TowneBank’s new 8,500-square-foot branch at 9961 Iron Bridge. (John Wadsworth photo)
In a deal driven by its desire to accelerate its growth in the Richmond market, TowneBank is back in acquisition mode.
The $17 billion Hampton Roads-based bank announced on Tuesday a deal to absorb Midlothian-based competitor Village Bank.
In addition to taking on Village’s $747 million in assets, the move also gives Towne an extra nine branches in the Richmond region to go along with its eight existing local locations.
Bob Aston, Towne’s founder and executive chairman, said Village’s presence in Chesterfield and Hanover counties were of particular interest.
“It’s a really good deal for us that will help us expand our branching network in Richmond and get it done a little quicker than we could do building branches (one by one),” Aston said. “Particularly in Chesterfield and Hanover counties, this will kind of complete our branching network. Chesterfield and Hanover are growing like crazy.”
Towne has only one branch in Chesterfield and none in Hanover. Village has three branches in Chesterfield at 13531 Midlothian Turnpike, 6736 Southshore Drive and 4221 West Hundred Road; and two in Hanover County at 10035 Sliding Hill Road and 8051 Mechanicsville Turnpike. Those are in addition to locations in Scott’s Addition, Powhatan, the West End and Williamsburg.
Bob Aston
Aston said two or three of those locations overlap in proximity to existing Towne branches and will likely call for consolidation.
He said Towne also was attracted to Village’s commercial banking operations and its residential mortgage unit.
He said the bulk of Village’s 145 employees will likely stay on, particularly its 30 or so in mortgage operations, nearly four dozen working in its retail branches and around two dozen in its credit operations.
He said any consolidation of employees will be in redundant administrative roles, which is typical in these sorts of combinations.
“We think the changes on the employee side will be somewhat minimal. We’ll try to place as many of those people in our operation as we can,” he said.
He said no workforce changes are expected at Village until at least the middle of next year when Village is fully absorbed into Towne.
Among those Village employees staying on is CEO Jay Hendricks. A former SunTrust banker, Hendricks joined Village in 2013, starting as chief credit officer. He took over the CEO role Bill Foster in 2020.
Aston said Towne is entering into a long-term employment contract with Hendricks to stay on in a senior executive role to manage the bulk of Village’s commercial and retail bank operations after the closure of the deal.
The banks have yet to disclose in public filings the details of that arrangement.
Jay Hendicks
Hendricks did not respond to an interview request on Tuesday.
The bulk of Towne’s Richmond operations will continue to be managed by regional president Pat Collins, while its Chesterfield operations are managed by Matt Clarke.
Aston said the Village Bank name will be phased out in favor of the TowneBank brand next year. That means an end to the nearly 20-year run for the Village brand.
Village was founded in Midlothian in 1999 as Southern Community Bank and Trust. It rebranded to Village a few years later and expanded in the region by acquiring Mechanicsville-based River City Bank in 2008.
The deal marks Towne’s seventh acquisition since its founding 25 years ago. Its most recent transaction was last year when it acquired Farmers Bank, a $600 million institution in Hampton Roads.
It’s Towne’s second acquisition of a Richmond-area bank since it bought its way into the market in 2015 by absorbing Franklin Federal Savings Bank.
Aston said such deals are getting harder to come by as consolidation has snatched up many attractive smaller bank targets.
“There’s just not that many left in the markets that we’re in,” he said. “Virginia still has a lot of small community banks but unfortunately a lot are in slow growth areas. That’s why this deal was very attractive, because there’s a limited universe of quality players.”
Village has nine branches in the Richmond market, along with its Midlothian headquarters.
The cash-for-stock deal calls for Village shareholders to receive $80.25 for each share of Village stock they own. That pegs the value of the deal at approximately $120 million.
That per-share price is a nearly 50% premium on Village’s stock and news of the deal sent its share price skyrocketing Tuesday to well over $70 per share, up more than 40% from Monday.
The deal has already been given the blessing by the boards of directors of both banks. It still needs approval from Village shareholders, as well as regulators. It’s expected to close in the first half of 2025.
Piper Sandler & Co. served as Towne’s financial advisor in the deal and Troutman Pepper is its legal counsel. Janney Montgomery Scott is Village’s financial advisor and Williams Mullen is its legal counsel.
Bringing Village into the fold will help Towne eclipse $2 billion in Richmond-area deposits for the first time, cementing its place in the top five in deposits region wide.
Aston said Towne remains bullish on the Richmond market, which he said is holding up well despite sluggishness across the overall banking sector due to heightened interest rates of the last year or two.
He said the Fed’s recent decision to begin to lower rates should shake things loose.
“With rates coming down we think real estate deals will come back to life,” he said. “We have a number of apartment developers that are sitting on land and waiting for rates to come back down to make the numbers work.”