TowneBank (TOWN) in Suffolk, Va., has agreed to buy Franklin Financial (FRNK) in Richmond, Va.

The $4.8 billion-asset TowneBank will pay $275 million, or $23.04 a share, in stock for the $1.1 billion-asset Franklin. The transaction is expected to be immediately accretive to TowneBank's capital ratios and accretive to its earnings starting in 2016.

"We consider it a wonderful privilege to expand our business to Richmond," G. Robert Aston Jr., TowneBank's chairman and chief executive, said in a press release Tuesday.

"In addition to acquiring a great foundation for our entry into the Richmond market, this transaction has the added benefit of effectively being a capital raise due to Franklin's strong capital base," Alston added. "Accordingly, the transaction will provide capital for additional expansion in Richmond as well as retiring the preferred stock we issued in connection with the Small Business Lending Fund Program."

Franklin has eight branches, $671 million in deposits and $555 million of net loans.

Sandler O'Neill and LeClairRyan advised TowneBank. Keefe, Bruyette & Woods and Kilpatrick, Townsend & Stockton advised Franklin.

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