Pinnacle Bankshares Corporation and Virginia Bank Bankshares, Inc. Push Merger Process Forward with Amendment to Merger Agreement

ALTAVISTA, Va. and DANVILLE, Va., June 09, 2020 (GLOBE NEWSWIRE) -- Pinnacle Bankshares Corporation (OTCQX: PPBN) (“Pinnacle”) and Virginia Bank Bankshares, Inc. (OTC Pink: VABB) (“Virginia Bank”) today jointly announced that they will be moving forward with their planned merger and have entered into an amendment to the initial Agreement and Plan of Reorganization, dated January 21, 2020, between Pinnacle and Virginia Bank (the “Agreement”)

The effects of the COVID-19 pandemic on the companies’ local economies, financial markets and other conditions prompted both companies to modify their respective financial projections and reevaluate the terms of the merger. The amendment to the Agreement was unanimously approved by the boards of directors of both companies today.

Under the terms of the amended Agreement, Virginia Bank shareholders will have the opportunity to elect to receive either $16.00 in cash (the “Cash Consideration”), or 0.5400 shares per share of Pinnacle common stock (the “Stock Consideration”) for each share of Virginia Bank common stock held, subject to allocation and proration such that 60% of the Virginia Bank common shares will be exchanged for the Stock Consideration and 40% of the shares will be exchanged for the Cash Consideration.

Relative to the initial Agreement, the amended Agreement includes the same Cash Consideration ($16.00 per share), an adjusted exchange ratio (0.5400 compared to 0.5000 shares offered in the initial Agreement), and a higher percentage of shares of Virginia Bank common stock that will receive the Cash Consideration (40% compared to 30% under the initial Agreement). All other terms of the transaction will remain substantially the same. In addition, Pinnacle intends to issue $7.0 million of subordinated debt in connection with the merger and plans to maintain a dividend payout policy that appropriately balances providing returns in the form of a cash dividend with retaining earnings to mitigate economic uncertainties and capitalize growth. 

Based upon Pinnacle’s 10-trading day average stock price of $19.73 as of June 8, 2020, the implied aggregate deal value was $23.5 million. This represents an 11% market premium per share to Virginia Bank’s closing price as of June 8, 2020 and approximately 96% of Virginia Bank’s tangible book value as of the most recent quarter. With the amended transaction terms and updated financial projections, the transaction is now expected to be 37.7% accretive to Pinnacle’s updated 2021 financial projections. Pinnacle expects to issue to Virginia Bank shareholders approximately 594,692 shares of Pinnacle common stock in the merger.