Mail merge

UPDATE: TowneBank and Farmers Bank to merge – The Suffolk News-Herald

Editor’s note: This story was updated on August 19, 2022 with additional merger details.

Based in Suffolk TowneBank announced on Thursday that it has signed a merger agreement with Farmers Bankshares Inc., the Windsor-based holding company of Farmers Bank.

According to a press release from TowneBank, the merger has been approved by the boards of both companies. The merger is expected to close in the first quarter of 2023, subject to regulatory approval and Farmers shareholder approval.

The merger marks the end of an era for the Isle of Wight’s last county-based bank, founded 103 years ago in Windsor.

The transaction, according to the press release, will “solidify” TowneBank’s No. 1 market share in the Virginia Beach-Norfolk-Newport News metro area, adding Isle of Wight and Southampton counties to the area of service to society while increasing Towne Insurance’s revenue.

Our TowneBank family is honored and excited to join our longtime friends at Farmers,” said G. Robert Aston Jr., Executive Chairman of TowneBank, via the press release. “We believe our partnership can bring additional products and expanded services to Farmers Bank customers while helping our communities grow and prosper.”

According to TowneBank’s press release, Farmers Bank shareholders will receive 0.605 shares of TowneBank common stock for each share held by Farmers, which “implies a transaction value” of $17.82 per share, or approximately $56 million.

“This is an equity rather than a cash deal, which means TowneBank is offering equity in exchange for ownership of Farmers Bank,” explained Dr. Thomas Schneider, professor of finance at Old University. Dominion. “In an all-stock transaction, no money changes hands.”

“Instead, each share of FBVA will be exchanged for 0.6050 shares of TOWN,” he added, using the two banks’ over-the-counter share abbreviations. “Based on their recent market values, it appears that TowneBank is selling approximately $56 million (in) stock to current Farmers Bank shareholders to buy the bank.”

Aston told the Smithfield Times on Aug. 19 that Farmers Bank offices in Virginia Beach, Chesapeake and the Harbourview area of ​​Suffolk will close and consolidate with nearby TowneBank offices. The remaining Farmers offices, including in Smithfield and Windsor, will eventually be rebranded as TowneBank but will remain open. Aston is not planning any staff reductions.

TowneBank, which operates the fifth-largest bank-owned insurance agency in the country according to Aston, will acquire a 72% stake in Manry-Rawls, a Franklin-based insurance company, through the merger.

“This should bring our insurance revenue to around $85-86 million,” Aston said.

Based on financial statements released on June 30, the combined companies would have total assets of $17.5 billion, loans of $10.9 billion and deposits of $14.5 billion, the statement said. hurry. According to the Farmers Bankshares annual report, as of December 31, 2021, Farmers had $623 million in total assets, $255 million in total loans, and $531 million in total deposits.

We feel privileged to partner with our neighbors at TowneBank,” said Vernon Towler, Managing Director of Farmers, in the press release announcing the sale. “They share with Farmers Bank a commitment to philanthropy and community involvement. TowneBank is an incredibly strong organization.

The announcement comes following a months-long power struggle between Farmers management and the bank’s former chairman of the board, Richard “Dick” Holland Jr.

Holland, whose family founded Farmers, was ousted as chairman of the board of Farmers Bankshares in February over a disagreement over how aggressively to pursue a sale or merger of the business.

The Farmers Bankshares board had elected William A. Gwaltney Jr. to replace Holland as chairman in February. Holland had claimed in a March 8 letter to shareholders that he had “lost faith” in the current board and believed his investment as one of the bank’s major shareholders “would be better protected by a sale or merger of the company”.

Towler’s Aug. 18 remarks on the TowneBank merger are a stark departure from a Feb. 28 shareholder letter he signed in support of the bank’s independence. Aston told The Times the merger took place at the farmers’ request, with negotiations beginning six to eight weeks ago.

“We were lucky to be the one they chose,” Aston said.

In the months leading up to Farmers’ shareholders’ meeting on May 12, which saw around 60% of voting shareholders back Holland over the bank’s current direction, Holland and the bank had sent shareholders a series of dueling letters – the bank urging support for a slate of nine board members. for re-election and Holland’s urging shareholders to “hold back” their votes.

According to a May 24 Farmers Bankshares press release, all nine won re-election – but with only 37-40% of the vote. The remaining 59% to 62% of the votes “were retained”. All in-person and proxy votes cast represented approximately 76% of the Company’s outstanding shares.

In February, Farmers Bankshares reported record earnings of $8.5 million, or $2.72 per share, in 2021. Holland, however, claimed in his letter that this was “largely driven” by the Farmers’ purchase of a majority stake in Franklin-based Manry Rawls. insurance agency during his 1994-2019 tenure as the bank’s CEO, and by a one-time $3.1 million gain from the sale of bank-owned property that he had “led to his term in 2021” as president, which “would not be repeated in the years to come. Excluding Manry Rawls’ revenue and one-time sale revenue, “the picture is grim,” Holland told shareholders.

In April, Gwaltney and Towler had sent another one letter to shareholders saying the bank’s return on assets in 2021 was 1.44%, not the 0.5% claimed by Holland. Holland’s numbers, they argued, “leave out important parts of our revenue mix, such as Manry Rawls’ insurance business and Tidewater Home Funding’s mortgage business,” and did “not calculated in accordance with generally accepted accounting principles”.

“Given the strong ‘withhold’ vote against management at their shareholders’ meeting, it’s not too surprising that we are seeing an acquisition. It appears that Mr. Holland’s campaign to sell the bank has been successful,” Schneider said.

Farmers Bankshares’ stock price fluctuated throughout the year, from a low of $16.12 per share on January 4 to a high of $22 per share on April 4 and 19, according to the Wall. StreetJournal. At the May 12 shareholder meeting, it was trading at $19.50 per share. At 3:55 p.m. on August 18 after the merger announcement, it was trading at $18.04, four cents higher than the fixed price of $18 per share announced at 4 p.m. on August 17.

Holland declined to comment on the merger. Gwaltney did not respond to phone or email requests for comment from the Smithfield Times.