Bay Commercial Bank in Walnut Creek, Calif., has stepped in to outbid a rival to buy Valley Community Bank in Pleasanton, Calif.

The $503 million-asset Bay Commercial will pay $7.8 million in stock for the $130 million-asset Valley, based on the price per share and amount of stock outstanding, and will assume the seller's outstanding noncumulative preferred stock. The acquisition is expected to close in the first quarter.

Valley agreed in March to sell itself to FNB Bancorp in South San Francisco for roughly $6.2 million. FNB's acquisition had received approval from the Office of the Comptroller of the Currency, and was awaiting clearance from the California Department of Business Oversight when Bay Commercial stepped in with a higher offer.

The FNB offer had drawn a public objection from Taylor Asset Management in Chicago, which owns about 9.8% of Valley's stock. Stephen Taylor, the investment firm's chairman, had called the original deal "grossly unfair" to Valley's investors. He also took aim in a press release last month at the FNB deal's valuation — roughly half of the seller's book value — and $500,000 in payments to officers and insiders.

Bay Commercial and Valley did not disclose in a press release Monday if Valley had to pay a termination fee to FNB.

Bay Commercial was advised by Gary Steven Findley & Associates and The Findley Group. Valley was advised by Bryan Cave and Monroe Financial Partners, the same firms that advised it during the original agreement with FNB.

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