Virginia National Bankshares Corporation (OTCPK:VABK) (Virginia National) executed non-binding letter of intent to acquire Fauquier Bankshares, Inc. (NasdaqCM:FBSS) (Fauquier) for $62.5 million in merger of equals transaction on March 6, 2020. Virginia National Bankshares Corporation (OTCPK:VABK) (Virginia National) entered into an agreement and plan of reorganization to acquire Fauquier Bankshares, Inc. (NasdaqCM:FBSS) (Fauquier) for $62.5 million in merger of equals transaction on September 30, 2020. Under the terms of the transaction, each share of Fauquier common stock will be converted into the right to receive 0.6750 shares of Virginia National common stock (exchange ratio) plus cash in lieu of any fractional shares, each Fauquier restricted stock award will vest fully and be converted into the right to receive the exchange ratio and each Fauquier restricted stock unit award will vest and convert into, at the election of the holder, either cash or shares of Fauquier common stock. Post-closing, Virginia National shareholders will own approximately 51.4% and Fauquier shareholders will own approximately 48.6% of the combined company. The Fauquier Bank, the wholly-owned subsidiary of Fauquier, will be merged with and into Virginia National Bank, wholly-owned subsidiary of Virginia National and Virginia National Bank will be the surviving bank. The combined company will operate under the Virginia National Bankshares name and the combined bank will operate under the Virginia National Bank name. Virginia National will pay a termination fee of $2.5 million. Fauquier will pay a termination fee of $2.5 million.

Post-completion, the Boards of Directors of Virginia National will be fixed at 13 Directors, consisting of seven Directors to be designated by Virginia National (including William D. Dittmar, the current Chairman of the Board of Directors of Virginia National and Glenn W. Rust, the current President and Chief Executive Officer of Virginia National) and six Directors to be designated by Fauquier (including John B. Adams, the current Chairman of the Board of Directors of Fauquier and Marc J. Bogan, the current President and Chief Executive Officer of Fauquier). William D. Dittmar will continue to serve as the Chairman of the Board of Directors of Virginia National. John B. Adams will serve as Vice Chairman of the Board of Directors of Virginia National. Glenn W. Rust will continue to serve as Virginia National's President and Chief Executive Officer. Marc J. Bogan will be appointed President and Chief Executive Officer of Virginia National Bank. Virginia National currently intends to designate Steven W. Blaine, Hunter E. Craig, James T. Holland, Linda M. Houston, and Gregory L. Wells as the remaining five Virginia National directors that will continue as directors of Virginia National and Virginia National Bank following the merger, in addition to William D. Dittmar and Glenn W. Rust. Fauquier currently intends to designate Kevin T. Carter, Randolph D. Frostick, Jay B. Keyser and Sterling T. Strange, III as the remaining four Fauquier directors to be appointed as directors of Virginia National and Virginia National Bank following the merger. Offices of The Fauquier Bank will be rebranded as VNB offices after systems are integrated. Virginia National's headquarters will remain in Charlottesville, Virginia. The Fauquier Bank will not close any branches.

The transaction is subject to approval of the agreement by shareholders of Virginia National and Fauquier, receipt of all required regulatory approvals, the effectiveness of the registration statement and resignation of Directors of Fauquier. The Boards of Directors of each of Virginia National and Fauquier have unanimously approved the agreement and the transaction has unanimous support from all directors. A special meeting of shareholders of Fauquier Bankshares and Virginia National will be held on Thursday, March 25, 2021 at 10:00 a.m., Eastern Time. As of March 25, 2021, shareholders of both Fauquier and Virginia National have approved the acquisition. The transaction is expected to close in the first half of 2021. As of March 26, 2021, the parties expect the Merger to be effective on April 1, 2021. The transaction is financially attractive with EPS accretion greater than 25% to Virginia National and Fauquier, tangible book earn back period of 3.9 years, cash IRR greater than 35% and 62% dividend accretion for shareholders of Fauquier. Scott Richter, Ben McCall, Lee Lester, Nona Massengill, Marie Yascko-Rosado, Conrad Garcia and Anna Derewenda of Williams Mullen acted as legal advisors while Performance Trust Capital Partners, LLC acted as the financial advisor and fairness opinion provider for Virginia National. Jacob A. Lutz III, Lynda M. Crouse, Constance Brewster and Seth A. Winter of Troutman Pepper Hamilton Sanders LLP acted as legal advisors while Piper Sandler & Co. acted as the financial advisor and fairness opinion provider for Fauquier. Fauquier agreed to pay Piper Sandler approximately $835,000 for the services as financial advisor. Piper Sandler's fee is equal to 1.35% of the aggregate purchase price. Piper Sandler also received a $250,000 fee from Fauquier upon rendering its opinion, which opinion fee will be credited in full towards the portion of the advisory fee which will become payable to Piper Sandler upon consummation of the merger. Fauquier has also agreed to indemnify Piper Sandler against certain claims and liabilities arising out of Piper Sandler's engagement. Virginia National will pay to Performance Trust as financial advisor an amount equal to 0.115% of Fauquier's total assets as of the end of the month prior to the closing of the merger, $40,000 of which was paid by Virginia National upon the execution of the merger agreement and the balance of which is contingent upon consummation of the merger. Virginia National has also previously paid Performance Trust a fee of $10,000 in connection with its engagement and a fee of $25,000 upon delivery of its fairness opinion. Fauquier retained Regan & Associates, Inc. to assist in soliciting proxies for a fee of approximately $15,000. Virginia also retained Regan & Associates, Inc. to assist in soliciting proxies for a fee of approximately $10,000. American Stock Transfer & Trust Company, LLC acted as transfer agent to Virginia National Bankshares Corporation and Fauquier Bankshares.

Virginia National Bankshares Corporation (OTCPK:VABK) completed the acquisition of Fauquier Bankshares, Inc. (NasdaqCM:FBSS) on April 1, 2021. Virginia National's common stock has been approved for listing on the Nasdaq Capital Market and will begin trading on April 5, 2021 under the ticker symbol “VABK. In connection with the Merger, all of Fauquier's directors ceased serving on the Fauquier board of directors as of the Effective Time. At the Effective Time, Marc J. Bogan, former President and Chief Executive Officer of Fauquier, became President and Chief Executive Officer of Virginia National Bank. The former branches of The Fauquier Bank assumed in the merger will operate as The Fauquier Bank, a division of Virginia National Bank.