Two major players in the Richmond banking market are making moves, one through a deal that will bring a new bank brand to town and another that will shake up the rankings of the largest community banks in the state.
In the first of two deals announced Thursday, Hampton Roads-based TowneBank, which has nine branches in Richmond and has grown its local presence quickly since entering the market three years ago, will acquire Paragon Commercial Bank of North Carolina and its parent company in a transaction valued at $324 million.
Once consummated as expected in the fourth quarter, the deal will give TowneBank total assets of $9.7 billion. That will help it unseat Richmond-based Union Bank & Trust as the largest community bank headquartered in the state, based on today’s figures.
Union had $8.66 billion in assets as of March 31, compared to Towne’s $8.17 billion.
Its next-nearest Virginia rival was Tyson’s Corner-based Cardinal Bank, which had around $4 billion in assets until being acquired this month by West Virginia-based United Bank. That deal resulted in a $19 billion institution.
Snatching up Paragon will take TowneBank’s retail banking operations for the first time into the Raleigh and Charlotte markets. It previously had entered North Carolina by acquiring the former Bank of Currituck in the eastern part of the Tar Heel State.
Towne said it will continue to use the Paragon Bank brand in Raleigh, Charlotte and Cary.
Paragon CEO Robert Hatley will continue in his current role, and will oversee the Paragon division and the rest of Towne’s North Carolina operations.
Paragon’s current COO, chief credit officer and Charlotte market president will remain in their roles under the Towne umbrella.
Paragon had a presence in Richmond until 2011, when locally based Xenith Bank acquired its local assets.
Paragon shareholders will receive 1.7 shares of TowneBank stock for each Paragon share, which pegs the value of the deal at $59.25 per share.
The second deal announced Thursday will have a more visible effect on the Richmond market, as Charlotte-based Park Sterling bank agreed to be acquired by South Carolina giant South State Bank.
That transaction, valued at $691 million, will plant the South State Bank brand on the ground in Richmond for the first time, as it will be hung on Park Sterling’s seven local branches.
Park Sterling picked up those branches through the $87 million acquisition of the former Glen Allen-based First Capital Bank in 2016. Park Sterling had eight local branches until last month, when it shut down its Patterson Avenue outpost.
The deal will bring South State’s total assets to $14.5 billion, of which Park Sterling accounts for $3.3 billion and 50 branches in North Carolina, South Carolina, Virginia and Georgia.
Park Sterling CEO Jim Cherry, a former Richmond banker, will relinquish his executive role and take a seat on South State’s board of directors.
Shareholders of Park Sterling will receive 0.14 shares of South State stock for each share of Park Sterling stock.
South State was represented in the deal by investment banking firm Keefe, Bruyette & Woods and law firm Wachtell, Lipton, Rosen & Katz. Park Sterling hired Stephens Inc. as its financial advisor and McGuireWoods as its legal counsel.
Williams Mullen was Towne’s legal counsel in the deal. Sandler O’Neill was its financial advisor. Wyrick Robbins Yates & Ponton was Paragon’s legal counsel. Raymond James was its financial advisor.