|
Port City Capital Bank
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BNC Bancorp
|
|
SterlingSouth Bank & Trust Company
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Premier Community Bankshares, Inc.
|
|
Albemarle First Bank
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Union Bankshares Corporation
|
|
Prosperity Bank & Trust Company
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American National Bankshares, Inc.
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|
Community First Financial Corporation
|
Citizens South Banking Corporation
|
|
Trinity Bank
|
Transaction multiples for the merger were derived from an offer
price of $10.54 per share for TransCommunity. For each precedent
transaction, Keefe, Bruyette & Woods, Inc. derived and
compared, among other things, the implied ratio of price per
common share paid for the acquired company to:
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|
|
the earnings per share of the acquired company for the latest
12 months of results publicly available prior to the time
the transaction was announced;
|
|
|
|
book value per share of the acquired company based on the latest
publicly available financial statements of the company available
prior to the announcement of the acquisition;
|
|
|
|
tangible book value per share of the acquired company based on
the latest publicly available financial statements of the
company available prior to the announcement of the acquisition;
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|
|
additionally, for each precedent transaction, Keefe,
Bruyette & Woods, Inc. derived and compared the
premium paid in aggregate consideration over tangible book value
to core deposits. Core deposits were defined as total deposits
less jumbo CDs (CDs with balances greater than
$100,000); and
|
|
|
|
market premium based on the latest closing price
1-day prior
to the announcement of the acquisition.
|
The results of the analysis are set forth in the following table.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
|
|
|
Comparable
|
|
|
Comparable
|
|
|
|
Community Bankers/
|
|
|
Transactions
|
|
|
Transactions
|
|
|
Transactions
|
|
|
|
TransCommunity
|
|
|
Median
|
|
|
Maximum
|
|
|
Minimum
|
|
|
Price / Trailing 12 months earnings per share
|
|
|
NM
|
x
|
|
|
30.1
|
x
|
|
|
41.2
|
x
|
|
|
17.4
|
x
|
Price / Book value
|
|
|
1.61
|
x
|
|
|
2.33
|
x
|
|
|
3.36
|
x
|
|
|
1.77
|
x
|
Price / Tangible Book value
|
|
|
1.61
|
x
|
|
|
2.45
|
x
|
|
|
3.36
|
x
|
|
|
1.82
|
x
|
Core Deposit Premium
|
|
|
13.9
|
%
|
|
|
20.2
|
%
|
|
|
32.8
|
%
|
|
|
9.3
|
%
|
Market Premium
|
|
|
36.0
|
%
|
|
|
37.6
|
%
|
|
|
87.0
|
%
|
|
|
21.9
|
%
|
No company or transaction used as a comparison in the above
analysis is identical to Community Bankers, TransCommunity or
the proposed merger. Accordingly, an analysis of these results
is not mathematical. Rather, it involves complex considerations
and judgments concerning differences in financial and operating
characteristics of the companies.
Discounted Cash Flow Analysis. Keefe,
Bruyette & Woods, Inc. performed a discounted cash
flow analysis to estimate a range for the implied equity value
per share of TransCommunity common stock. In this analysis,
Keefe, Bruyette & Woods, Inc. assumed discount rates
ranging from 11.0% to 15.0% to derive (1) the present value
of the estimated free cash flows that TransCommunity could
generate over the period beginning January 2008 and
64
ending in December 2012, including certain expenses forecasted
as a result of the merger, and (2) the present value of
TransCommunitys terminal value at the end of 2013.
Terminal values for TransCommunity were calculated based on a
range of 15.0x to 18.0x estimated 2013 earnings per share. In
performing this analysis, Keefe, Bruyette & Woods,
Inc. used TransCommunitys managements estimates for
2007 through 2010. Based on managements estimates, Keefe,
Bruyette & Woods, Inc. assumed 15% earnings per share
growth for 2011 and 2012, with 10% growth thereafter. Certain
data was adjusted to account for certain restructuring charges
anticipated by management to result from the merger. Keefe,
Bruyette & Woods, Inc. assumed that TransCommunity
would maintain a tangible equity / tangible asset
ratio of 7.00% and would retain sufficient earnings to maintain
that level. Any earnings in excess of what would need to be
retained represented dividendable cash flows for TransCommunity.
Based on these assumptions, Keefe, Bruyette & Woods,
Inc. derived a range of implied equity values per share of
TransCommunity common stock of $8.76 to $11.48.
The discounted cash flow analysis is a widely used valuation
methodology, but the results of such methodology are highly
dependent on the assumptions that must be made, including asset
and earnings growth rates, terminal values, dividend payout
rates, and discount rates. The analysis did not purport to be
indicative of the actual values or expected values of
TransCommunity common stock.
Forecasted Pro Forma Financial
Analysis. Keefe, Bruyette & Woods, Inc.
analyzed the estimated financial impact of the merger on
Community Bankers 2008 and 2009 estimated earnings per
share. For Community Bankers, Keefe, Bruyette & Woods,
Inc. used managements estimates of earnings per share for
2008 and grew those earnings by 5% for 2009. For TransCommunity,
Keefe, Bruyette & Woods, Inc. used managements
estimates for 2008 and 2009, which included total revenue of
$13.1 million and $15.3 million (net interest income
plus non-interest income) for 2008 and 2009, respectively, and
net income before taxes of $2.1 million and
$3.6 million for 2008 and 2009, respectively. Keefe,
Bruyette & Woods, Inc. applied a 35% normalized tax
rate to net income before taxes which equated to net income of
$1.3 million and $2.3 million, or earnings per share
of $0.29 and $0.51 for 2008 and 2009, respectively. In addition,
Keefe, Bruyette & Woods, Inc. assumed that the merger
will result in no cost savings, based upon managements
estimates. Based on its analysis, Keefe, Bruyette &
Woods, Inc. determined that the merger would be accretive to
Community Bankers earnings per share in 2009.
Furthermore, the analysis indicated that Community Bankers
Leverage Ratio, Tier 1 Risk-Based Capital Ratio and Total
Risk Based Capital Ratio would all remain above regulatory
minimums for well capitalized institutions. This analysis was
based on internal projections provided by Community
Bankers and TransCommunitys senior management teams.
For all of the above analysis, the actual results achieved by
Community Bankers following the merger may vary from the
projected results, and the variations may be material.
Other Analyses. Keefe, Bruyette &
Woods, Inc. reviewed the relative financial and market
performance of TransCommunity to a variety of relevant industry
peer groups and indices. Keefe, Bruyette & Woods, Inc.
also reviewed earnings estimates, balance sheet composition,
historical stock performance and other financial data for
TransCommunity.
Community Bankers board has retained Keefe,
Bruyette & Woods, Inc. as an independent contractor to
act as financial advisor to Community Bankers regarding the
merger. As part of its investment banking business, Keefe,
Bruyette & Woods, Inc. is continually engaged in the
valuation of banking businesses and their securities in
connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. As
specialists in the securities of banking companies, Keefe,
Bruyette & Woods, Inc. has experience in, and
knowledge of, the valuation of banking enterprises. In the
ordinary course of its business as a broker-dealer, Keefe,
Bruyette & Woods, Inc. may, from time to time,
purchase securities from, and sell securities to, Community
Bankers and TransCommunity. As a market maker in securities
Keefe, Bruyette & Woods, Inc. may from time to time
have a long or short position in, and buy or sell, debt or
equity securities of Community Bankers and TransCommunity for
Keefe, Bruyette & Woods, Inc.s own account and
for the accounts of its customers.
Community Bankers and Keefe, Bruyette & Woods, Inc.
have entered into an agreement relating to the services to be
provided by Keefe, Bruyette & Woods, Inc. in
connection with the merger. Community Bankers paid to Keefe,
Bruyette & Woods, Inc. at the time Keefe,
Bruyette & Woods, Inc. issued the fairness opinion, a
cash fee of
65
$125,000 and has agreed to pay to Keefe, Bruyette &
Woods, Inc. an additional cash fee of $375,000 at the time of
and contingent upon closing. Pursuant to the Keefe,
Bruyette & Woods, Inc. engagement agreement, Community
Bankers also agreed to reimburse Keefe, Bruyette &
Woods, Inc. for reasonable out-of-pocket expenses and
disbursements incurred in connection with its retention and to
indemnify it against certain liabilities, including liabilities
under the federal securities laws.
Separately, Community Bankers and Keefe, Bruyette &
Woods, Inc. have entered into an agreement relating to the
services to be provided by Keefe, Bruyette & Woods,
Inc. in connection with Community Bankers proposed merger
with BOE. Community Bankers paid to Keefe, Bruyette &
Woods, Inc. at the time Keefe, Bruyette & Woods, Inc.
issued the fairness opinion in connection with the proposed
merger with BOE, a cash fee of $125,000 and has agreed to pay to
Keefe, Bruyette & Woods, Inc. an additional cash fee
of $375,000 at the time of and contingent upon the closing of
the proposed merger with BOE. Pursuant to the Keefe,
Bruyette & Woods, Inc. engagement agreement, Community
Bankers also agreed to reimburse Keefe, Bruyette &
Woods, Inc. for reasonable out-of-pocket expenses and
disbursements incurred in connection with its retention and to
indemnify it against certain liabilities, including liabilities
under the federal securities laws.
Opinion
of TransCommunitys Financial Advisor
By letter dated August 7, 2007, TransCommunity retained
Sandler ONeill & Partners, LP to act as its
financial advisor in connection with a possible business
combination with another financial institution. Sandler
ONeill is a nationally recognized investment banking firm
whose principal business specialty is financial institutions. In
the ordinary course of its investment banking business, Sandler
ONeill is regularly engaged in the valuation of financial
institutions and their securities in connection with mergers and
acquisitions and other corporate transactions.
Sandler ONeill acted as financial advisor to
TransCommunity in connection with the proposed merger and
participated in certain of the negotiations leading to the
execution of the merger agreement. At the December 12, 2007
meeting at which TransCommunitys special committee
considered and approved the merger agreement, Sandler
ONeill delivered to the special committee its oral
opinion, subsequently confirmed in writing that, as of such
date, the consideration to be received in the transaction was
fair to TransCommunitys stockholders from a financial
point of view, including the effects of Community Bankers
transaction with BOE (the BOE Transaction) on the
combined entity. Sandler ONeill also advised the board
that their December 12, 2007 fairness opinion would
supercede the fairness opinion rendered by Sandler ONeill
on September 5, 2007.
The full text of Sandler ONeills opinion is
attached as Appendix E to this proxy statement/prospectus.
The opinion outlines the procedures followed, assumptions made,
matters considered and qualifications and limitations on the
review undertaken by Sandler ONeill in rendering its
opinion. The description of the opinion set forth below is
qualified in its entirety by reference to the opinion.
TransCommunity stockholders are urged to read the entire opinion
carefully in connection with their consideration of the proposed
merger.
Sandler ONeills opinion speaks only as of the
date of the opinion. The opinion was directed to the
TransCommunity board of directors and is directed only to the
fairness of the merger consideration to TransCommunity
stockholders from a financial point of view. It does not address
the underlying business decision of TransCommunity to engage in
the merger or any other aspect of the merger and is not a
recommendation to any TransCommunity stockholder as to how such
stockholder should vote at the special meeting with respect to
the merger or any other matter.
In connection with rendering its December 12, 2007 opinion,
Sandler ONeill reviewed and considered, among other things:
|
|
|
|
|
the merger agreement;
|
|
|
|
certain publicly available financial statements and other
historical financial information of TransCommunity that Sandler
ONeill deemed relevant;
|
|
|
|
certain publicly available financial statements and other
historical financial information of Community Bankers that
Sandler ONeill deemed relevant;
|
|
|
|
an internal budget for TransCommunity for the year ending
December 31, 2007 prepared by and reviewed with management
of TransCommunity and management guidance on growth and
performance thereafter;
|
66
|
|
|
|
|
the pro forma financial impact of the merger on Community
Bankers based on assumptions relating to transaction expenses,
purchase accounting adjustments and cost savings determined by
the senior managements of TransCommunity and Community Bankers;
|
|
|
|
the financial impact of BOE Transaction on the combined entities
as discussed with the senior management of Community Bankers;
|
|
|
|
publicly reported historical price and trading activity for the
common stock of TransCommunity and Community Bankers, including
a comparison of certain financial and stock market information
for TransCommunity with similar publicly available information
for certain other companies the securities of which are publicly
traded;
|
|
|
|
to the extent publicly available, the financial terms of certain
recent business combinations in the commercial banking industry;
|
|
|
|
the current market environment generally and the banking
environment in particular; and
|
|
|
|
such other information, financial studies, analyses and
investigations and financial, economic and market criteria as we
considered relevant.
|
Sandler ONeill also discussed with certain members of
senior management of TransCommunity the business, financial
condition, results of operations and prospects of TransCommunity.
In performing its reviews and analyses and in rendering its
opinion, Sandler ONeill assumed and relied upon the
accuracy and completeness of all the financial information,
analyses and other information that was publicly available or
otherwise provided to Sandler ONeill by TransCommunity,
including any information related to the BOE Transaction, and
further relied on the assurances of management of TransCommunity
that they were not aware of any facts or circumstances that
would make such information inaccurate or misleading. Sandler
ONeill was not asked to and did not independently verify
the accuracy or completeness of any of such information and they
did not assume any responsibility or liability for the accuracy
or completeness of any of such information. Sandler ONeill
did not make an independent evaluation or appraisal of the
assets, the collateral securing assets or the liabilities,
contingent or otherwise, of TransCommunity or Community Bankers
or any of their respective subsidiaries, or the collectibility
of any such assets, nor was it furnished with any such
evaluations or appraisals. Sandler ONeill is not an expert
in the evaluation of allowances for loan losses and it did not
make an independent evaluation of the adequacy of the allowance
for loan losses of TransCommunity, nor did it review any
individual credit files relating to TransCommunity. With
TransCommunitys consent, Sandler ONeill assumed that
the respective allowances for loan losses for TransCommunity
were adequate to cover such losses and for the combined company.
With respect to the internal budget and management guidance for
TransCommunity and the projections of transaction costs,
purchase accounting adjustments and expected cost savings
prepared by
and/or
reviewed with the managements of TransCommunity and Community
Bankers and used by Sandler ONeill in its analyses,
TransCommunitys and Community Bankers management
confirmed to Sandler ONeill that they reflected the best
currently available estimates and judgments of management of the
future financial performance of TransCommunity and Community
Bankers and Sandler ONeill assumed that such performance
would be achieved. Sandler ONeill expresses no opinion as
to the budget it received or the guidance provided by management
and estimates or the assumptions on which they are based.
Sandler ONeill also assumed that there has been no
material change in TransCommunitys and Community
Bankers assets, financial condition, results of
operations, business or prospects since the date of the most
recent financial statements made available to Sandler
ONeill. Sandler ONeill did not express any opinion
as to the financial terms or conditions of Community
Bankers merger with BOE except as to how such financial
terms and conditions relate to the merger.
Sandler ONeills opinion was necessarily based upon
market, economic and other conditions as they existed on, and
could be evaluated as of, the date of its opinion. Sandler
ONeill assumed, in all respects material to its analysis,
that all of the representations and warranties contained in the
merger agreement and all related agreements are true and
correct, that each party to such agreements will perform all of
the covenants required to be performed by such party under such
agreements and that the conditions precedent in the merger
agreement are not waived. Sandler ONeill also assumed,
with TransCommunitys consent, that there has been no
material change in
67
TransCommunitys and Community Bankers assets,
financial condition, results of operations, business or
prospects since the date of the last financial statements made
available to it that TransCommunity and Community Bankers will
remain as going concerns for all periods relevant to its
analyses, and that the merger will qualify as a tax-free
reorganization for federal income tax purposes. Finally, with
TransCommunitys consent, Sandler ONeill relied upon
the advice that TransCommunity received from its legal,
accounting and tax advisors as to all legal, accounting and tax
matters relating to the merger and the other transactions
contemplated by the agreement.
In rendering its December 12, 2007 opinion, Sandler
ONeill performed a variety of financial analyses. The
following is a summary of the material analyses performed by
Sandler ONeill, but is not a complete description of all
the analyses underlying Sandler ONeills opinion. The
summary includes information presented in tabular format. In
order to fully understand the financial analyses, these tables
must be read together with the accompanying text. The tables
alone do not constitute a complete description of the financial
analyses. The preparation of a fairness opinion is a complex
process involving subjective judgments as to the most
appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances.
The process, therefore, is not necessarily susceptible to a
partial analysis or summary description. Sandler ONeill
believes that its analyses must be considered as a whole and
that selecting portions of the factors and analyses considered
without considering all factors and analyses, or attempting to
ascribe relative weights to some or all such factors and
analyses, could create an incomplete view of the evaluation
process underlying its opinion. Also, no company included in
Sandler ONeills comparative analyses described below
is identical to TransCommunity or Community Bankers and no
transaction is identical to the merger. Accordingly, an analysis
of comparable companies or transactions involves complex
considerations and judgments concerning differences in financial
and operating characteristics of the companies and other factors
that could affect the public trading values or merger
transaction values, as the case may be, of TransCommunity or
Community Bankers and the companies to which they are being
compared.
In performing its analyses, Sandler ONeill also made
numerous assumptions with respect to industry performance,
business and economic conditions and various other matters, many
of which cannot be predicted and are beyond the control of
TransCommunity, Community Bankers and Sandler ONeill. The
analyses performed by Sandler ONeill are not necessarily
indicative of actual values or future results, which may be
significantly more or less favorable than suggested by such
analyses. Sandler ONeill prepared its analyses solely for
purposes of rendering its opinion and provided such analyses to
TransCommunity at its December 12, 2007 meeting. Estimates
on the values of companies do not purport to be appraisals or
necessarily reflect the prices at which companies or their
securities may actually be sold. Such estimates are inherently
subject to uncertainty and actual values may be materially
different. Accordingly, Sandler ONeills analyses do
not necessarily reflect the value of TransCommunity common stock
or Community Bankers common stock or the prices at which
TransCommunity or Community Bankers common stock may be sold at
any time.
Summary of Proposal. Sandler ONeill
reviewed the financial terms of the proposed transaction. Based
upon the closing price of Community Bankers common stock on
December 10, 2007 of $7.42 per share, a fixed exchange
ratio of 1.4200 shares of Community Bankers stock for each
share of TransCommunity common stock, or a fixed price of
$10.536 for each share of TransCommunity common stock, and the
exchange of 100% of TransCommunitys shares into shares of
Community Bankers in the merger, and based upon per-share
financial information for TransCommunity for the twelve months
ended September 30, 2007. Sandler ONeill calculated
the following ratios:
|
|
|
|
|
|
|
Transaction
|
|
|
|
Ratios(1)
|
|
|
Transaction value/Estimated Forward Four Quarter Earnings Per
Share
|
|
|
36.8
|
x
|
Transaction value/Book value per share
|
|
|
161
|
%
|
Transaction value/Tangible book value per share
|
|
|
161
|
%
|
Tangible book premium/Core deposits(2)
|
|
|
13.3
|
%
|
|
|
|
(1) |
|
Based upon the closing price of Community Bankers common stock
on December 10, 2007 of $7.42, a total per share
consideration of $10.536 will be exchanged for all of
TransCommunitys shares. |
|
(2) |
|
Assumes TransCommunitys total core deposits are
$134 million. Excludes CDs greater than $100,000. |
68
The aggregate offer value was approximately $48.3 million,
based upon 4,586,741 shares of TransCommunity common stock
outstanding and including the intrinsic value of options to
purchase an aggregate of 289,625 shares with a weighted
average strike price of $9.97 per share. Sandler ONeill
noted that the transaction value represented a 52.7% premium
over the December 10, 2007 closing value of TransCommunity
common stock.
In addition to the financial terms of the proposed transaction
ratios, Sandler ONeill reviewed the effect of a change in
Community Bankers stock price to the common stock
consideration paid to TransCommunity. Applying a range of
Community Bankers stock prices of $5.94 to $8.90, it was
noted that the total per share consideration would range from
$10.536 to $12.644. This per share consideration range results
in an aggregate transaction value range of $48.6 million to
$58.8 million, based upon 4,586,741 shares of
TransCommunity common stock outstanding and including the
intrinsic value of options to purchase an aggregate of
289,625 shares with a weighted average strike price of
$9.97 per share. Sandler ONeill calculated the following
transaction values and transaction ratios:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price/
|
|
Forward Four
|
|
|
Buyers
|
|
Change
|
|
|
|
Purchase
|
|
Value of
|
|
Value of
|
|
Aggregate
|
|
Tangible
|
|
Quarter
|
|
Premium to
|
Stock
|
|
in Stock
|
|
Exchange
|
|
Price per
|
|
Shares
|
|
Options
|
|
Deal
|
|
Book
|
|
Earnings per
|
|
Market
|
Price
|
|
Price (%)
|
|
Ratio
|
|
Share ($)
|
|
Received ($000)
|
|
($mm)
|
|
Value ($mm)
|
|
Value (%)
|
|
Share (x)
|
|
(%)
|
|
$
|
8.90
|
|
|
|
20.0
|
%
|
|
|
1.4200
|
|
|
$
|
12.644
|
|
|
|
57,993
|
|
|
|
774
|
|
|
|
58.8
|
|
|
|
193
|
|
|
|
44.2
|
|
|
|
83.2
|
|
$
|
8.72
|
|
|
|
17.5
|
%
|
|
|
1.4200
|
|
|
$
|
12.380
|
|
|
|
56,785
|
|
|
|
698
|
|
|
|
57.5
|
|
|
|
189
|
|
|
|
43.3
|
|
|
|
79.4
|
|
$
|
8.53
|
|
|
|
15.0
|
%
|
|
|
1.4200
|
|
|
$
|
12.117
|
|
|
|
55,577
|
|
|
|
622
|
|
|
|
56.2
|
|
|
|
185
|
|
|
|
42.3
|
|
|
|
75.6
|
|
$
|
8.35
|
|
|
|
12.5
|
%
|
|
|
1.4200
|
|
|
$
|
11.853
|
|
|
|
54,369
|
|
|
|
545
|
|
|
|
54.9
|
|
|
|
181
|
|
|
|
41.4
|
|
|
|
71.8
|
|
$
|
8.16
|
|
|
|
10.0
|
%
|
|
|
1.4200
|
|
|
$
|
11.590
|
|
|
|
53,161
|
|
|
|
469
|
|
|
|
53.6
|
|
|
|
177
|
|
|
|
40.5
|
|
|
|
68.0
|
|
$
|
7.98
|
|
|
|
7.5
|
%
|
|
|
1.4200
|
|
|
$
|
11.327
|
|
|
|
51,952
|
|
|
|
393
|
|
|
|
52.3
|
|
|
|
173
|
|
|
|
39.6
|
|
|
|
64.2
|
|
$
|
7.79
|
|
|
|
5.0
|
%
|
|
|
1.4200
|
|
|
$
|
11.063
|
|
|
|
50,744
|
|
|
|
317
|
|
|
|
51.1
|
|
|
|
169
|
|
|
|
38.7
|
|
|
|
60.3
|
|
$
|
7.61
|
|
|
|
2.5
|
%
|
|
|
1.4200
|
|
|
$
|
10.800
|
|
|
|
49,536
|
|
|
|
172
|
|
|
|
48.6
|
|
|
|
165
|
|
|
|
36.9
|
|
|
|
53.1
|
|
$
|
7.42
|
|
|
|
0.0
|
%
|
|
|
1.4200
|
|
|
$
|
10.536
|
|
|
|
48,326
|
|
|
|
164
|
|
|
|
48.5
|
|
|
|
161
|
|
|
|
36.8
|
|
|
|
52.7
|
|
$
|
7.23
|
|
|
|
(2.5
|
)%
|
|
|
1.4564
|
|
|
$
|
10.536
|
|
|
|
48,393
|
|
|
|
164
|
|
|
|
48.6
|
|
|
|
161
|
|
|
|
36.8
|
|
|
|
52.7
|
|
$
|
7.05
|
|
|
|
(5.0
|
)%
|
|
|
1.4947
|
|
|
$
|
10.536
|
|
|
|
48,393
|
|
|
|
164
|
|
|
|
48.6
|
|
|
|
161
|
|
|
|
36.8
|
|
|
|
52.7
|
|
$
|
6.86
|
|
|
|
|