C&F Financial (CFFI) has agreed to acquire Central Virginia Bankshares. Both are in the Richmond, Va., area.

C&F, the $977 million-asset parent of Citizens and Farmers Bank, said late Monday that it would pay $855,000 in cash for Central Virginia, which has $390 million in assets and seven branches.

C&F also would pay nearly $3.4 million to redeem preferred stock and warrants that Central Virginia issued in 2009 to the Treasury Department through the Troubled Asset Relief Program. The payment would extinguish $13.1 million in debt that Central Virginia owed the Treasury as of March 31, according to a C&F spokesman.

The combined company would have $1.4 billion in assets and 25 branches in the Richmond area.

"We will have a greatly enhanced presence in the growing Richmond area, enabling us to expand our personal and commercial customer base, while offering more products, locations and services" to customers of both companies, Larry Dillon, C&F's chief executive, said in a news release.

The deal, which is expected to close in the fourth quarter, was the second in Virginia on Monday. Union First Market Bankshares (UBSH) in Richmond agreed to pay $445 million for StellarOne (STEL) in Charlottesville.

C&F is based in West Point, Va., and has 18 branches in cities such as Richmond, Williamsburg and Newport News. Central Virginia, in Powhatan, has seven branches in counties around Richmond.

In May, Central Virginia told investors it did not expect to be able to repay its Tarp obligations "in the foreseeable future" and that it was pursuing "strategic alternatives."

BB&T Capital Markets and the law firm of Troutman Sanders advised C&F on the deal. Central Virginia was advised by Davenport & Co. and the law firm of Williams Mullen.

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