Bank of Virginia Co., the commonwealth's third largest bank holding company, is planning to merge its nine banks into one, Chairman Frederick Deane Jr. told shareholders yesterday.

Deane said recent changes in Virginia banking laws - for which the bank lobbied vigorously - will allow Bank of Virginia Co. to consolidate and expand its operation.

"By consolidating our banks we will receive great benefits," Deane said, citing concertration of capital and reverses in a single account, improved management controls and increased efficiency.

The chairman said Bank of Virginia's "move to be a one-bank organization rather than a nine-bank organization" will allow it to "compete better with the large out-of-state banks that are invading the Virginia market."

Noting a national trend toward a one bank holding companies in states where they are permitted, Deane said the consolidation would culminate prior efforts to improve efficiencies.

The company earlier merged three Canadian subsidiaries into one, set up centralized trust and commercial departments, consolidated credit operations and established four regions to oversee its banks.

The holding company's largest operation is Bank of Virginia in Richmond; its other subsidiaries, such as bank of Virginia-Potamac in Falls Church, all are separate corporations now.

Deane set no timetable for the merger, but said staff members are already working on it.

The company also plans what its chairman call "modest expansion" as a result of the changes in law that paved the way for consolidation. The Virginia law that previously took away the right to add branches to banks that merged has restored that right, he noted, and has extended the area in which new branches can be added.

Bank of Virginia shareholders, who reelected the 19-member board of directors without objection, were told the company broke all earnings records in the first quarter of this year and passed the $2 billion mark in assets for the first time.

Income before security transactions was $3.1 million (67 cents a share) up 9 percent from $2.8 million (62 cents) in the same period a year ago.

Attributing this gain to higher volumes rather than improved profit margins, Deane reported a 15 percent increase in loans to $1.4 billion. The growth is a particularly significant economic indicator, he noted, because the first quarter historically is a poor period for loan demand.