United Virginia Bank in Richmond has agreed to acquire Citizens National Bank of New Market. The merger, subject to regulatory and stockholder approval, is expected to be completed late this year.

Under terms of the agreement, Citizens shareholders will receive cash and/or common stock, valued at $4.9 million, of United Virginia Bankshares Inc., parent company of UVB, the state's largest bank.

Individual stockholders in Citizens National may elect to exchange each of their shares for $130 cash or $115 in UVB Inc. common stock. Up to 18,700 of the 40,695 shares of Citizens National outstanding may be exchanged for cash.

The merger plan calls for William L. Craun to continue as president of the New Market bank, which will operate as part of UVB's western region, headquartered in Lynchburg.

Craun said the merger will give Citizens National's customers access to expanded statewide banking services.

The proposed merger with Citizens National is the second announced in less than a month by UVB, Virginia's largest bank and holding company, with assets of $4 billion and 170 offices. In March, UVB announced plans to merge with First National Bank of Martinsville.

Citizens National, with $36 million in assets, operates two offices in the Shenandoah County area. It reported earnings of $8.75 a share before securities transactions and net income of $8.86 a share in 1981.