Virginia-based based TowneBank (NASDAQ:TOWN) agreed to acquire Monarch Financial Holdings, Inc., the parent company of Monarch Bank (NASDAQ:MNRK), for $220 million.
On a proforma basis, the combined companies will have total assets of $7.3 billion, deposits of $5.8 billion and loans of $5.4 billion. The combined entity will rank No. 1 in deposit market share with 20.64% of Virginia’s Hampton Roads market and will be the only community bank in the top 50 largest MSAs in the United States with a No. 1 market share ranking.
Common shareholders of Monarch will receive 0.8830 shares of TowneBank common stock for each share of Monarch. This implies a deal value per share of $18.57 or approximately $220.6 million based on TowneBank’s closing stock price of $21.03 on Wednesday, December 16, 2015. Using a 20-day moving average of TowneBank’s closing stock price implies a deal value per share of $19.25 or $229 million on an average share price of $21.81. The transaction is expected to be accretive to TowneBank’s earnings and capital ratios.
“Since the founding of our two banks in 1998, our companies have been built around the values of serving others and enriching lives,” said G. Robert Aston, Jr., Chairman and CEO of TowneBank.
“We have known and respected the senior leadership team and employees at Towne Bank for many years and have been impressed by the way they have grown their company into one of the largest and most successful financial institutions in Virginia”, stated Brad E. Schwartz, CEO of Monarch. “This combination of the top two performing community banks in the market gives us a dynamic foundation to serve our commercial, mortgage and consumer customers with even greater convenience, expanded product and service offerings, and additional lending capacity.”
Brad E. Schwartz will join Aston on the Towne Corporate Management Group as Senior Executive Vice President and Chief Operating Officer along with TowneBank President and Chief Banking Officer, J. Morgan Davis; William B. Littreal, Senior Executive Vice President and Chief Strategy Officer; and Clyde E. McFarland, Senior Executive Vice President and Chief Financial Officer.
Neal Crawford, Monarch Bank President, will join Towne as President and Chief Executive Officer of Towne Financial Services Group. William T. Morrison, Chief Executive Officer of Monarch Mortgage will become Chairman and Chief Executive Officer of TowneBank Mortgage and Realty Group succeeding Jacqueline B. Amato, currently TowneBank Mortgage CEO, who is planning to retire at the end of the 2016 calendar year.
Monarch Chairman, Jeffrey F. Benson, will join the TowneBank Corporate Board along with Monarch Directors, Elizabeth T. Patterson, Dwight E. Schaubach and Robert M. Oman. Schwartz, Crawford and Morrison will also join the board. Monarch Directors, Virginia Sancilio Cross, Taylor B. Grissom, Lawton H. Baker and Joe P. Covington will be elected to the Towne Financial Services Group Board of Directors.
Sandler O’Neill + Partners, LP acted as financial advisor to TowneBank and LeClairRyan, A Professional Corporation acted as its legal advisor in the transaction. Raymond James acted as financial advisor to Monarch and Williams Mullen acted as its legal advisor.