UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

Filed by the Registrant  x                            Filed by a Party other than the Registrant  ¨

Check the appropriate box:

¨	Preliminary Proxy Statement
¨	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x	Definitive Proxy Statement
¨	Definitive Additional Materials
¨	Soliciting Material under §240.14a-12
BAY BANKS OF VIRGINIA, INC.
(Name of registrant as specified in its charter)
(Name of person(s) filing proxy statement, if other than the registrant)
Payment of Filing Fee (Check the appropriate box):
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April 8, 2011

Dear Fellow Stockholders:

You are cordially invited to attend the Annual Meeting of Stockholders of Bay Banks of Virginia, Inc. on May 16, 2011, at 1:00 p.m., at Indian Creek Yacht & Country Club, Kilmarnock, Virginia. We would be pleased to have you as our guest for a buffet luncheon starting at 12:00 p.m. If you wish to attend, please indicate this on the enclosed luncheon reservation card that must be returned with your completed proxy. This will allow us to have an accurate count of those joining us for the luncheon.

The primary business of the meeting will be the election of one director of the Company, and the ratification of the appointment of the Company’s independent registered public accounting firm, as more fully explained in the accompanying proxy statement.

During the meeting, we also will report to you on the condition and performance of the Company and its subsidiaries, the Bank of Lancaster and Bay Trust Company. You will have an opportunity to question management on matters that affect the interests of all stockholders.

We hope you can join us for the luncheon and attend the Annual Meeting on May 16th. Whether or not you plan to attend, please complete, sign and date the enclosed proxy and return it promptly in the enclosed envelope.

YOUR VOTE IS IMPORTANT

Thank you for your interest in the Company’s affairs. As always, we are most grateful for your continued support of Bay Banks of Virginia.

Sincerely,
Robert F. Hurliman	Austin L. Roberts, III
Chairman of the Board	President and Chief Executive Officer

If you hold your shares through a broker, it is necessary for you to actually vote any proxies you receive in

order for your vote on the election of the director to be counted.

Your Vote is Important.

BAY BANKS OF VIRGINIA, INC.

100 South Main Street

Kilmarnock, Virginia 22482

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

May 16, 2011

To Our Stockholders:

The Annual Meeting of Stockholders of Bay Banks of Virginia, Inc. (the “Company”) will be held at Indian Creek Yacht & Country Club, Kilmarnock, Virginia, on May 16, 2011 at 1:00 p.m. for the following purposes:

1. To elect one (1) Class I director to serve a three-year term;

2. To ratify the selection of Yount, Hyde & Barbour P.C., independent registered public accounting firm, as auditors of the Company for the year ending December 31, 2011; and

3. To transact such other business as may properly come before the meeting or any adjournment thereof. Management knows of no other business to be brought before the meeting.

Only stockholders of record at the close of business on March 11, 2011 will be entitled to notice of and to vote at the Annual Meeting and any adjournments thereof.

By Order of the Board of Directors

Pamela A. Varnier

Corporate Secretary

April 8, 2011

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: A complete set of proxy materials relating to the Company’s Annual Meeting is available on the Internet. These materials may be found at http://www.baybanks.com.

PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY, WHETHER OR

NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.

BAY BANKS OF VIRGINIA, INC.

100 S. Main Street

Kilmarnock, Virginia 22482

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

May 16, 2011

GENERAL

The enclosed proxy is solicited by the Board of Directors of Bay Banks of Virginia, Inc. (the “Company”), the holding company for the Bank of Lancaster and Bay Trust Company (together, the “Subsidiaries”), for the Company’s Annual Meeting of Stockholders to be held on May 16, 2011, at the time and place and for the purposes set forth in the accompanying Notice of the Annual Meeting or any adjournment thereof. The approximate mailing date of this Proxy Statement and accompanying proxy is April 8, 2011.

Revocation and Voting of Proxies

Execution of a proxy will not affect a stockholder’s right to attend the Annual Meeting and to vote in person. Any stockholder who has executed and returned a proxy may revoke it by attending the Annual Meeting and requesting to vote in person. A stockholder may also revoke his proxy at any time before it is exercised by filing a written notice with the Company or by submitting a proxy bearing a later date. Proxies will extend to, and will be voted at, any adjourned session of the Annual Meeting.

Voting Rights and Solicitation

Only stockholders of record at the close of business on March 11, 2011 are entitled to notice of and to vote at the Annual Meeting or any adjournments thereof. The number of shares of common stock of the Company outstanding and entitled to vote on March 11, 2011 was 2,605,856. The Company has no other class of stock outstanding. A 60% majority of the shares entitled to vote, represented in person or by proxy, will constitute a quorum for the transaction of business.

Each share of common stock entitles the record-holder thereof to one vote upon each matter to be voted upon at the Annual Meeting. Shares for which the holder has elected to abstain or to withhold the proxies’ authority to vote on a matter, and broker non-votes, will count toward a quorum, but will not be included in determining the number of votes cast with respect to such matter.

The cost of solicitation of proxies will be borne by the Company. Solicitation is being made by mail, and if necessary may be made in person, by telephone, or special letter by officers and regular employees of the Company, acting without compensation other than regular compensation.

Principal Stockholders

The only beneficial owner of 5% or more of the outstanding common stock of the Company is the Bay Banks of Virginia Employee Stock Ownership Trust (the “Trust”), which owns 159,110 shares, or 6.1% of the Company’s common stock. The Trust was established pursuant to the Company’s Employee Stock Ownership Plan (“ESOP”). One member of the Board of Directors of the Company and two directors of Bank of Lancaster (the “Bank”) are trustees of the ESOP. As of March 11, 2011, all shares held in the

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Trust had been allocated to the accounts of participating employees. Under the terms of the ESOP, the trustees must vote all allocated shares held in the ESOP in accordance with the instructions of the participating employees, and allocated shares for which employees do not give instructions will be voted in the same ratio on any matter as to those shares for which instructions are given.

PROPOSAL ONE – ELECTION OF DIRECTOR

The Company’s Board of Directors is divided into three classes (I, II and III). The term of office for the single Class I director will expire at the Annual Meeting. Currently, the Class I director is Austin L. Roberts, III. If elected, Mr. Roberts will serve until the Annual Meeting of Stockholders held in 2014.

The persons named in the proxy will vote for the election of the nominee named below unless authority is withheld. If, for any reason, the person named as nominee should become unavailable to serve, an event that management does not anticipate, proxies will be voted for such other person as the Board of Directors may designate.

The Board of Directors recommends the Class I nominee, as set forth below, for election. The Board of Directors recommends that stockholders vote FOR the nominee. The nominee receiving the greatest number of affirmative votes cast at the Annual Meeting will be elected.

Name (Age)	Company Director Since	Principal Occupation During Past Five Years
Class I (Nominee to serve until the 2014 Meeting):
Austin L. Roberts, III (64)	1997	President and Chief Executive Officer of the Company and the Bank
Class II (Director serving until the 2012 Meeting):
Julien G. Patterson (59)	2009	Chairman and past President and Chief Executive Officer of OMNIPLEX World Services Corporation, Chantilly, Virginia; past Chairman of the Virginia State Chamber of Commerce, Richmond, Virginia

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Name (Age)	Company Director Since	Principal Occupation During Past Five Years
Class III (Directors serving until the 2013 Meeting):
Robert C. Berry, Jr. (66)	2004	Retired Vice President of the Company since February 2008; Retired President and Chief Executive Officer of Bay Trust Company since February 2008
Richard A. Farmar, III (53)	2004	President of B.H. Baird Insurance Agency, Warsaw, Virginia
Robert F. Hurliman (66)	2007	Retired Director of Vehicle Logistics of DaimlerChrysler Corporation, Auburn Hills, Michigan, since 2000

Board of Directors Information

Board Meetings. Each director is expected to devote sufficient time, energy and attention to ensure diligent performance of the director’s duties, including attendance at Board and Committee meetings. During 2010, there were ten meetings of the Board of Directors. Each incumbent director attended at least 75% of the aggregate number of meetings of the Board of Directors and its Committees. Directors are encouraged to attend stockholders meetings, and all 2010 directors attended the 2010 Annual Meeting of Stockholders, with the exception of Julien G. Patterson.

There are no family relationships among any of the directors or among any directors and any officer. None of the directors serves as a director of any other publicly held company.

Leadership Structure. The positions of Chairman of the Board and Chief Executive Officer are held by separate persons. The Chief Executive Officer serves on the Board of Directors; however, his main focus is to provide leadership to the Company in accomplishing the directives established by the Board. In that role, he is responsible for the general administration, oversight, care and management of the business of the Company and the Subsidiaries, as well as full authority over all officers, managers and employees. The Chairman of the Board is considered the lead independent director, and his role, along with the Board, is to provide independent oversight of the Chief Executive Officer, to direct the business and affairs of the Company for the benefit of its stockholders, and to balance the interests of the Company’s diverse constituencies including stockholders, customers, employees and communities.

Qualifications and Experiences of Directors.

Robert C. Berry, Jr. brings to the Board 38 years of experience in the financial services industry, ranging from trust and estate administration to executive management of a trust division of another financial institution with $270 million in assets under management. He became Chairman of the Bay Trust Company Board of Directors in April 2009, after serving as a director since 2001, and has remained on that board since his retirement from Bay Trust Company in February 2008 as President and Chief Executive Officer. He has been a director of the Company since 2004. Mr. Berry received his undergraduate degree from the University of Louisville and his law degree from that University’s School of Law. He is a member of the Kentucky Bar Association.

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Richard A. Farmar, III is President of B. H. Baird Insurance Company, headquartered in Warsaw, Virginia. A graduate of Hampden-Sydney College, he joined B. H. Baird in 1979. In 1983, he received the AAI (Accredited Advisor in Insurance) designation and in 1994, the CPCU (Chartered Property Casualty Underwriter) designation. Mr. Farmar became President of B. H. Baird in January 1999. He has served as President of the Independent Insurance Agents of Virginia and as a director of the Virginia Financial Services Corporation. Active in his community, Mr. Farmar has served as President of the Warsaw Jaycees, President of the George Washington National Memorial Association, President of the Rappahannock Chapter of Ducks Unlimited, and has coached Little League Baseball. He is a Past President and current member of the Warsaw Rotary Club and a director of The Tidewater Foundation. Mr. Farmar is also the Chairman of the Board of Bank of Lancaster and Chairman of its Executive, Loan and Planning Committees. His connections to Richmond County, Virginia provide valuable knowledge of that market area.

Robert F. Hurliman is Chairman of the Board of the Company, where he has been a director since 2007. Mr. Hurliman has also been a director of Bay Trust Company since 2006. He brings to the Board extensive executive skills from his career of 31 years at DaimlerChrysler, AG in Michigan, from which he retired in 2000, after serving that company in manufacturing, engineering, purchasing and supply chain management. His last position was that of Director of Logistics, in which he was responsible for delivery of over 3 million domestically produced and imported vehicles in North America. Mr. Hurliman received his undergraduate degree from Pennsylvania State University and his graduate degree from Wayne State University. He is active in our community, serving as Treasurer of Grace Episcopal Church, Kilmarnock; past president and Nominating Committee member of Lancaster County Community Library; and a member of the Architectural Review Board and Strategic Planning Chair for Laurel Point Property Owners Association.

Julien G. Patterson brings to the Board valuable business and board skills as Chairman and Past President and Chief Executive Officer of OMNIPLEX World Services Corporation, a company he founded 21 years ago. The company employs approximately 3,500 employees worldwide. Mr. Patterson’s security career began with the Central Intelligence Agency, during which time he designed a wide variety of comprehensive and specialized security training programs. Serving 10 years with the CIA, he was responsible for heading up its worldwide mobile training teams. In 1987, Mr. Patterson left the CIA to begin his career as an entrepreneur and consultant. In 1997, Mr. Patterson was named the Greater Washington Entrepreneur of the Year from a field of over 890 nominees in the highly competitive Business Services category. The Entrepreneur of the Year award, sponsored by Ernst & Young LLP, the NASDAQ Stock Market, and other nationally known companies, was established to recognize “an elite group of entrepreneurs whose vision, innovation and hard work have established and sustained successful growing businesses.” Mr. Patterson received his undergraduate and honorary doctorate degrees from Norfolk State University. He is also the Past Chairman of the Virginia State Chamber of Commerce; a director of the Boys & Girls Club of the Northern Neck; and a director of the Steamboat Era Museum.

Austin L. Roberts, III brings a lifetime career in banking to the Board. He is President and Chief Executive Officer of the Company, and has been a director since 1997. Mr. Roberts has also been President and Chief Executive Officer of Bank of Lancaster since 1990. He has served as a director of Bay Trust Company since 1999 and has been its Vice Chairman since 2006. Mr. Roberts has over 42 years of experience in the financial services industry. He received his undergraduate and graduate degrees from the College of William & Mary. He serves as a director of the ABA, as a director of its Education Foundation, as a member of its Government Relations Council, and is past chairman of its Community Bankers Council, its Joint Preparedness Task Force and its Emerging Technology Steering committees. Mr. Roberts is Vice Chairman and a director of the Virginia State Chamber of Commerce and the Virginia Council on Economic Education. He is a director of the VBA and a past director of the Virginia Association of Community Banks. Mr. Roberts has been very active in the community, serving

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as a director of Virginia Quality for Life, as a principal organizer for development of the Northern Neck Branch of the Metropolitan Peninsula YMCA as the Chairman of the Northern Neck YMCA, and as a current director of the Development Board of the School of Education for the College of William & Mary. Mr. Roberts is past director of Northern Neck Court Appointed Special Advocate and the Education Foundation Board of Rappahannock Community College. He is past president of the Chesapeake Academy Board of Trustees and a past member and Secretary of the Board of Visitors for the College of William & Mary.

Board Involvement in Risk Oversight. The Board oversees risk management to be reasonably certain that the Company’s risk management policies, procedures, and practices are consistent with Company strategy and functioning appropriately. The Board performs its risk oversight in several ways. The Board establishes standards for risk management by approving policies that address and mitigate material risks. These include policies addressing risks such as credit risk, interest rate risk, operational risk, liquidity risk, capital risk and fiduciary risk. The Audit Committee oversees financial, accounting and internal control risk management. The Board also monitors, reviews, and reacts to risk through various reports presented by management, internal and external auditors, and regulatory examiners.

Board Committees

The Board of Directors of the Company has, among others, a standing Compensation Committee and Audit Committee.

Compensation Committee. The Compensation Committee currently consists of Richard A. Farmar, III, Robert F. Hurliman and Julien G. Patterson. The function of this committee, which operates without a charter, is to review compensation adjustments for officers; to review and recommend compensation levels for senior officers; to recommend compensation for directors and executive officers; to recommend the annual ESOP contribution; and to review the Company’s benefits program. In the opinion of the Compensation Committee and the Board of Directors, the Company’s compensation practices do not encourage excessive or inappropriate risk taking and are not reasonably likely to have a material adverse effect on the Company. The Compensation Committee met two times during 2010, and has engaged no compensation consultants.

Audit Committee. The Audit Committee currently consists of Robert C. Berry, Jr., Richard A. Farmar, III and Robert F. Hurliman. All members of the Audit Committee meet the requirements for independence as set forth in the NASDAQ definition of “independent director,” and all members meet the definition of an independent director as set forth in Rule 10A-3 of the Securities Exchange Act of 1934.

Although the Company does not currently have an “audit committee financial expert” as defined by the Sarbanes-Oxley Act of 2002, all three directors on the Audit Committee bring diversity of financial knowledge and expertise and have extensive business backgrounds that the Board has determined are sufficient for the proper exercise of their duties on the Committee.

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the Company’s independent registered public accounting firm. Accordingly, the independent registered public accounting firm reports directly to the Audit Committee of the Company. It is the responsibility of the Audit Committee to select the Company’s independent registered public accounting firm, to approve the scope of the independent registered public accounting firm’s audits and to review the reports of examination by the regulatory agencies, the independent registered public accounting firm and the internal auditor. The Committee regularly reports to the Board of Directors of the Company. The Audit Committee met five times during 2010.

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Nominating Committee. The Company’s Board of Directors does not have a standing nominating committee. The Board of Directors does not believe that it is necessary to have a nominating committee because it has determined that the functions of a nominating committee can be adequately performed by its independent members and that stockholders are best served by having such directors participate in the selection of board nominees.

In accordance with the Company’s Bylaws, nominations for the election of directors shall be made by the Board of Directors or by any stockholder entitled to vote in the election of directors generally. However, any stockholder entitled to vote in the election of directors generally may nominate one or more persons for election as director(s) at a meeting only if written notice of such stockholder’s intent to make such nomination or nominations has been given, either by personal delivery or by U.S. mail, postage prepaid, to the Secretary of the Company not later than (i) with respect to an election to be held at an annual meeting of stockholders, 120 days prior to the date of the anniversary of the immediately preceding Annual Meeting, and (ii) with respect to an election to be held at a special meeting of stockholders for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to stockholders. Each notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (e) the consent of each nominee to serve as director of the Company if so elected. The Chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure. The above procedures are in addition to the procedures regarding inclusion of stockholder proposals in proxy materials set forth in “Stockholder Proposals” in this Proxy Statement.

Qualifications for consideration as a director nominee may vary according to the particular areas of expertise being sought as a complement to the existing board composition. High-level leadership experience in business activities, breadth of knowledge about issues affecting the Company and time available for meetings and consultation on Company matters are among the initial criteria the Nominating Committee looks for in a candidate. Although the Board has not adopted a formal policy relating to Board diversity, the independent directors seek a diverse group of candidates who possess the background, skills and expertise to make a significant contribution to the Board, to the Company and its stockholders. The independent directors, along with the other board members as appropriate, evaluate potential nominees, whether proposed by stockholders or otherwise, by reviewing their qualifications, reviewing results of personal and reference interviews and reviewing other relevant information. Consideration is made of a candidate’s ability to complement the existing Board, and the Board’s need for operational, management, financial, technological or other expertise, as well as geographical representation within the Company’s market areas. Other factors, such as a candidate’s race, gender, or national origin, are considered if all other qualifications are met. Candidates whose evaluations are favorable are then chosen by a majority of the independent directors to be recommended for selection by the full Board. The full Board then selects and recommends candidates for nomination as directors for stockholders to consider and vote upon at an annual meeting.

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DIRECTORS’ COMPENSATION

Non-employee directors of the Company receive a $3,500 annual retainer, with the exception of the Chairman, who receives an annual retainer of $6,000 beginning in 2011. They also receive $350 for each meeting of the Company’s Board of Directors attended, and $200 for each committee meeting attended. Directors who are employees of the Company, the Bank or Trust Company are not compensated for attendance at Board or Committee meetings. In addition, certain directors serve on Community Reinvestment Act Advisory Boards, and receive $50 for each meeting attended.

In accordance with the 2008 Non-Employee Directors Stock Option Plan, five of the non-employee directors of the Company and the eight non-employee directors of the Subsidiaries were granted stock options for 500 shares of the Company’s common stock on May 19, 2010, at the fair market value on that date. This plan, which reserves a total of 50,000 shares of common stock of the Company, provides that each non-employee director of the Company and the Subsidiaries is eligible to receive a stock option grant for 500 shares in May of each year during the term of the plan.

The following table presents compensation information on directors of the Company for 2010.

2010 Director Compensation
	Fees Earned or Paid in Cash		Option Awards (1)		Nonqualified Deferred Compensation Earnings (2)		All Other Compensation		Total
Walter C. Ayers (3)	$	6,900	$	292		—		—	$	7,192
Robert C. Berry		14,700		292		—		—		14,992
Richard A. Farmar, III		15,050		292	$	8,028		—		23,370
Robert F. Hurliman		17,000		292		596		—		17,888
Julien Patterson		5,800		292		—		—		6,092

(1) Assumptions used to calculate the value can be found in Note 17 in the Notes to the Company’s consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

(2) Messrs. Farmar and Hurliman have elected to defer cash into the Virginia Bankers Association’s non-qualified deferred compensation plan for the Company.

(3) Mr. Ayers retired effective February 2011.

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OWNERSHIP OF COMPANY COMMON STOCK

The following table sets forth, as of March 11, 2011, certain information with respect to the beneficial ownership of Company common stock held by each director and director nominee, the named executive officers in the Summary Compensation Table on page 9, and by the directors, director nominees and all executive officers as a group.

Name	Amount and Nature  of Beneficial Ownership (1)			Percent of Class
Robert C. Berry, Jr.		5,261	(2) (3)		*
Kenneth O. Bransford, Jr.		49,350	(2) (4)		1.9	%
Richard A. Farmar, III		13,016	(2) (5)		*
Robert F. Hurliman		18,126	(2) (6)		*
Julien G. Patterson		16,776	(7)		*
Austin L. Roberts, III		62,030	(2) (8)		2.4	%
All directors and executive officers as a group (6 persons)		165,100	(2) (9)		6.2	%

* Represents less than 1% of Company common stock.

(1) For purposes of this table, beneficial ownership has been determined in accordance with the provisions of Rule 13d-3 of the Securities Exchange Act of 1934 under which, in general, a person is deemed to be the beneficial owner of a security if he has or shares the power to vote or direct the voting of the security or the power to dispose of or direct the disposition of the security, or if he or she has the right to acquire beneficial ownership of the security within 60 days.

(2) Includes shares held by affiliated corporations, close relatives and children, and shares held jointly with spouses or as custodians or trustees, as follows: Mr. Berry, 1,838 shares; Mr. Bransford, 979 shares; Mr. Farmar, 6,496 shares; Mr. Hurliman, 3,595 shares; and Mr. Roberts, 15,499 shares.

(3) Includes 1,602 shares that may be acquired pursuant to currently exercisable stock options granted under the Company’s stock option plans.

(4) Includes 17,062 shares that may be acquired pursuant to currently exercisable stock options granted under the Company’s stock option plans, and 11,848 shares held in the Company’s ESOP.

(5) Includes 5,389 shares that may be acquired pursuant to currently exercisable stock options granted under the Company’s stock option plans.

(6) Includes 2,143 shares that may be acquired pursuant to currently exercisable stock options granted under the Company’s stock option plans.

(7) Includes 1,061 shares that may be acquired pursuant to currently exercisable stock options granted under the Company’s stock option plans.

(8) Includes 22,577 shares that may be acquired pursuant to currently exercisable stock options granted under the Company’s stock option plans, and 7,114 shares held in the Company’s ESOP.

(9) Includes 49,834 shares that may be acquired pursuant to currently exercisable stock options granted under the Company’s stock option plans, and 18,962 shares held in the Company’s ESOP.

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EXECUTIVE COMPENSATION

No officer receives compensation from the Company. All compensation is paid through the Subsidiaries.

The following table presents compensation information on the Company’s President and Chief Executive Officer and its Vice President. No other executive officer of the Company earned over $100,000 in total compensation in 2010.

Summary Compensation Table

	Year		Salary		Bonus		Option Awards (1)		Change in Pension Value (2)		All Other Compensation			Total
Austin L. Roberts, III President and CEO		2010	$	205,000		—	$	1,962	$	45,726	$	10,487	(3)(4)	$	263,175
		2009		205,000		—		2,125		110,244		8,878	(3)(4)		326,247
Kenneth O. Bransford, Jr. (5) Vice President		2010	$	117,110		—	$	981	$	29,907	$	6,002	(6)(7)	$	154,000

(1) The Company’s 2003 stock option plan does not permit the granting of restricted stock awards or stock appreciation rights, and it is the Company’s only stock-based long-term compensation plan currently in effect in which employees may participate. Assumptions used to calculate the value can be found in Note 17 in the Notes to the Company’s consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

(2) Amounts shown reflect the change in present value of the accumulated benefit obligation. See “Benefit Plans – Pension Plan” below.

(3) Consists of: (i) $6,150 accrued in 2010 and $4,609 in 2009 on behalf of Mr. Roberts under the 401(k) Plan; (ii) $3,373 contributed in 2010 and $3,328 in 2009 to Mr. Roberts under the Company’s ESOP; and (iii) $964 accrued in 2010 and $941 in 2009 on behalf of Mr. Roberts for life insurance.

(4) Perquisites included the use of a Company-owned vehicle for Mr. Roberts in 2009 and 2010. However, the aggregate incremental cost to the Company for all perquisites was less than $10,000 and therefore is not included here.

(5) Mr. Bransford was elected to the position of Vice President in August 2010, therefore, no Company compensation is required for 2009.

(6) Consists of: (i) $3,513 accrued in 2010 on behalf of Mr. Bransford under the 401(k) Plan; (ii) $1,936 contributed in 2010 to Mr. Bransford under the Company’s ESOP; and (iii) $553 accrued in 2010 on behalf of Mr. Bransford for life insurance.

(7) Perquisites included the use of a Company-owned vehicle for Mr. Bransford in 2010. However, the aggregate incremental cost to the Company for all perquisites was less than $10,000 and therefore is not included here.

Executive Compensation Discussion

The compensation program for executive management consists of up to four elements: (i) base salary, which is set on an annual basis; (ii) incentive stock options; (iii) the ESOP; and (iv) retirement plans, such as the pension plan and the 401(k) plan. In addition to executive management, these compensation elements apply to other key employees and officers.

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The Board of Directors determines general salary and benefit policies and procedures. The Board uses market studies and published compensation data to review competitive rates of pay, to establish salary ranges, and to arrive at base salary levels. The Board approves base salaries at levels competitive with amounts paid to executives with comparable qualifications, experience and responsibilities after comparing salary information of similar sized banks as provided by the Virginia Bankers Association’s Salary Survey of Virginia Banks and other compensation surveys. In addition, the Board considers the recent performance of the Company and assesses the executive’s past performance and its expectation as to future contributions in leading the Company.

Compensation for senior officers other than the President and Chief Executive Officer is recommended to the Compensation Committee by the President and Chief Executive Officer. The Compensation Committee reviews these recommendations and has the authority to revise the proposed compensation proposals. Once approved by the Compensation Committee, the senior officer’s compensation is referred to the Board of Directors for review, discussion, revision if requested, and approval.

The Board uses a subjective approach to the determination of compensation based on the factors noted above. Except concerning incentive stock options, the Board does not rely on formulas or weights of specific factors. Neither the profitability of the Company nor the market value of its stock is directly utilized in computing an officer’s base compensation. The Company’s executive compensation program has substantially relied on base salary as its primary component.

Incentive stock option grants are deemed earned only if the objectives set by the Compensation Committee for each key employee are achieved by a specified date. The objective of these options is to create a link between officer compensation and Company performance. In determining the appropriate level of stock-based allotments, the Committee considers the officer’s contribution toward the Company’s performance. To encourage growth in stockholder value, incentive stock options are granted to all officers who are in a position and have a responsibility to make a substantial contribution to the long-term success of the Company. The Board believes this focuses attention on managing the Company from the perspective of an owner with an equity stake in the business.

Equity Awards

Stock Option Plans. The Company currently has in effect one stock option plan for employees, the 2003 plan. The 1994 stock option plan has expired, but certain options deemed earned are still exercisable as outlined below. The 2003 plan provides for the earning of incentive stock options by key employees of the Company upon successful completion of agreed upon goals. The Compensation Committee of the Company makes allocations under the plan and fixes the terms and conditions of each allocation pursuant to a separate agreement entered into with each eligible key employee. The exercise price of each option award deemed earned is 100% of the fair market value of the Company’s common stock on the date of the award. The awards, or a portion thereof, vest twelve months after the date of grant, based upon a determination of the percentage of goals achieved. An option granted under the 2003 plan is not exercisable after the expiration of ten years from the date such option is granted. In general, an option is not transferable by a person to whom it is granted other than by will or the laws of descent and distribution.

Under the 2003 plan, of the 189,280 shares authorized, 76,718 are available for granting purposes. In 2010, of the 36,712 shares granted, the number of shares considered earned has not been determined. Although the 1994 plan has expired, option grants for 43,381 shares are still available for exercise.

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The following table presents certain information on the stock options held by the Company’s President and Chief Executive Officer, and its Vice President, as of December 31, 2010.

Outstanding Equity Awards at Fiscal Year-End

		Option Awards
	Year of Award	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable			Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)			Option Exercise Price ($)		Option Expiration Date
Austin L. Roberts, III	2010		—		7,280	(1)		7,280	(1)	$	5.43		6/03/2020
	2009		2,839		—			—			7.40		4/29/2019
	2008		1,135		—			—			11.09		4/08/2018
	2007		3,407		—			—			13.87		4/10/2017
	2006		1,135		—			—			12.39		4/11/2016
	2005		—		—			—			—		—
	2004		—		—			—			—		—
	2003		—		—			—			—		—
	2002		7,571		—			—			15.25		4/29/2012
	2001		6,490		—			—			15.49		4/16/2011
Kenneth O. Bransford, Jr.	2010		—		3,640	(1)		3,640	(1)	$	5.43		6/03/2020
	2009		974		—			—			7.40		4/29/2019
	2008		1,704		—			—			11.09		4/08/2018
	2007		730		—			—			13.87		4/10/2017
	2006		1,217		—			—			12.39		4/11/2016
	2005		1,340		—			—			14.75		4/19/2015
	2004		2,272		—			—			14.75		4/20/2014
	2003		3,677		—			—			13.64		5/30/2013
	2002		3,786		—			—			15.25		4/29/2012
	2001		1,362		—			—			15.49		4/16/2011

(1) All or a portion of these awards vest on June 3, 2011, at which time a determination will be made as to which, if any, associated performance criteria have been satisfied, and therefore how many shares have been earned.

Benefit Plans

Pension Plan. The Company converted its non-contributory defined benefit pension plan, which covered substantially all salaried employees who have reached the age of 21, to a cash balance pension plan effective December 31, 2009. Prior to this date, benefits were generally based upon years of service and average compensation for the five highest-paid consecutive years of service. Under the cash balance plan, benefits earned by participants under the prior defined benefit pension plan through December 31, 2009 were converted to an opening account balance for each participant. This account balance for each

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participant will grow each year with annual pay credits based on age and years of service and monthly interest credits based on an amount established each year by the Board of Directors. Pursuant to the terms of the cash balance pension plan, employees are 100% vested after three years of service. Once vested, the accumulated cash balance is available to the participant upon retirement, death or other termination of employment and is payable in various forms at the election of the participant, including as a lump sum.

At December 31, 2010, the lump sum value of the accrued benefit in this plan was $668,718 for Mr. Roberts and $487,900 for Mr. Bransford.

401(k) Plan. The Company has a contributory 401(k) plan. All salaried employees of Subsidiaries are eligible to participate after having worked six months consecutively and there is no age requirement. Participants may elect to defer between 1% and 15% of their base compensation, which will be contributed to the plan, providing the amount deferred does not exceed the federal dollar maximum election deferral for each year. The Subsidiaries match 100% up to a 2% deferral, then 25% on deferrals between 2% and 6% of salary. Under the plan, an employee is vested in the matched portion of the contribution by 20% after two years and 20% each year thereafter for the next four years of service. If an employee leaves prior to the initial two-year period, he or she forfeits any accrued match contribution.

Distributions to participants are made at death, retirement or other termination of employment in a lump sum payment. The plan permits certain in-service withdrawals. Normal retirement age is considered 65; early retirement is considered at 55 with 10 years of vested service; disability retirement has no age requirements but a service requirement of 10 years of vested service.

Employee Stock Ownership Plan. The ESOP is a non-contributory plan supported by annual contributions made at the discretion of the Company’s Board of Directors. The ESOP is a stock bonus plan qualified under Section 401(a) of the Internal Revenue Code and an employee stock ownership plan under Section 4975(E)(7) of the Internal Revenue Code. Trustees and an administrative committee as appointed by the Chairman of Company’s Board of Directors for the exclusive benefit of participants administer the ESOP. The ESOP is eligible to each Bank and Trust Company employee over the age of 21 and credited with at least 1,000 hours of service for the plan year.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of Bay Banks of Virginia, Inc. oversees the Company’s financial reporting process on behalf of the Board of Directors of the Company. The Audit Committee is elected by the Board of Directors of the Company. All members of the Audit Committee are independent of management. In addition, the Audit Committee operates under a written charter adopted by the Board of Directors. While management has the primary responsibility for the quality and integrity of the Company’s financial statements and reporting processes, the Audit Committee provides assistance to management in fulfilling this responsibility. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements for the Annual Report with management and the independent registered public accounting firm, and discussed the quality and acceptability of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosure in the financial statements.

In addition, the Committee obtained from the Company’s independent registered public accounting firm a formal written statement discussing any disclosed relationship or service which may impact the objectivity and independence of the independent registered public accounting firm, as required by Independence Standards Board Standard No. 1 “Independence Discussions with Audit Committees.” The committee also discussed with the independent registered public accounting firm all communications required by Public Company Accounting Oversight Auditing Standard AU Section 380 and Rule 2-07 of Regulation S-X, as amended.

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The Audit Committee also monitored the internal audit functions of the Company including the independence and authority of its reporting obligation, the proposed audit plan for the coming year, and the adequacy of management response to internal audit findings and recommendations.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board has approved) that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2010 for filing with the Securities and Exchange Commission. The Company’s Audit Committee has also recommended the selection of the Company’s independent registered public accounting firm.

Audit Committee

Bay Banks of Virginia, Inc.

Robert F. Hurliman, Chair

Robert C. Berry, Jr.

Richard A. Farmar, III

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES

Yount, Hyde and Barbour, P.C. (“YHB”) audited the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, and reviewed the Company’s quarterly reports on Form 10-Q during 2010.

The following table presents aggregate fees paid or to be paid by the Company and the Bank for professional services rendered by YHB. Audit fees include audit and review services, consents, and review of documents filed with the Securities and Exchange Commission. Audit related fees consist of research and consultation concerning financial accounting and reporting standards and audits of the Virginia Bankers Association defined contribution plan and the ESOP. Tax fees include preparation of federal and state tax returns and consultation regarding tax compliance issues.

	Fiscal 2010		Fiscal 2009
Audit Fees	$	73,000	$	71,300
Audit-related Fees		20,706		20,213
Tax Fees		4,900		4,800
Total Fees	$	98,606	$	96,313

The Audit Committee pre-approves all audit, audit related, and tax services on an annual basis, and in addition, authorizes individual engagements that exceed pre-established thresholds. Any additional engagement that falls below the pre-established thresholds must be reported by management at the Audit Committee meeting immediately following the initiation of such an engagement.

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PROPOSAL TWO – RATIFICATION OF SELECTION OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has appointed Yount, Hyde and Barbour, P.C. as the Company’s independent registered public accounting firm for 2011, subject to ratification of the stockholders. The services that YHB will perform will consist primarily of the examination and audit of the institution’s financial statements, tax reporting assistance, and other audit and accounting matters. Representatives of YHB are expected to be present at the Annual Meeting and will be given an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.

The Board of Directors recommends that you vote FOR the ratification of the appointment of Yount, Hyde & Barbour, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2011. Proxies solicited by the Board will be voted in favor thereof unless a stockholder has indicated otherwise on the proxy.

INTEREST OF DIRECTORS AND OFFICERS IN CERTAIN TRANSACTIONS

Some of the Company’s directors, executive officers, and members of their immediate families, and corporations, partnerships and other entities, of which such persons are officers, directors, partners, trustees, executors or beneficiaries, are customers of the Bank. All loans and loan commitments to them were originated in the ordinary course of business, upon substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and, other than as set forth below, do not involve more than normal risk of collectibility or present other unfavorable features. It is the policy of the Bank to provide loans to officers who are not executive officers and to employees at more favorable rates than those prevailing at the time for comparable transactions with other persons. These loans do not involve more than the normal risk of collectibility or present other unfavorable features.

The law firm of Dunton, Simmons & Dunton serves as legal counsel to the Company, the Bank and the Trust Company. Mr. John C. Hodges, a director on the Board of the Bank, is a member of the firm.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Pursuant to Section 16(a) of the Securities Exchange Act of 1934, directors and executive officers of the Company are required to file reports with the Securities and Exchange Commission indicating their holdings of and transactions in Company common stock. To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, insiders of the Company complied with all filing requirements during 2010.

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OTHER MATTERS

General

Management knows of no other business to be brought before the Annual Meeting. Should any other business properly be presented for action at the meeting, the shares represented by the enclosed proxy shall be voted by the persons named therein in accordance with their best judgment and in the best interests of the Company.

STOCKHOLDER PROPOSALS

The Company’s Bylaws provide that, in addition to any other applicable requirements, for business (including stockholder nominations of director candidates) to be properly brought before an annual meeting by a stockholder, the stockholder must give timely notice in writing to the Secretary of the Company no later than 120 days before the anniversary date of the immediately preceding annual meeting. As to each matter, the notice must comply with certain informational requirements set forth in the Bylaws. These requirements are separate and apart from and in addition to the Securities and Exchange Commission’s requirements that a stockholder must meet to have a proposal included in the Company’s proxy materials. To be considered for inclusion in the Company’s proxy materials relating to the 2012 Annual Meeting of Stockholders pursuant to applicable Securities and Exchange Commission rules, the Secretary of the Company must receive stockholder proposals no later than December 10, 2011. Stockholder proposals should be addressed to Corporate Secretary, Pamela A. Varnier, Bay Banks of Virginia, Inc., 100 S. Main Street, P.O. Box 1869, Kilmarnock, Virginia 22482.

Stockholder Communication

Bay Banks of Virginia has a process whereby stockholders can contact the Company’s directorship. Corporate stockholder contact information is available on the Company website at www.baybanks.com.

ANNUAL REPORT ON FORM 10-K

A copy of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, excluding exhibits, as filed with the Securities and Exchange Commission can be obtained without charge by writing to Austin L. Roberts, III, President and CEO, Bay Banks of Virginia, Inc., 100 South Main Street, P. O. Box 1869, Kilmarnock, Virginia 22482. This information may also be accessed, without charge, by visiting either the Company’s website at www.baybanks.com or the Securities and Exchange Commission’s website at www.sec.gov.

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z			{
x	PLEASE MARK VOTES AS IN THIS EXAMPLE	REVOCABLE PROXY BAY BANKS OF VIRGINIA, INC.

This Proxy is solicited on behalf of

the Board of Directors

The undersigned, revoking all prior proxies, hereby appoints Robert F. Hurliman and Richard A. Farmar, III, or either of them, as proxies with full power of substitution to represent the undersigned and vote, as designated below, all the shares of common stock of Bay Banks of Virginia, Inc. held of record by the undersigned on March 11, 2011, at the Annual Meeting of Stockholders to be held on May 16, 2011, at 1:00 p.m. at the Indian Creek Yacht & Country Club, Kilmarnock, Virginia, or any adjournment thereof, on each of the following matters:

Please be sure to date and sign this proxy card in the box below.			Date
	Sign above	Co-holder (if any) sign above

		For	With- hold
1.	To elect one director to serve in the Class shown below, for a term to expire at the annual meeting of stockholders in 2014:	¨	¨
	Class I: Austin L. Roberts, III
		For	Against	Abstain
2.	To ratify the selection of Yount, Hyde and Barbour, P.C., independent registered public accounting firm, as auditors of the Company for the year ending December 31, 2011; and	¨	¨	¨
3.	To transact such other business as may properly come before the meeting or any adjournment thereof. Management knows of no other business to be brought before the meeting.

This proxy, when properly executed, will be voted in the manner directed by the undersigned stockholder. If no direction is made, this proxy will be voted “FOR” the listed nominee in proposal 1 and “FOR” proposal 2. All joint owners MUST sign.

Please sign exactly as your name appears on this card. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.

x y

¿   Detach  above card, sign, date and mail in postage paid envelope provided.     BAY BANKS OF VIRGINIA, INC. ¿

PLEASE ACT PROMPTLY

SIGN, DATE & MAIL YOUR PROXY CARD TODAY

Important Notice Regarding the Availability of Proxy Materials for the Meeting of Shareholders to be held on May 16, 2011: A complete set of proxy materials relating to the Company’s Annual Meeting is available on the Internet. These materials, consisting of the Proxy Statement, including the Proxy Card, and the Annual Report and Form 10-K for the year ended December 31, 2010, may be viewed at http://www.baybanks.com.

IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.

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