A big banking deal in Hampton Roads will have some ripple effect in Richmond.
Suffolk-based TowneBank last week announced a deal to acquire rival Monarch Bank in a transaction valued at $220 million.
While Chesapeake-based Monarch doesn’t have a retail branch presence in Richmond, it does have a sizeable mortgage operation locally that will be brought into the TowneBank fold. TowneBank made its splash into Richmond earlier this year with its acquisition of Franklin Federal Savings Bank.
Monarch CEO Brad Schwartz, who will take on the role of Towne’s chief operating officer following the deal, said his bank’s mortgage group has about 25 people in Richmond. It currently has offices in Innsbrook and off Forest Avenue in the West End that have focused largely on residential mortgages.
“We do good production (in Richmond),” Schwartz said.
He said he expects Monarch to close $100 million in mortgage loans out of the Richmond offices in 2015.
Once the deal closes as expected in the second quarter, Monarch’s Richmond lending group will be combined with TowneBank’s group of Richmond commercial bankers, most of whom work out of Franklin Federal’s former headquarters building in Innsbrook.
The combined residential and commercial operations should complement each other, Schwartz said.
“The goal is to take Richmond and be a major player,” he said.
TowneBank CEO Bob Aston said his bank has about two dozen commercial bankers here.
“(The combination will) juice us up a little up there in the mortgage production category,” Aston said.
TowneBank has $6.1 billion in assets. Monarch has $1.1 billion.
The deal will also create a larger statewide rival to Richmond’s biggest community bank, Union Bank & Trust. Union, which will still hold the status as the biggest community bank in Virginia, had $7.5 billion in assets as of the end of the third quarter.
TowneBank will become the dominant bank in Hampton Roads once the deal closes, leapfrogging it past Wells Fargo for the largest deposit market share in that area.
Aston said he didn’t want to see Monarch get scooped up by another larger bank.
“From a longer-term strategy, it prevents Monarch from falling into the hands of some other competitor who might have wanted to enter the market,” he said.
Schwartz said Monarch had been looking around, as consolidation is rampant in the banking industry.
“We looked at so many options, but there aren’t a lot of good partners out there,” he said.
Another reason for the deal was TowneBank’s succession plan, Aston said. The bulk of the Monarch executive team is in their mid-50s, while much of TowneBank’s leadership is older. And pending retirements and other vacancies left TowneBank with several openings in its upper ranks that will be filled by Monarch executives.
“That was one reason I approached them: I knew I had room to accommodate their leadership team,” Aston said.
TowneBank is also in the midst of construction on its new Richmond headquarters in the Gateway Plaza tower downtown. The bank has leased ground-floor space for a branch in the building, as well as for offices on upper levels.
Aston said they’ll look to open in the building toward the end of the first quarter in 2016.