As filed with the Securities and Exchange Commission on March 20, 2008

Registration No. 333-148675

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

 

Pre-Effective Amendment No. 3 to

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

COMMUNITY BANKERS ACQUISITION CORP.

(Exact name of registrant as specified in its charter)

 

 

9912 Georgetown Pike, Suite D-203

Great Falls, Virginia 22066

(703) 759-0751

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

Gary A. Simanson, President and Chief Executive Officer

Community Bankers Acquisition Corp.

9912 Georgetown Pike, Suite D-203

Great Falls, Virginia 22066

(703) 759-0751

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

 

 

Copies to:

 

 

Approximate date of commencement of the proposed sale to the public:  As soon as practicable after the effectiveness of this registration statement and the satisfaction or waiver of all other conditions to the merger described in the joint proxy statement/prospectus.

 

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

(Do not check if a smaller reporting company)

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement will become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.

 

 

COMMUNITY BANKERS ACQUISITION CORP.

9912 Georgetown Pike, Suite D-203

Great Falls, Virginia 22066

Telephone: (703) 759-0751

 

          , 2008

 

Dear Community Bankers Acquisition Corp. Stockholder:

 

You are cordially invited to attend the annual meeting of the stockholders of Community Bankers Acquisition Corp., a Delaware corporation (“Community Bankers”). The annual meeting will be held on April 25, 2008, at 10 a.m., local time, at the offices of Nelson Mullins Riley & Scarborough LLP, 101 Constitution Avenue, N.W., Suite 900, Washington, D.C. 20001.

 

At the annual meeting, you will be asked to consider and vote on (1) a proposal to adopt the Agreement and Plan of Merger, dated as of September 5, 2007, by and between Community Bankers Acquisition Corp. and TransCommunity Financial Corporation; (2) a proposal to adopt an amendment to the certificate of incorporation of Community Bankers to reset the terms of the classes of Community Bankers’ directors, effective upon consummation of the merger; (3) a proposal to adopt an amendment to the certificate of incorporation of Community Bankers to change the corporation’s name to “Community Bankers Trust Corporation,” effective upon consummation of the merger; (4) a proposal to elect each of Chris A. Bagley and Keith Walz to the board of directors; (5) a proposal to ratify the appointment of Miller, Ellin & Company LLP as Community Bankers’ independent public accountants for the fiscal year ending December 31, 2007; and (6) a proposal to authorize the board of directors to adjourn the annual meeting to allow time for further solicitation of proxies.

 

Pursuant to Delaware law, adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Community Bankers common stock entitled to vote at the annual meeting. Community Bankers’ certificate of incorporation also requires the affirmative vote of the holders of a majority of Community Bankers outstanding shares of common stock issued in Community Bankers’ initial public offering and voted at the annual meeting. Both requirements must be met for adoption of the merger agreement. In addition, for the merger to be consummated, the holders of less than 20% of the outstanding shares of common stock (1,499,999 shares) issued in Community Bankers’ initial public offering must have voted against the merger and thereafter exercised their rights to convert their shares into cash equal to a pro rata portion of Community Bankers’ trust account.

 

Adoption of each of the amendments to the certificate of incorporation requires the affirmative vote of a majority of the shares of Community Bankers’ outstanding common stock entitled to vote at the annual meeting.

 

Election of each of Chris A. Bagley and Keith Walz to the board of directors and ratification of the appointment of Community Bankers’ independent public accountants for the fiscal year ending December 31, 2007 each requires the affirmative vote of the holders of a majority of the shares of Community Bankers common stock present in person or represented by proxy and entitled to vote at the annual meeting.

 

Authorization for the board of directors to adjourn the annual meeting until a later date requires the affirmative vote of the holders of a majority of the shares of Community Bankers common stock present in person or represented by proxy and entitled to vote at the annual meeting, whether or not a quorum is present.

 

Each of these proposals is more fully described in the accompanying joint proxy statement/prospectus.

 

If you hold shares of common stock issued in Community Bankers’ initial public offering (whether such shares were acquired pursuant to such initial public offering or afterwards), then you have the right to vote against the merger proposal and demand that Community Bankers convert such shares into cash equal to a pro rata portion of the trust account in which a substantial portion of the net proceeds of Community Bankers’ initial public offering are held. As of March 25, 2008, there was $      in the trust account, including accrued interest on the funds in the trust account, or approximately $      per share issued in the initial public offering. The actual conversion price will differ from the $      per share due to any interest earned on the funds in the trust account since March 25, 2008, and any taxes payable in respect of interest earned thereon.

 

If you wish to exercise your conversion rights, you must:

 

 

 

 

 

 

 

Prior to exercising your conversion rights, you should verify the market price of Community Bankers’ common stock, as you may receive higher proceeds from the sale of your common stock in the public market than from exercising your conversion rights. Shares of Community Bankers’ common stock are currently quoted on the American Stock Exchange under the symbol “BTC.” On March 25, 2008, the record date for the annual meeting of stockholders, the last sale price of Community Bankers’ common stock was $     . Your shares will only be converted if the merger is consummated and you voted against the merger and properly demanded conversion rights according to the instructions in this letter and the joint proxy statement/prospectus.

 

All of the Community Bankers insiders (including all of Community Bankers’ officers, directors and initial stockholders) have agreed to vote the 1,875,000 shares of Community Bankers common stock acquired by them before Community Bankers’ initial public offering (which constitute 20% of Community Bankers’ outstanding shares of common stock), on the merger proposal consistent with the majority of the votes cast on the merger by the holders of the shares of common stock issued in the initial public offering. They have further indicated that they will vote the shares held by them in favor of the adoption of the amendments to the certificate of incorporation, for the election of Chris A. Bagley and Keith Walz to Community Bankers’ board of directors, for the ratification of the appointment of the independent public accountants for the fiscal year ending December 31, 2007, and for the proposal to authorize the board of directors to adjourn the annual meeting to allow time for further solicitation of proxies in the event there are insufficient votes present at the annual meeting to approve the proposals.

 

The Community Bankers board of directors has unanimously determined that the proposals and the transactions contemplated thereby are in the best interests of Community Bankers and its stockholders. The board of directors recommends that you vote, or give instruction to vote, “FOR” the adoption of each of the proposals and that you vote in favor of each of the two director nominees.

 

Enclosed is a notice of annual meeting and the joint proxy statement/prospectus containing detailed information concerning the merger proposal and the transactions contemplated by the merger agreement, as well as detailed information concerning each of the proposals. We urge you to read the joint proxy statement/prospectus and attached annexes carefully.

 

Your vote is important. Whether or not you plan to attend the special meeting in person, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided.

 

I look forward to seeing you at the meeting.

 

Sincerely,

 

Eugene S. Putnam, Jr.

Chairman of the Board

 

COMMUNITY BANKERS ACQUISITION CORP.

9912 Georgetown Pike, Suite D-203

Great Falls, Virginia 22066

Telephone: (703) 759-0751

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 25, 2008

 

To the Stockholders of Community Bankers Acquisition Corp.:

 

Community Bankers Acquisition Corp.  will hold its annual meeting of stockholders on April 25, 2008, at 10 a.m., local time, at the offices of Nelson Mullins Riley & Scarborough LLP, 101 Constitution Avenue, N.W., Suite 900, Washington, D.C. 20001 for the following purposes:

 

 

 

 

Unless Community Bankers and TransCommunity agree otherwise, the merger will only be consummated if the stockholders of Community Bankers adopt the staggered board amendment to the certificate of incorporation. In addition, the staggered board amendment and the name change amendment to the certificate of incorporation will only be effected in the event and at the time the merger with TransCommunity is consummated.

 

Community Bankers has fixed the close of business on March 25, 2008 as the record date for determining those stockholders entitled to vote at the annual meeting and any adjournments or postponements of the annual meeting. Accordingly, only stockholders of record on that date are entitled to notice of, and to vote at, the annual meeting and any adjournments or postponements of the annual meeting.

 

If you hold shares of common stock issued in Community Bankers’ initial public offering (whether such shares were acquired pursuant to such initial public offering or afterwards), then you have the right to vote against the merger proposal and demand that Community Bankers convert such shares into cash equal to a pro rata portion of the trust account in which a substantial portion of the net proceeds of Community Bankers’

initial public offering are held. For more information regarding your conversion rights, see “The Merger — Conversion Rights of Community Bankers Stockholders” on page    of the joint proxy statement/prospectus.

 

Whether or not you plan to attend the annual meeting in person, please complete, date, sign and return the enclosed proxy card as promptly as possible. Community Bankers has enclosed a postage prepaid envelope for that purpose. Any Community Bankers stockholder may revoke his or her proxy by following the instructions in the joint proxy statement/prospectus at any time before the proxy has been voted at the annual meeting. Even if you have given your proxy, you may still vote in person if you attend the annual meeting. Please do not send any stock certificates to us at this time.

 

Community Bankers encourages you to vote on these very important matters. The Board of Directors of Community Bankers unanimously recommends that Community Bankers stockholders vote “FOR” each of the proposals above.

 

By Order of the Board of Directors,

 

Eugene S. Putnam, Jr.

Chairman of the Board

 

          , 2008

 

TAKING ANY ACTION THAT DOES NOT INCLUDE AN AFFIRMATIVE VOTE AGAINST THE MERGER, INCLUDING ABSTAINING FROM VOTING ON THE MERGER PROPOSAL, WILL PREVENT YOU FROM EXERCISING YOUR CONVERSION RIGHTS. YOU MUST AFFIRMATIVELY VOTE AGAINST THE MERGER PROPOSAL IN PERSON OR BY SUBMITTING YOUR PROXY CARD BEFORE THE VOTE ON THE MERGER PROPOSAL TO EXERCISE YOUR CONVERSION RIGHTS. IN ORDER TO CONVERT YOUR SHARES, YOU MUST ALSO EITHER PHYSICALLY TENDER, OR IF YOU HOLD YOUR SHARES OF COMMUNITY BANKERS COMMON STOCK IN “STREET NAME,” CAUSE YOUR BROKER TO PHYSICALLY TENDER, YOUR STOCK CERTIFICATES REPRESENTING SHARES OF COMMUNITY BANKERS COMMON STOCK TO CONTINENTAL STOCK TRANSFER & TRUST COMPANY, COMMUNITY BANKERS’ TRANSFER AGENT, OR DELIVER YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC SYSTEM, TO CONTINENTAL STOCK TRANSFER & TRUST COMPANY, COMMUNITY BANKERS’ TRANSFER AGENT, BY 10 A.M. ON APRIL 25, 2008. FAILURE TO MEET THESE REQUIREMENTS WILL CAUSE YOUR CONVERSION DEMAND TO BE REJECTED. SEE THE SECTIONS ENTITLED “SUMMARY — CONVERSION RIGHTS” AND “THE MERGER — CONVERSION RIGHTS OF COMMUNITY BANKERS STOCKHOLDERS” FOR MORE SPECIFIC INSTRUCTIONS.

 

TRANSCOMMUNITY FINANCIAL CORPORATION

4235 Innslake Drive

Glen Allen, Virginia 23060

(804) 934-9999

 

          , 2008

 

Dear TransCommunity Financial Corporation Shareholder:

 

You are cordially invited to attend a special meeting of the shareholders of TransCommunity Financial Corporation (“TransCommunity”). The special meeting will be held on April 22, 2008, at 10 a.m., local time, at The Place at Innsbrook, 4036-C Cox Road, Glen Allen, Virginia 23060.

 

At the special meeting, you will be asked to consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated September 5, 2007, by and between TransCommunity and Community Bankers Acquisition Corp.(“Community Bankers”). You will also be asked to vote on a proposal to authorize the board of directors to adjourn the special meeting to allow time for further solicitation of proxies, should that be necessary.

 

Each of these proposals is more fully described in the accompanying joint proxy statement/prospectus.

 

The TransCommunity board of directors has determined unanimously that the proposals and the transactions contemplated thereby are in the best interests of TransCommunity and its shareholders. The board of directors recommends that you vote, or give instruction to vote, “FOR” the adoption of each of the proposals.

 

Under Virginia law, you have the right to assert appraisal rights with respect to the merger and demand in writing that Community Bankers pay the fair value of your shares of TransCommunity common stock. In order to exercise and perfect appraisal rights, generally you must:

 

 

A copy of the applicable Virginia statutory provisions is included in the joint proxy statement/prospectus as Appendix C, and a more detailed description of the procedures to demand and perfect appraisal rights is included in the section entitled “The Merger — Appraisal Rights of TransCommunity Stockholders” beginning on page   .

 

Enclosed is a notice of special meeting and the joint proxy statement/prospectus containing detailed information concerning the merger proposal and the transactions contemplated by the merger agreement. We urge you to read the joint proxy statement/prospectus and attached annexes carefully.

 

Your vote is important. Because approval of the merger proposal requires the affirmative vote of holders of a majority of the shares entitled to vote at the TransCommunity special meeting, abstaining from voting (including by way of a broker non-vote), either in person or by proxy, will have the same effect as a vote against approval of the merger agreement. Whether or not you plan to attend the special meeting in person, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. We look forward to seeing you at the special meeting, and we appreciate your continued loyalty and support.

 

Sincerely,

 

Bruce B. Nolte

President & Chief Executive Officer

 

TRANSCOMMUNITY FINANCIAL CORPORATION

4235 Innslake Drive

Glen Allen, Virginia 23060

(804) 934-9999

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held On April 22, 2008

 

To the Shareholders of TransCommunity Financial Corporation:

 

TransCommunity Financial Corporation will hold a special meeting of shareholders on April 22, 2008, at 10 a.m., local time, at The Place at Innsbrook, 4036-C Cox Road, Glen Allen, Virginia 23060 for the following purposes:

 

 

TransCommunity has fixed the close of business on March 25, 2008 as the record date for determining those shareholders entitled to vote at the special meeting and any adjournments or postponements of the special meeting. Accordingly, only shareholders of record on that date are entitled to notice of, and to vote at, the special meeting and any adjournments or postponements of the special meeting.

 

TransCommunity shareholders have the right to assert appraisal rights with respect to the merger and demand in writing that Community Bankers pay the fair value of your shares of TransCommunity common stock under applicable provisions of Virginia law. In order to exercise and perfect appraisal rights, generally you must:

 

 

A copy of the applicable Virginia statutory provisions is included in the joint proxy statement/prospectus as Appendix C, and a more detailed description of the procedures to demand and perfect appraisal rights is included in the section entitled “The Merger — Appraisal Rights of TransCommunity Stockholders” beginning on page   .

 

Whether or not you plan to attend the special meeting in person, please complete, date, sign and return the enclosed proxy card as promptly as possible. TransCommunity has enclosed a postage prepaid envelope for that purpose. Any TransCommunity shareholder may revoke his or her proxy by following the instructions in the joint proxy statement/prospectus at any time before the proxy has been voted at the special meeting. Even if you have given your proxy, you may still vote in person if you attend the special meeting. Please do not send any stock certificates to TransCommunity at this time.

 

TransCommunity encourages you to vote on this very important matter. The Board of Directors of TransCommunity Financial Corporation unanimously recommends that TransCommunity Financial Corporation’s shareholders vote “FOR” the proposals above.

 

By Order of the Board of Directors,

 

Bruce B. Nolte

President and Chief Executive Officer

 

          , 2008

JOINT PROXY STATEMENT/PROSPECTUS
FOR THE
PROPOSED MERGER OF
COMMUNITY BANKERS ACQUISITION CORP.
AND
TRANSCOMMUNITY FINANCIAL CORPORATION

 

The boards of directors of Community Bankers Acquisition Corp. and TransCommunity Financial Corporation have unanimously agreed to a merger of our companies. If the proposed merger is completed, TransCommunity stockholders will receive 1.4200 shares of Community Bankers common stock for each share of TransCommunity common stock they own, subject to possible adjustment as described in this joint proxy statement/prospectus. This 1.4200 multiple, as it may be adjusted, is referred to as the “exchange ratio.”

 

Community Bankers was formed to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business in the banking industry. Its common stock is listed on the American Stock Exchange under the symbol “BTC.” TransCommunity common stock is quoted on the OTC Bulletin Board under the symbol “TCYF.OB.” Based on the closing price of Community Bankers common stock on March 25, 2008 of $     , TransCommunity stockholders will receive approximately $      worth of Community Bankers common stock for each share of TransCommunity stock they own. The actual value of the Community Bankers common stock received by TransCommunity stockholders in the merger will depend on the market value of Community Bankers common stock at the time of closing.

 

This joint proxy statement/prospectus provides detailed information about the merger and the annual meeting of Community Bankers stockholders and the special meeting of TransCommunity stockholders. It also provides information about the Community Bankers common stock to be issued to TransCommunity stockholders in the event the merger is approved. As described in this proxy statement/prospectus, we cannot complete the merger unless we obtain the necessary government approvals and unless the stockholders of both Community Bankers and TransCommunity approve the merger proposal.

 

In addition to the proposed merger of Community Bankers with TransCommunity, Community Bankers has entered into an agreement and plan of merger, dated as of December 13, 2007, with BOE Financial Services of Virginia, Inc., a bank holding company based in Tappahannock, Virginia. BOE common stock is listed on the Nasdaq Capital Market under the symbol “BSXT.” Although the stockholders of Community Bankers and TransCommunity will not be voting on Community Bankers’ proposed merger with BOE at the annual meeting and special meeting, this joint proxy statement/prospectus contains certain information about BOE, and the proposed merger with BOE.

 

Please carefully review and consider this joint proxy statement/prospectus which explains the merger proposal in detail, including the discussion under the heading “Risk Factors” beginning on page 25. It is important that your shares are represented at your stockholders meeting, whether or not you plan to attend. Accordingly, please complete, date, sign, and return promptly your proxy card in the enclosed envelope. You may attend the meeting and vote your shares in person if you wish, even if you have previously returned your proxy.

 

 

 

This joint proxy statement/prospectus is dated          , 2008. It is first being mailed to Community Bankers’ and TransCommunity’s stockholders on or about          , 2008.

TABLE OF CONTENTS

 

 

 

 

 

 

 

You may also contact Morrow & Co., LLC, Community Bankers’ and TransCommunity’s proxy solicitor, at 470 West Avenue, Stamford, Connecticut 06492, toll free (800) 607-0088.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUMMARY

	•	the board of directors of the surviving corporation will be comprised of ten directors; six directors will be nominated by TransCommunity, one of which shall serve as chairman of Community Bankers upon consummation of the merger, and four directors will be nominated by Community Bankers;
	•	the management of TransCommunity will continue in their existing roles as management of Community Bankers;
	•	the current president and chief executive officer of Community Bankers would become its chief strategic officer; and
	•	TransCommunity Bank, will become a subsidiary bank of Community Bankers, with its existing board of directors and senior management.

	•	the markets in which TransCommunity operates;
	•	the growth prospects associated with TransCommunity;
	•	the balance sheet make-up and product mix, including the loan and deposit mix of TransCommunity;
	•	opportunities to grow existing revenue streams and create new revenue streams associated with TransCommunity;
	•	the competitive position of TransCommunity within its operating markets;
	•	the industry dynamics, including barriers to entry;
	•	the experience of TransCommunity’s board of directors and management, including Bruce B. Nolte, the current president and chief executive officer of TransCommunity who will become president and chief executive officer of Community Bankers in the merger, including their recent experience in consolidating TransCommunity’s subsidiary bank’s charters and existing non-core business lines;
	•	acquisition opportunities in the industry;
	•	the opportunity for further consolidation and cost savings in the banking industry;
	•	the valuation of comparable companies;
	•	the companies’ similar community banking philosophies;
	•	the financial results of TransCommunity, including potential for revenue growth, enhanced operating margins and operating efficiencies; and
	•	Keefe, Bruyette & Woods’ fairness opinion that the merger is fair to Community Bankers from a financial point of view.

	•	TransCommunity’s poor earnings history;
	•	the disruption that TransCommunity had experienced with its management and board of directors;
	•	the reputational risk that these issues could raise;
	•	TransCommunity’s ability to successfully integrate its subsidiary banks; and
	•	whether other banks would be attracted to join the franchise, although there were and are no plans, arrangements, agreements or understandings other than Community Bankers’ proposed merger with BOE.

	•	the premium over the company’s prevailing stock price to be received by TransCommunity’s stockholders (see “The Merger — Background of the Merger”);
	•	the value of the consideration TransCommunity’s stockholders will receive relative to the projected book value and earnings per share of TransCommunity common stock (see “The Merger — Opinion of TransCommunity’s Financial Advisor”);
	•	Sandler O’Neill’s opinion that the consideration TransCommunity’s stockholders will receive as a result of the merger is fair from a financial point of view;
	•	the fact that TransCommunity’s stockholders will receive shares in a larger company traded on the American Stock Exchange, which will potentially provide greater liquidity for TransCommunity stockholders to sell their shares quickly and efficiently than under the existing OTC Bulletin Board system;
	•	the fact that the exchange ratio is fixed in the event that Community Banker’s stock price increases before closing, but is adjustable in the event that Community Banker’s stock price decreases, thereby affording TransCommunity’s stockholders a combination of upside participation and downside protection (see “The Merger — Merger Consideration”);
	•	the additional capital to support a larger bank;
	•	the potential for the combined company to attract merger candidates that TransCommunity would not be likely to attract on its own;
	•	the proposed merger would be a strategic merger of equals in which the combined companies may achieve a level of growth that neither company could achieve on its own;
	•	the financial terms of recent business combinations in the financial services industry and a comparison of the multiples of selected combinations with the terms of the merger;
	•	the skills and experience offered by the Community Bankers’ management and board of directors;
	•	the anticipated compatibility of management and business philosophy of Community Bankers and TransCommunity;
	•	the projected positive value of Community Bankers’ shares offered to TransCommunity’s stockholders in relation to the estimated market value, book value, and earnings per share of TransCommunity common stock (see “The Merger — Opinion of TransCommunity’s Financial Advisor”);
	•	the competitive and regulatory environment for financial institutions generally; and
	•	the fact that the merger will enable TransCommunity’s stockholders to exchange their shares of common stock in a tax-free transaction.

	•	the dilution of ownership rights of TransCommunity’s stockholders (see “The Merger — Stock Ownership of Existing Community Bankers and TransCommunity Stockholders After the Merger”);
	•	the reduction in the level of control that TransCommunity’s stockholders would have in the surviving corporation;

	•	no special purposes acquisition company transactions have been completed in the banking industry;
	•	TransCommunity was enjoying progress with its strategic plan, including recently consolidating its subsidiary banks into one subsidiary; and
	•	potential stockholder opposition to the merger.

	•	all of the members of the board of directors of Community Bankers will continue to serve as members of the board of Community Bankers following the merger;

	•	following the merger Gary A. Simanson, the current president and chief executive officer of Community Bankers, will become the vice chairman of the board of directors and chief strategic officer of Community Bankers, at a salary of $270,000, pursuant to an employment agreement that will be effective upon completion of the merger;
	•	if the merger is not approved and Community Bankers is required to liquidate, all the shares of common stock and all the warrants held by its directors and officers, which, as of the record date, for the shares, were worth $           per share and $           in the aggregate and, for the warrants, were worth $           per warrant and $          in the aggregate, will be worthless; and
	•	if Community Bankers liquidates prior to the consummation of a business combination, Gary A. Simanson, its president and chief executive officer, and David Zalman, a stockholder, will be personally liable to ensure that the trust account is not reduced by claims of Community Bankers’ vendors and service providers for services rendered or products sold in the event of Community Bankers’ dissolution and liquidation. Messrs. Simanson and Zalman will not be liable for and will not pay any termination fees that may be payable by Community Bankers to TransCommunity or BOE under the respective merger agreements. These termination fees may be as little as $500,000 or as much as $1,700,000, and

		if sufficient operating funds are unavailable, the termination fees will not be paid out of the trust account. See “Information About Community Bankers — Liquidation If No Business Combination” and “The Merger — Expenses and Termination Fees.”

	•	following the merger, six members of the board of directors of TransCommunity, will join the board of directors of Community Bankers and Troy A. Peery, Jr., the chairman of TransCommunity, will become the chairman of Community Bankers;
	•	following the merger with TransCommunity without considering the merger with BOE, which will impact certain management positions, Bruce B. Nolte will become president and chief executive officer of Community Bankers, and Patrick J. Tewell, TransCommunity’s chief financial officer, will become chief financial officer of Community Bankers. In addition, M. Andrew McLean will continue to be the president of TransCommunity Bank and Richard C. Stonbraker will continue to be the chief lending officer of TransCommunity Bank;
	•	following the merger, the existing directors of TransCommunity Bank will remain on the board of directors of TransCommunity Bank;
	•	following the merger, Community Bankers will generally indemnify and provide liability insurance for up to three years following the merger to the present directors and officers of TransCommunity and TransCommunity Bank, subject to certain exceptions;
	•	for the 12-month period following the merger, Community Bankers will adopt TransCommunity’s benefit plans and will furnish those employees of TransCommunity who become employees of Community Bankers or a Community Bankers subsidiary benefits under the TransCommunity benefit plans;
	•	following the merger, the stock options held by the officers and directors of TransCommunity will be converted into options to purchase common stock of Community Bankers, with adjustments to the number of shares and the exercise price to reflect the exchange ratio; and
	•	following the merger, the restricted stock held by the officers and directors of TransCommunity will be converted into and become rights with respect to Community Bankers common stock.

	•	Community Bankers’ bylaws provide that any director may be removed, with or without cause, by holders of a majority of the shares entitled to vote at the election of directors; in comparison TransCommunity’s articles of incorporation and bylaws provide that directors only may be removed for cause with the affirmative vote of at least two-thirds of the outstanding shares entitled to vote.
	•	Community Bankers’ bylaws provide that the election of directors is determined by a vote of the holders of a majority of the shares represented in person or by proxy and entitled to vote, at a meeting of stockholders at which a quorum is present; in comparison TransCommunity’s bylaws provide that all elections are determined by a plurality of the votes cast, in person or by proxy, at a meeting of stockholders at which a quorum is present.
	•	Community Banker’s bylaws provide that stockholder action may be taken by written consent, without prior notice and without a vote, if the written consent is signed by the holders of outstanding stock having at least the minimum number of votes that would be necessary to take such action at a meeting at which all shares entitled to vote thereon were present and voted; in comparison TransCommunity’s bylaws provide that stockholder action may be taken by written consent if the action is unanimous.
	•	Community Bankers’ bylaws provide that special meetings of the stockholders may be called by a majority of the board of directors or by the Chairman, the Chief Executive Officer or the President and will be called by the Secretary at the request in writing of stockholders owning a majority of the shares of capital stock of Community Bankers issued and outstanding and entitled to vote; in comparison TransCommunity’s bylaws provide that a special meeting of the stockholders will be held only on the call of the Chairman of the board of directors, the Chief Executive Officer or the board of directors.
	•	Community Bankers has elected not to be governed by Section 203 of the DGCL, which limits engaging in a business combination with any interested stockholder; in comparison TransCommunity is subject to 13.1-725.1 and related provisions of the Virginia Stock Corporation Act known as the “Affiliated Transaction Statute,” which limits engaging in a business combination with any interested stockholder. TransCommunity is also subject to 13.1-728.4 of the Virginia Stock Corporation Act, which provides that certain notice and informational filings and special stockholder meetings and voting procedures must occur prior to consummation of a proposed “control share acquisition.”

	•	if the other party is in breach of any of its representations or warranties under the merger agreement and fails to cure the violation and the breach relates to an inaccuracy that, without considering any qualification in such representation, is likely to have a material adverse effect on the breaching party;
	•	if required regulatory approval is denied by final nonappealable action of a regulatory authority or if any action taken by such authority is not appealed within the time limit for appeal;

	•	if any law or order permanently restraining, enjoining, or otherwise prohibiting the consummation of the merger has become final and nonappealable;
	•	if the approval of the stockholders of Community Bankers and TransCommunity is not obtained or the holders of 20% or more of the outstanding shares of Community Bankers common stock issued in Community Bankers’ initial public offering vote against the merger proposal and exercise their right to convert their shares into cash equal to a pro rata portion of the Community Bankers trust account;
	•	if we do not complete the merger by May 31, 2008;
	•	if a party’s board of directors fails to reaffirm its approval upon the other party’s request for such reaffirmation of the merger or if the party’s board of directors resolves not to reaffirm the merger; or
	•	if the Community Bankers or the TransCommunity board of directors withdraws, modifies, or changes in a manner adverse to the other party, its recommendation that the stockholders approve the merger in certain instances where failure to do so would likely result in a breach of the board of directors’ respective fiduciary duties.

																		The 525,000
																		Warrants
																525,000		Included in
																Units		the Units
																Issuable		issuable
												19.99% of		Community		Upon		Upon
												Community		Bankers’		Exercise of		Exercise of
												Bankers’		7,500,000		the Unit		the Unit		The Merger
Percent Ownership												Conversion		Warrants		Purchase		Purchase		with BOE
Community												Rights are		are		Option are		Option are		has been
Bankers				TransCommunity				BOE		Total		Exercised		Exercised		Exercised		Exercised		Completed
	73.35%				26.65%			0.00%		100.00%				X		X		X
	72.76%				27.24%			0.00%		100.00%				X		X
	72.15%				27.85%			0.00%		100.00%				X
	71.61%				28.39%			0.00%		100.00%		X		X		X		X
	70.94%				29.06%			0.00%		100.00%		X		X		X
	70.24%				29.76%			0.00%		100.00%		X		X
	61.55%				38.45%			0.00%		100.00%						X		X
	60.32%				39.68%			0.00%		100.00%						X
	59.01%				40.99%			0.00%		100.00%
	57.81%				42.19%			0.00%		100.00%		X				X		X
	57.13%				20.76%			22.11%		100.00%				X		X		X		X
	56.40%				21.11%			22.49%		100.00%				X		X				X
	56.33%				43.67%			0.00%		100.00%		X				X

The 525,000

Warrants

525,000

Included in

Units

the Units

Issuable

issuable

19.99% of

Community

Upon

Upon

Community

Bankers’

Exercise of

Exercise of

Bankers’

7,500,000

the Unit

the Unit

The Merger

Percent Ownership

Conversion

Warrants

Purchase

Purchase

with BOE

Community

Rights are

are

Option are

Option are

has been

Bankers

TransCommunity

BOE

Total

Exercised

Exercised

Exercised

Exercised

Completed

55.65%

21.48%

22.88%

100.00%

X

X

54.98%

21.80%

23.22%

100.00%

X

X

X

X

X

54.73%

45.27%

0.00%

100.00%

X

54.17%

22.19%

23.64%

100.00%

X

X

X

X

53.34%

22.59%

24.07%

100.00%

X

X

X

43.66%

27.28%

29.06%

100.00%

X

X

X

42.40%

27.89%

29.71%

100.00%

X

X

41.07%

28.53%

30.39%

100/00%

X

39.89%

29.11%

31.00%

100.00%

X

X

X

X

38.44%

29.81%

31.75%

100.00%

X

X

X

36.93%

30.54%

32.53%

100.00%

X

X

X		- denotes that event occurred

	•	affirmatively vote against the merger proposal in person or by submitting your proxy card before the vote on the merger proposal and checking the box that states “Against” for proposal number 1; and
	•	either:

	°	check the box that states “Exercise Conversion Rights” on the proxy card; or

	°	send a letter to Continental Stock Transfer & Trust Company at 17 Battery Place, 8th Floor New York, NY 10004, attn: Mark Zimkind, stating that you are exercising your conversion rights and demanding your shares of Community Bankers common stock be converted into cash; and

	•	either:

	°	physically tender, or if you hold your shares of Community Bankers common stock in “street name,” cause your broker to physically tender, your stock certificates representing shares of Community Bankers common stock to Continental Stock Transfer & Trust Company, Community Bankers’ transfer agent; or

	°	deliver your shares electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, to Continental Stock Transfer & Trust Company, Community Bankers’ transfer agent, by 10 a.m. on April 25, 2008.

	•	not vote any shares owned by you in favor of the merger;
	•	deliver written notice of your intent to demand payment for your shares to TransCommunity before the vote is taken on the merger at the special meeting;
	•	complete, sign and return the form to be sent to you pursuant to Section 13.1-734 of the Virginia Stock Corporation Act; and
	•	if you hold certificated shares, deposit your TransCommunity common stock certificates in accordance with the instructions in the form.

										Equivalent Price
										Per Share of
		Community Bankers				TransCommunity				TransCommunity
		Common Stock				Common Stock				Common Stock(1)
September 5, 2007		$	7.42			$	7.25			$	10.54
March 25, 2008		$				$				$

(1)		The equivalent prices per share of TransCommunity common stock have been calculated by multiplying the closing price per share of Community Bankers common stock on each of the two dates by the exchange ratio of 1.4200.

 

If the merger is consummated, TransCommunity stockholders will receive shares of Community Bankers common stock in exchange for their shares of TransCommunity common stock. An investment in Community Bankers common stock is subject to a number of risks and uncertainties, many of which also apply to an existing investment in TransCommunity common stock. Risks and uncertainties relating to general economic conditions are not summarized below. Those risks, among others, are highlighted on page    under the heading “A Warning About Forward-Looking Statements.”

 

However, there are a number of other risks and uncertainties relating to Community Bankers and your decision on the merger proposal that you should consider in addition to the risks and uncertainties associated with financial institutions generally. Many of these risks and uncertainties could affect Community Bankers’ future financial results and may cause Community Bankers’ future earnings and financial condition to be less favorable than expected. This section summarizes those risks.

 

TransCommunity has a limited operating history upon which to base any estimate of its future success.

 

TransCommunity was organized in 2001, and it and its subsidiary, TransCommunity Bank, have limited operating histories. As a consequence, there is limited historical financial information on which to base an evaluation of TransCommunity’s current business or to make any estimate of its future performance.

 

Many of the loans in TransCommunity’s loan portfolio have been originated in the last five years, which may not be representative of credit defaults in the future.

 

Approximately 96% of TransCommunity Bank’s loans have been originated in the past five years and have a short term maturity. In general, loans do not begin to show signs of credit deterioration or default until they have been outstanding for some period of time. As a result, a portfolio of older loans will usually behave more predictably than a newer portfolio. Because TransCommunity’s loan portfolio is relatively new with short term maturities, the current level of delinquencies and defaults may not be representative of the level that will prevail in the event TransCommunity makes loans with longer maturity periods. If delinquencies and defaults increase, TransCommunity may be required to increase its provision for loan losses, which would adversely affect its results of operations and financial condition.

 

TransCommunity’s concentrations of loans may create a greater risk of loan defaults and losses.

 

TransCommunity has a substantial amount of loans secured by real estate in the central Virginia area, and substantially all of its loans are to borrowers in that area. Additionally, at September 30, 2007, approximately 80% of its loan portfolio consisted of commercial and residential construction loans, commercial real estate loans, commercial business loans and commercial lines of credit. These types of loans typically have a higher risk of default than other types of loans, such as fixed-rate single family residential mortgage loans. In addition, the repayments of these loans, which generally have larger balances than single family mortgage loans, often depend on the successful operation of a business or the sale or development of the underlying property, and as a result are more likely to be adversely affected by deteriorating conditions in the real estate market or the economy in general. These concentrations expose TransCommunity to the risk that adverse developments in the real estate market, or in general economic conditions in the central Virginia/Richmond metropolitan area, could increase the levels of nonperforming loans and charge-offs, and reduce loan demand. In that event, TransCommunity would likely experience additional losses. Additionally, if, for any reason, economic conditions in the area deteriorate, or there is significant volatility or weakness in the economy or any significant sector of the area’s economy, TransCommunity’s ability to develop its business relationships may be diminished, the quality and collectibility of its loans may be adversely affected, the value of collateral may decline and loan demand may be reduced.

 

If TransCommunity’s allowance for loan losses becomes inadequate, its results of operations may be adversely affected.

 

TransCommunity maintains an allowance for loan losses that it believes is adequate to absorb the estimated losses in its loan portfolio. Through periodic review of the loan portfolio, management determines the amount of the allowance for loan losses by considering, among other factors, general market conditions, credit quality of the loan portfolio and performance of TransCommunity customers relative to their financial obligations with

TransCommunity. The amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates that may be beyond its control, and these future losses may exceed its current estimates. There is no precise method for predicting credit losses since any estimate of loan losses is necessarily subjective and the accuracy depends on the outcome of future events. As a result, charge-offs in future periods may exceed its allowance for loan losses and additional increases in the allowance for loan losses would be required. If TransCommunity needs to make significant and unanticipated increases in its loan loss allowance in the future, its results of operations and financial condition would be materially adversely affected at that time.

 

The markets for TransCommunity’s services are highly competitive, and TransCommunity faces substantial competition.

 

The banking business is highly competitive. TransCommunity competes with other commercial banks, savings and loan associations, credit unions, finance companies, mutual funds, insurance companies and brokerage and investment banking firms soliciting business from residents of and businesses located in its markets. Many of its competitors enjoy competitive advantages, including greater financial resources, a wider geographic presence or more accessible branch office locations, the ability to offer additional services, more favorable pricing alternatives and lower origination and operating costs. Failure to compete effectively to attract new and to retain existing customers could result in a decrease in loans TransCommunity originates and could negatively affect its results of operations.

 

In attracting deposits, TransCommunity competes with insured depository institutions such as banks, savings institutions and credit unions, as well as institutions offering uninsured investment alternatives, including money market funds. Traditional banking institutions, as well as entities intending to transact business online, are increasingly using the Internet to attract deposits without geographic or physical limitations. In addition, many non-bank competitors are not subject to the same extensive regulations that govern TransCommunity. These competitors may offer higher interest rates on deposits than TransCommunity offers, which could result in either TransCommunity attracting fewer deposits or increasing its interest rates in order to attract deposits. Increased deposit competition could raise TransCommunity’s cost of funds and could adversely affect its ability to generate the funds necessary for its lending operations, which would negatively affect its results of operations.

 

Changes in interest rates could have an adverse effect on TransCommunity’s income.

 

TransCommunity’s profitability depends to a large extent upon its net interest income. Net interest income is the difference between interest income on interest-earning assets, such as loans and investments, and interest expense on interest-bearing liabilities, such as deposits and borrowings. TransCommunity’s net interest income will be adversely affected if market interest rates change so that the interest it pays on deposits and borrowings increases faster than the interest it earns on loans and investments. Changes in interest rates also affect the value of its loans. An increase in interest rates could adversely affect borrowers’ ability to pay the principal or interest on existing loans or reduce their ability to borrow more money. This may lead to an increase in TransCommunity’s nonperforming assets or a decrease in loan originations, either of which could have a material and negative effect on TransCommunity’s results of operations. A decrease in interest rates could also negatively impact earnings in the event TransCommunity’s loans reprice more quickly than its sources of funds. TransCommunity’s loans are primarily variable rate assets and TransCommunity relies substantially on fixed-rate certificates of deposits for its funding sources.

 

Interest rates are highly sensitive to many factors that are partly or completely outside of its control, including governmental monetary policies, domestic and international economic and political conditions and general economic conditions such as inflation, recession, unemployment and money supply. Fluctuations in market interest rates are neither predictable nor controllable and may have a material and negative effect on TransCommunity’s business, financial condition and results of operations.

 

TransCommunity is subject to significant government regulations that affect its operations and may result in higher operating costs or increased competition for TransCommunity.

 

TransCommunity’s success will depend not only on competitive factors, but also on state and federal regulations affecting financial and bank holding companies generally. TransCommunity is subject to extensive regulation by the Board of Governors of the Federal Reserve System, the Office of Comptroller of the Currency and, to a lesser extent, the Bureau of Financial Institutions of the Virginia State Corporation

Commission. Supervision, regulation and examination of banks and bank holding companies by bank regulatory agencies are intended primarily for the protection of depositors rather than stockholders. These agencies examine financial and bank holding companies and commercial banks, establish capital and other financial requirements and approve new branches, acquisitions or other changes of control. TransCommunity’s ability to establish new banks or branches or make acquisitions is conditioned on receiving required regulatory approvals from the applicable regulators.

 

Regulations now affecting TransCommunity may change at any time, and these changes could affect it in unpredictable and adverse ways. Such changes could subject TransCommunity to additional costs, limit the types of financial services and products it may offer, increase the ability of non-banks to offer competing financial services and products, and/or assist competitors that are not subject to similar regulation, among other things. Failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and damage to TransCommunity’s reputation, which could have a material adverse effect on its business, financial condition and results of operation.

 

TransCommunity’s success will depend significantly upon general economic conditions in central Virginia and nationally.

 

TransCommunity’s success will depend significantly upon general economic conditions in central Virginia as well as national economic conditions affecting Virginia. Any prolonged economic downturn or recession affecting central Virginia could impair borrowers’ ability to repay existing loans, potentially causing an increase in TransCommunity’s nonperforming assets and charge-offs; deter customers from incurring more debt, possibly decreasing loan originations; or cause customers to draw down their savings, potentially decreasing deposits. In that event, TransCommunity may experience lower earnings or losses, impaired liquidity and the erosion of capital. Such an economic downturn or recession could result from a variety of causes, including natural disasters, a prolonged downturn in various industries upon which the economy of central Virginia depends, or a national recession.

 

In addition, one of the focal points of TransCommunity’s business is serving the banking and financial services needs of small to medium-sized businesses. These businesses generally have fewer financial resources in terms of capital or borrowing capacity relative to larger entities. As such, the businesses of many of TransCommunity’s customers and their ability to repay outstanding loans may be more sensitive to changes in general economic conditions than larger entities. As a consequence, TransCommunity’s results of operations and financial condition could be adversely affected by weakening economic conditions in central Virginia and nationally.

 

TransCommunity could be negatively impacted by recent developments in the mortgage industry.

 

Industry concerns over asset quality have increased nationally due in large part to issues related to subprime mortgage lending, declining real estate activity and general economic concerns. The markets in which TransCommunity currently operates remain stable and to date there has been no significant deterioration in the quality of TransCommunity’s loan portfolio. In addition TransCommunity closed Main Street Mortgage, its former mortgage brokerage subsidiary, in late 2006. Management will continue to monitor delinquencies, risk rating changes, charge-offs and other indicators of risk in TransCommunity’s portfolio, but even with these efforts, TransCommunity may be impacted by negative developments in the mortgage industry and the real estate markets.

 

Concentrations in loans secured by real estate may increase credit losses, which would have a negative affect on TransCommunity’s financial results.

 

Many of TransCommunity’s loans are secured by real estate (both commercial and residential) in TransCommunity’s market area. A variety of loans secured by real estate are offered, including commercial lines of credit, commercial term loans, real estate, construction, home equity, consumer and other loans. At September 30, 2007, approximately 76% of TransCommunity’s loans were secured by real estate. A major change in the real estate market, such as deterioration in value of the property, or in the local or national economy, could adversely affect TransCommunity’s customers’ ability to pay these loans, which in turn could adversely impact TransCommunity.

TransCommunity depends on the services of key personnel, and a loss of any of those personnel could disrupt its operations and could have a material adverse effect on its operations.

 

TransCommunity is a customer-focused and relationship-driven organization. Its growth and success has been in large part driven by the personal customer relationships maintained by its executives. TransCommunity depends on the performance of its management at the holding company as well as the presidents of each of its bank divisions. Although TransCommunity has entered into change in control agreements with certain of its officers, and Community Bankers intends to enter into employment agreements with certain TransCommunity executive officers, which would become effective at the effective time of the merger, these officers and other key employees may leave the employ of the surviving corporation and seek opportunities elsewhere. Moreover, TransCommunity’s does not maintain key man life insurance on any of its executive officers. The loss of services of one or more of these key employees could have a material adverse impact on TransCommunity’s operations.

 

Failure to maintain effective systems of internal and disclosure controls could have a material adverse effect on TransCommunity’s results of operation and financial condition.

 

Effective internal and disclosure controls are necessary for TransCommunity to provide reliable financial reports and effectively prevent fraud and to operate successfully as a public company. If TransCommunity cannot provide reliable financial reports or prevent fraud, its reputation and operating results would be harmed. As part of TransCommunity’s ongoing monitoring of internal control it may discover material weaknesses or significant deficiencies in its internal control as defined under standards adopted by the Public Company Accounting Oversight Board, or PCAOB, that require remediation.

 

TransCommunity has discovered a material weakness and significant deficiency in its internal control over financial reporting. The material weakness relates to TransCommunity’s accounting and documentation for loans participated to third parties, and the significant deficiency relates to TransCommunity’s accounting and record generation and maintenance for loan origination costs and for amortizing fees. TransCommunity has adopted and implemented measures in connection with its efforts to improve internal control processes, including reviewing and modifying certain loan operating policies to provide guidance on daily operations, providing additional training to loan personnel, hiring a new chief credit officer and centralizing the credit administration function.

 

Despite efforts to strengthen its internal and disclosure controls, TransCommunity may identify additional other internal or disclosure control deficiencies in the future. Any failure to maintain effective controls or timely effect any necessary improvement of its internal and disclosure controls could, among other things, result in losses from fraud or error, harm its reputation or cause investors to lose confidence in its reported financial information, all of which could have a material adverse effect on its results of operation and financial condition.

 

The success of TransCommunity’s future recruiting efforts will impact its ability to grow.

 

The implementation of TransCommunity’s business strategy will require it to continue to attract, hire, motivate and retain skilled personnel to develop new customer relationships as well as new financial products and services. Many experienced banking professionals employed by TransCommunity’s competitors are covered by agreements not to compete or solicit their existing customers if they were to leave their current employment. These agreements make the recruitment of these professionals more difficult. The market for these people is competitive, and TransCommunity may not be successful in attracting, hiring, motivating or retaining them. The success of TransCommunity’s recruiting efforts may impact its ability to grow and its future profitability.

 

TransCommunity does not expect to pay regular dividends for the foreseeable future.

 

In the event the merger is not consummated, TransCommunity does not expect to pay dividends on its common stock for at least several years. In the event the merger is consummated, TransCommunity does plan to pay a one-time special dividend in the amount of $0.25 per share to TransCommunity stockholders, which dividend would be paid immediately prior to the closing of the merger. Consequently, if the merger is not consummated, the return on TransCommunity’s stock, if any, may be limited to capital appreciation for an indefinite period. TransCommunity’s future dividend policy will depend in large part on the earnings of its subsidiary bank, capital requirements, financial condition and other factors considered relevant by its Board of

Directors. Additionally, TransCommunity is a separate legal entity from its subsidiary bank and does not have significant operations or revenues of its own. TransCommunity substantially depends on dividends from its subsidiary bank to pay its operating expenses. The availability of dividends from the subsidiary bank is limited by various statutes and regulations. In the event that its subsidiary bank is not permitted to pay dividends due to federal or state regulations, TransCommunity may not be able to pay its operating expenses. Consequently, any future inability to receive dividends from its subsidiary bank could adversely affect TransCommunity’s business, financial condition, results of operations and cash flows.

 

If Community Bankers’ merger with BOE is consummated, Community Bankers expects to pay regular dividends to its stockholders. Subject to board and regulatory approval, Community Bankers expects to pay quarterly cash dividends in an amount not less than the quotient obtained by dividing $0.22 by the BOE exchange ratio for the foreseeable future.

 

Changes in accounting standards could impact reported earnings.

 

The accounting standard setters, including the Financial Accounting Standards Board, or the FASB, the Securities and Exchange Commission, or the SEC, and other regulatory bodies, periodically change the financial accounting and reporting standards that govern the preparation of consolidated financial statements. These changes can materially impact how TransCommunity records and reports its financial condition and results of operations. In some instances, TransCommunity could be required to apply a new or revised standard retroactively, resulting in the restatement of prior period financial statements.

 

To implement its growth strategy following the merger, Community Bankers must successfully identify opportunities for expansion and successfully integrate its new operations into its existing operating platform.

 

Following the merger, Community Bankers intends to continue to implement TransCommunity’s current growth strategy of entering underserved or over-consolidated markets in Virginia by opportunistically acquiring or merging with other banking institutions, such as BOE, or establishing new branches of TransCommunity Bank or any successor bank subsidiary such as Bank of Essex. If following the merger, Community Bankers is unable to consummate its merger with BOE and identify additional attractive markets to enter or suitable acquisition or merger candidates, an important component of our growth strategy may be lost. Additionally, any future expansion or acquisition efforts may entail substantial costs and may not produce the revenue, earnings or synergies that Community Bankers had anticipated. Any future expansion or acquisitions that Community Bankers undertakes, such as the proposed merger with BOE, will involve operational risks and uncertainties. Acquired companies may have unforeseen liabilities, exposure to asset quality problems, key employee and customer retention problems and other problems that could negatively affect Community Bankers.

 

Community Bankers may not be able to successfully integrate the operations, management, products and services of the entities that it acquires, including those of TransCommunity and BOE, or otherwise establishes. The integration process may also require significant time and attention from its management that Community Bankers would otherwise direct at servicing existing business and developing new business. Community Bankers’ failure to successfully integrate any entities that it acquires, including those of TransCommunity and BOE, or otherwise establishes into its existing operations may increase its operating costs significantly and adversely affect its business and earnings.

 

Community Bankers’ working capital could be reduced if Community Bankers’ stockholders exercise their right to convert their shares into cash equal to a pro rata portion of the Community Bankers trust account.

 

Pursuant to Community Bankers’ certificate of incorporation, holders of shares issued in Community Bankers’ initial public offering may vote against the merger and demand that Community Bankers convert their shares into cash equal to a pro rata portion of the Community Bankers trust account. Community Bankers will not consummate the merger if holders of 20% or more of the shares of common stock issued in its initial public offering exercise these conversion rights. To the extent the merger is consummated and holders of less than 20% of the common stock issued in Community Bankers’ initial public offering have demanded to convert their shares, working capital available to Community Bankers following the merger will be reduced by the amount paid out of the trust to stockholders exercising their conversion rights. Additionally, if holders demand to convert their shares, there may be a corresponding reduction in the value of each share of common stock of Community

Bankers. As of March 25, 2008, assuming the merger proposal is adopted, the maximum amount of funds that could be disbursed to Community Bankers’ stockholders upon the exercise of the conversion rights would be approximately $     , or approximately     % of the funds currently held in trust as of the record date for the Community Bankers annual meeting.

 

A substantial number of Community Bankers’ shares will be issued in the merger and will be eligible for future resale in the public market after the merger, which could result in dilution and have an adverse effect on the market price of those shares.

 

If the merger is consummated, assuming the exchange ratio is not adjusted, up to 6,956,213 shares of Community Bankers common stock will be issued to the former stockholders of TransCommunity common stock, and warrants to purchase 7,500,000 shares of common stock issued in connection with Community Bankers’ initial public offering will become exercisable at $5.00 per share on the date the merger is consummated, as described under “Description of Securities of Community Bankers” on page   . Thus, if the merger is consummated, assuming the exchange ratio is not adjusted, Community Bankers will have approximately 16,331,213 shares of common stock outstanding. This number of shares of Community Bankers common stock was determined by adding the product of the exchange ratio of 1.4200 and 4,898,741, which is the maximum number of shares of TransCommunity common stock that may be outstanding prior to the effective time of the merger (including 312,000 shares subject to options), to 9,375,000, the number of shares of Community Bankers common stock outstanding on the Community Bankers’ record date. Community Bankers has issued to I-Bankers Securities, Inc., Maxim Group LLC and Legend Merchant Group, Inc., the representatives of the underwriters in Community Bankers’ initial public offering, unit purchase options to acquire 525,000 units, including 525,000 warrants. Moreover, 1,875,000 shares of Community Bankers common stock purchased by stockholders prior to its initial public offering will be released from escrow on June 2, 2009 and thereby be eligible for resale in the public market subject to compliance with applicable law. Consequently, at various times after completion of the merger, a substantial number of additional shares of Community Bankers common stock will be eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of such shares and of the warrants.

 

Furthermore, in connection with Community Bankers’ proposed merger with BOE, Community Bankers would issue up to 6,937,779 shares of Community Bankers common stock to the former stockholders of BOE common stock. Thus, if the merger with BOE is also consummated, assuming the exchange ratio in either merger is not adjusted, Community Bankers will have approximately 23,268,992 shares of common stock outstanding. This number of shares of Community Bankers common stock was determined by adding the product of the exchange ratio of 5.7278 and 1,240,605, which is the maximum number of shares of BOE common stock that may be outstanding prior to the effective time of the merger (including 29,359 shares subject to options), to 16,331,213, the maximum number of shares of Community Bankers common stock could have outstanding after consummation of the merger with TransCommunity. The combined companies would result in 23,268,992 shares of Community Bankers outstanding.

 

In addition, Gary A. Simanson, president and chief executive officer of Community Bankers, and David Zalman, a stockholder, agreed as part of Community Bankers’ initial public offering, pursuant to an agreement with the representatives of the underwriters in the initial public offering, that they or their affiliates or designees, would purchase up to 1,000,000 warrants in the aggregate in open market transactions at market prices not to exceed $0.80 per warrant. Under this agreement, the representatives of the underwriters also agreed to place an irrevocable order for the purchase by them, or their affiliates or designees, of up to 500,000 warrants in the aggregate under identical terms and conditions as the purchases by Mr. Simanson and Mr. Zalman. As a result of the agreement, Community Bankers Acquisition LLC, an affiliate of Mr. Simanson, acquired an aggregate of 349,724 warrants and the representatives of the underwriters acquired an aggregate of 300,000 warrants. Warrants acquired by any of these parties pursuant to these purchases cannot be sold or transferred in the open market until after the consummation of a business combination and are not callable by Community Bankers while held by the purchasers. Accordingly, after the merger, 7,500,000 warrants will become exercisable which could result in dilution and an adverse effect on the market price of Community Bankers’ shares.

Community Bankers’ existing stockholders will incur immediate and substantial dilution of their ownership and voting interests upon completion of the merger.

 

Community Bankers’ existing stockholders’ voting interest would be diluted from 100% to as little as 36.93% or as much as 73.35% after the merger, assuming that no TransCommunity stockholders exercise appraisal rights, based on the number of shares of each of Community Bankers, TransCommunity and BOE issued and outstanding as of the date of their respective merger agreements. Factors that would affect the percentage of Community Bankers’ voting interests that existing Community Bankers stockholders would own after the merger include:

 

 

For a table outlining the effect of the various scenarios on the percentage of Community Bankers’ voting interests that existing Community Bankers stockholders will own after the merger with TransCommunity is completed, see “The Merger — Stock Ownership of Existing Community Bankers and TransCommunity Stockholders After the Merger.”

 

If the merger’s benefits do not meet the expectations of financial or industry analysts, the market price of Community Bankers common stock may decline.

 

The market price of Community Bankers common stock may decline as a result of the merger if:

 

 

Accordingly, investors may experience a loss as a result of a decline in the market price of Community Bankers common stock following the merger. A decline in the market price of Community Bankers common stock also could adversely affect its ability to issue additional securities and its ability to obtain additional financing in the future. In addition, if the daily average closing price for Community Bankers’ common stock for the 20 consecutive days of trading in such stock ending five days before the closing date is less than $7.42, Community Bankers will increase the exchange ratio to the quotient obtained by dividing $10.5364 by such daily average closing price resulting in Community Bankers issuing more shares of Community Bankers common stock to the TransCommunity stockholders.

 

The financial statements included in this proxy statement/prospectus do not take into account the consequences of a failure to complete a business combination by June 7, 2008.

 

The financial statements included in this joint proxy statement/prospectus have been prepared assuming that Community Bankers would continue as a going concern. As discussed in Note 1 to the Notes to the Community Bankers Financial Statements for the year ended March 31, 2007, Community Bankers is required to complete the merger with TransCommunity by June 7, 2008. The possibility of such business combination not being consummated raises substantial doubt as to Community Bankers’ ability to continue as a going concern and the financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

The fairness opinions obtained by Community Bankers and TransCommunity from their respective financial advisors will not reflect changes in circumstances prior to the merger.

 

Community Bankers obtained a fairness opinion, dated as of September 5, 2007, from its financial advisor, Keefe, Bruyette & Woods, Inc. TransCommunity obtained a fairness opinion dated as of September 5, 2007, from its financial advisor, Sandler O’Neill, which was updated and superseded by the opinion dated December 12, 2007, in connection with TransCommunity giving its consent to the merger of Community Bankers and BOE. The December 12, 2007 opinion, given by Sandler O’Neill reflected projected 2009 earnings per share for

TransCommunity of $0.41 compared to projected 2009 earnings per share for TransCommunity of $0.51 reflected in Keefe, Bruyette & Woods, Inc.’s September 5, 2007 fairness opinion. The lower projected 2009 earnings per share reflected in Sandler O’Neill’s fairness opinion was based on revised projections prepared by TransCommunity in December 2007. In the context of the remainder of the factors considered by the Community Bankers board in approving the merger, including the fairness opinion of Keefe, Bruyette & Woods, Inc., the board did not find the decline in the projected 2009 TransCommunity earnings per share material to its analysis in recommending the merger to its stockholders.

 

Neither Community Bankers nor TransCommunity have obtained or will obtain additional updated fairness opinions prior to completion of the merger. Changes in the operations and prospects of Community Bankers or TransCommunity, respectively, general market and economic conditions and other factors that may be beyond the control of Community Bankers and TransCommunity, and on which the respective fairness opinions were based, may alter the value of Community Bankers or TransCommunity or the price of shares of Community Bankers common stock or TransCommunity common stock by the time the merger is completed. The respective fairness opinions do not speak to any date other than the date of such opinions, and as such, the opinions will not address the fairness of the merger consideration, from a financial point of view, at any date after the date of such opinions, including at the time the merger is completed. For a description of the opinion that Community Bankers received from Keefe, Bruyette & Woods, Inc., please see “The Merger — Opinion of Community Banker’s Financial Advisor” and for a description of the opinion that TransCommunity received from Sandler O’Neill, please see “The Merger — Opinion of TransCommunity’s Financial Advisor.”

 

If you are a TransCommunity Stockholder, you will likely not have an opportunity to vote on Community Bankers’ merger with BOE.

 

Under the terms of the merger agreement by and between Community Bankers and BOE, and subject to its terms and conditions, BOE will become a wholly-owned subsidiary of Community Bankers and each share of BOE common stock outstanding will be exchanged for 5.7278 shares of Community Bankers common stock (subject to possible adjustment in association with the daily average closing price for Community Bankers’ common stock for the 20 consecutive days of trading in such stock ending five days before the closing date). As we anticipate the merger with BOE would be consummated concurrent with or promptly following the merger with TransCommunity, it is unlikely current TransCommunity stockholders would become holders of Community Bankers common stock in time to be eligible to vote for or against the merger with BOE. Even if current TransCommunity stockholders are eligible to vote for or against the merger with BOE, current TransCommunity stockholders would not have the right to assert appraisal rights with respect to the merger with BOE and would not be able to demand that they be paid the fair value of their shares of Community Bankers received in the merger between TransCommunity and Community Bankers, in connection with the merger with BOE. For more information concerning the merger with BOE, see “The Merger — The Proposed Merger Between Community Bankers and BOE” and the final proxy statement/prospectus that Community Bankers will file with the SEC in connection with the proposed merger with BOE.

 

If you are a Community Bankers stockholder and do not vote your shares against the merger at the annual meeting or give instructions to your broker to do so, you will not be eligible to convert your shares of common stock into cash equal to a pro rata portion of the Community Bankers trust account upon consummation of the merger.

 

Pursuant to Community Bankers’ certificate of incorporation, a holder of shares of Community Bankers common stock issued in its initial public offering may, if the stockholder votes against the merger and the merger is consummated, demand that Community Bankers convert such shares into cash equal to a pro rata portion of the Community Bankers trust account. This demand must be made in writing to Community Bankers’ transfer agent or the proxy solicitor prior to the vote on the merger proposal at the annual meeting. If so demanded and the merger is consummated, Community Bankers will convert each share of common stock into a pro rata portion of the Community Bankers trust account in which a substantial portion of the net proceeds of Community Bankers’ initial public offering are held, plus all interest earned thereon. If you exercise your conversion rights, then you will be exchanging your shares of common stock for cash and will no longer own these shares. If the merger with TransCommunity is not completed by June 7, 2008, then these shares will not be converted into cash and Community Bankers will need to liquidate. Shares that are voted for the merger or are

broker non-voted or where the stockholder abstains from voting shall not in any event be eligible to be converted into cash upon completion of the merger.

 

If the holders of 20% or more of the common stock issued in Community Bankers’ initial public offering decide to vote against the proposed merger and convert their shares to cash, Community Bankers will have to liquidate, stockholders may receive less than their initial investment and Community Bankers’ warrants will expire without value.

 

Under the terms of Community Bankers’ certificate of incorporation, if holders of 20% or more of the shares issued in its initial public offering vote against the merger and exercise their right to convert their shares of Community Bankers common stock into cash equal to a pro rata portion of the Community Bankers trust account, Community Bankers will be unable to complete the merger and will have to dissolve and liquidate. In any liquidation, the net proceeds of Community Bankers initial public offering held in the Community Bankers trust account plus the deferred underwriting compensation, plus any interest earned thereon not released to Community Bankers for working capital or to pay income taxes, will be distributed pro rata to the holders of Community Bankers common stock issued in its initial public offering. If Community Bankers must liquidate its assets, the per-share liquidation to its stockholders will be approximately $     , plus interest accrued thereon until the date of any liquidation, as of March 25, 2008. Furthermore, there will be no distribution with respect to Community Bankers outstanding warrants and, accordingly, the warrants will expire without value.

 

If Community Bankers is unable to complete the merger with TransCommunity and must dissolve and liquidate, third parties may bring claims against Community Bankers and, as a result, the proceeds held in trust could be reduced and the per share liquidation price received by stockholders could be less than $      per share.

 

If Community Bankers does not effect the merger with TransCommunity by June 7, 2008, Community Bankers must dissolve and liquidate and third parties may bring claims against Community Bankers. Although Community Bankers has prepaid certain of its material legal, printing, accounting, administrative and financial advisory fees and intends to prepay or obtain waiver agreements from vendors and service providers it may engage in the future for any material amounts whereby such parties will waive any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, such persons may seek recourse against the trust account notwithstanding such agreements. Furthermore, a court might not uphold the validity of such agreements. Accordingly, the proceeds held in trust could be subject to claims that could take priority over those of Community Bankers common stockholders. Additionally, if Community Bankers is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against Community Bankers that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in its bankruptcy estate and subject to the claims of third parties with priority over the claims of its stockholders. To the extent any bankruptcy or other claims deplete the trust account, Community Bankers may not be able to return to its common stockholders a per share liquidation price of at least $      per share.

 

If Community Bankers does not consummate the business combination with TransCommunity by June 7, 2008 and must dissolve and liquidate, payments from the trust account to its common stockholders may be delayed.

 

If Community Bankers does not effect the merger with TransCommunity by June 7, 2008, Community Bankers must dissolve and liquidate. In such event, Community Bankers anticipates that its board of directors will convene and adopt a specific plan of dissolution and liquidation, which it will then vote to recommend to its stockholders. At such time it will also cause to be prepared a preliminary proxy statement setting out such plan of dissolution and liquidation as well as the board’s recommendation of such plan. Community Bankers will promptly file its preliminary proxy statement with the SEC and then will mail the definitive proxy statement once it is legally permitted to do so (which could be after a lengthy SEC review) and convene a meeting of its stockholders at which they will vote on its plan of dissolution and liquidation. Community Bankers expects that all costs associated with the implementation and completion of its plan of dissolution and liquidation will be funded by any remaining net assets not held in the trust account although there may not be sufficient funds for such purpose. Community Bankers will not liquidate the trust account unless and until its stockholders approve its plan of dissolution and liquidation. Accordingly, the foregoing procedures may result in substantial delays in its liquidation and the distribution to its public stockholders of the funds in its trust account and any remaining net assets as part of its plan of dissolution and liquidation.

Community Bankers’ stockholders may be held liable for claims by third parties against Community Bankers to the extent of distributions received by them.

 

If Community Bankers does not effect the merger with TransCommunity by June 7, 2008, it will dissolve and liquidate. Community Bankers anticipates that its liquidation will occur pursuant to Section 281(b) of the Delaware General Corporation Law, or the DGCL. Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. If a corporation following its dissolution complies with the statutory procedures set forth in Section 280 of the DGCL, intended to ensure that the corporation makes reasonable provision for all claims against it, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. The procedures in Section 280 include a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions may be made to stockholders. However, it is Community Bankers’ intention to seek approval of its stockholders to make liquidating distributions to its public stockholders as soon as reasonably practicable following its dissolution in accordance with Section 281(b) of the Delaware statute. Therefore, Community Bankers’ stockholders could potentially be liable for any claims to the extent of distributions received by them in a dissolution and any liability of its stockholders may extend beyond the third anniversary of such dissolution.

 

Community Bankers may not properly assess all claims that may be potentially brought against it. As a result, Community Bankers stockholders could potentially be liable for any claims to the extent of distributions received by them in a dissolution (but no more) and any liability of Community Bankers’ stockholders may extend well beyond the third anniversary of such dissolution. Accordingly, third parties may seek to recover from Community Bankers stockholders amounts owed to them by Community Bankers.

 

Additionally, if Community Bankers is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it that is not dismissed, any distributions received by stockholders in Community Bankers’ dissolution might be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by Community Bankers stockholders in its dissolution. Furthermore, because Community Bankers intends to distribute the proceeds held in the trust account to its public stockholders as soon as possible after its dissolution, this may be viewed or interpreted as giving preference to Community Bankers public stockholders over any potential creditors with respect to access to or distributions from its assets. Also, the members of Community Bankers’ board of directors may be viewed as having breached their fiduciary duties to Community Bankers’ creditors and/or may have acted in bad faith, and thereby exposing Community Bankers’ directors and Community Bankers to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors and/or complying with certain provisions of the DGCL with respect to Community Bankers’ dissolution and liquidation. Therefore, it is possible that claims will be brought against Community Bankers for these reasons.

 

This joint proxy statement/prospectus contains forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance, and business of Community Bankers following the merger. These statements are preceded by, followed by, or include the words “believes,” “expects,” “anticipates,” or “estimates,” or similar expressions. Many possible events or factors could affect the future financial results and performance of Community Bankers following the merger. This could cause the results or performance of Community Bankers to differ materially from those expressed in the forward-looking statements. You should consider these important factors when you vote on the merger proposal. Factors that may cause actual results to differ materially from those contemplated by the forward-looking statements include the following:

 

 

 

 

 

The forward-looking statements are based on current expectations about future events. Although Community Bankers believes that the expectations reflected in the forward-looking statements are reasonable, Community Bankers cannot guarantee you that these expectations actually will be achieved. Community Bankers is under no duty to update any of the forward-looking statements after the date of this joint proxy statement/prospectus to conform those statements to actual results. In evaluating these statements, you should consider various factors, including the risks outlined in the section entitled “Risk Factors,” beginning on page   .

 

The following table presents for Community Bankers, selected consolidated financial data for the year ended March 31, 2007, and the period April 6, 2005 to March 31, 2006, and the six-month periods ended September 30, 2007 and September 30, 2006. On October 29, 2007, Community Bankers’ board of directors acted pursuant to Community Bankers’ bylaws to change Community Bankers’ fiscal year-end from March 31 to December 31, commencing with the nine-months ending December 31, 2007. The information is based on the consolidated financial statements of Community Bankers included in this joint proxy statement/prospectus.

 

You should read the following tables in conjunction with the consolidated financial statements of Community Bankers described above and with the notes to them.

 

Historical results are not necessarily indicative of results to be expected for any future period. In the opinion of the management of Community Bankers, all adjustments (which include only normal recurring adjustments) necessary to arrive at a fair statement of interim results of operations of Community Bankers have been included. With respect to Community Bankers, results for the six-month period ended September 30, 2007, are not necessarily indicative of results which may be expected for any other interim period or for the year as a whole.

 

 

 

The following table presents for TransCommunity, selected consolidated financial data for the years ended December 31, 2006, 2005, 2004, 2003, and 2002, and the nine-month periods ended September 30, 2007 and September 30, 2006. The information is based on the consolidated financial statements of TransCommunity included in this joint proxy statement/prospectus.

 

You should read the following tables in conjunction with the consolidated financial statements of TransCommunity described above and with the notes to them.

 

Historical results are not necessarily indicative of results to be expected for any future period. In the opinion of the management of TransCommunity, all adjustments (which include only normal recurring adjustments) necessary to arrive at a fair statement of interim results of operations of TransCommunity have been included. With respect to TransCommunity, results for the nine-month period ended September 30, 2007 are not necessarily indicative of results which may be expected for any other interim period or for the year as a whole.