TowneBank in Suffolk, Virginia, has agreed to pay $120 million in cash for an in-state rival, the Midlothian-based Village Bank.
The $748 million-asset Village's franchise is focused in the Richmond Metropolitan Statistical Area, home to eight of its nine branches. Towne
The $17 billion-asset Towne "is humbled and excited to partner with Village Bank and its team members," Executive Chairman Robert Aston said Tuesday in a press release. "We believe our partnership can bring additional products and expanded services to the clients of Village Bank while meaningfully enhancing our Richmond presence, which is core to our franchise and future growth."
The Richmond MSA's population, currently 1.36 million, is expected to grow 4.8%, twice the national average, over the next five years. The region's $82,000 median household income, also tops the national average, according to the Greater Richmond Partnership and the U.S. Census Bureau. Median Household income in Midlothian, a western suburb, tops $100,000, according to the partnership.
Richmond's demographics are attracting other banks. In March, The $1.5 billion-asset First National Corp. in Strasburg, Virginia, announced plans
Astin founded Towne, serving as CEO from its opening in April 1999 until March 2018. The company has completed six mergers in its 25-year-history.
Village, which also opened in 1999, reported net income totaling $3.9 million through the first six months of 2024, up about 22% from the same six-month period in 2023. President and CEO Jay Hendricks characterized the merger with Towne as a "strategic move."
"This partnership will give us the ability to continue to meet our customers' banking needs with greater resources and products while providing increased opportunities for our employees," Hendricks said in the press release.
The $120 million deal price amounts to 171% of Village's tangible book value per share. Towne called it a "strategically compelling" use of its capital, noting the acquisition would produce about twice as much earnings-per-share accretion — about 6% once cost-saves are complete — as share buybacks.
While the price-to-tangible-book-value ratio Towne is paying is higher than the average for 2024 transactions, according to Seaport Research Partners Senior Analyst Laurie Havener Hunsicker, it follows a trend of richer payouts in recent weeks. Tupelo, Mississippi-based Renasant Financial's
Towne and Village are targeting a closing date in the first half of 2025. Neither Astin nor Hendricks had returned a reporter's call at deadline.
