Suffolk-based TowneBank and Richmond-based Franklin Financial Corporation have signed a merger agreement under which TowneBank will acquire Franklin.

“Our Towne family is humbled and excited to join hands with a legendary company that has served the greater Richmond community for over 80 years,” said G. Robert Aston Jr., chairman and CEO of TowneBank.

“Since the founding of Towne in my home garage 15 years ago, we have built our company around the values of ‘serving others and enriching lives,’ while striving to build a great community asset. We consider it a wonderful privilege to expand our business to Richmond and we are grateful to Rick Wheeler and our friends at Franklin for the invitation to join with them.”

Richard T. Wheeler Jr., chairman, president and CEO of Franklin, added, “We are extremely pleased and excited to be joining forces with such a well-regarded banking institution. The combination will enable the combined institution to provide a much greater line of products to Franklin Federal’s current customers.”

“We have respected Bob Aston and his team for many years and admired TowneBank’s ability to not only succeed, but to excel,” he added. “Since its opening in 1999, TowneBank has grown to be the largest community bank and the third largest bank in Hampton Roads, and TowneBank intends to seek similar growth in the Richmond market.”

Based on financials reported on March 31, 2014, the combined companies would have total assets of $5.9 billion, deposits of $4.1 billion and loans of $3.8 billion.

Under the terms of the agreement, common shareholders of Franklin will receive 1.40 shares of TowneBank common stock for each share of Franklin. This implies a deal value per share of $23.04 or approximately $275 million, based on TowneBank’s closing stock price of $16.46 on July 14.

“In addition to acquiring a great foundation for our entry into the Richmond market, this transaction has the added benefit of effectively being a capital raise due to Franklin’s strong capital base,” Aston said in a press release.

“Accordingly, the transaction will provide capital for additional expansion in Richmond, as well as retiring the preferred stock we issued in connection with the Small Business Lending Fund Program.”

Wheeler will join the TowneBank corporate board and executive committee, as well as serving on the TowneBank of Richmond Board along with other Franklin board members and a yet to be named group of Central Virginia business and community leaders.

T. Patrick Collins, a prominent Richmond banker, has been named president and CEO of TowneBank of Richmond.