Windsor, Va.-based Farmers Bankshares Inc. and its subsidiary, Farmers Bank, will merge with and into Portsmouth-based TowneBank.
Under the terms of the agreement, shareholders of Farmers Bankshares will receive 0.6050 share of TowneBank common stock for each share of Farmers Bankshares owned. This implies a deal value per share of $17.82, or approximately $56.0 million, based on TowneBank's 20-day average stock price of $29.46, ending Aug. 17.
At announcement, S&P Global Market Intelligence calculates the deal value to be 153.66% of common equity, 205.74% of tangible common equity, 11.21% of deposits, 9.59% of assets and 11.36x earnings. The tangible book premium to deposits ratio is 5.70%.
Market Intelligence valuations for bank and thrift targets in the Southeast region between Aug. 18, 2021, and Aug. 18, 2022, averaged 149.76% of book and 164.14% of tangible book and had a median of 13.53x last-12-months earnings, on an aggregate basis. On a per-share basis, they averaged 147.58% of book and 181.26% of tangible book and had a median of 14.37x LTM earnings.
The merger is expected to close in the first quarter of 2023.
The combined company is expected to have total assets of $17.5 billion, loans of $10.9 billion and deposits of $14.5 billion, based on financials reported June 30.
With the completion of the deal, TowneBank will expand in Virginia by eight branches to be ranked seventh with a 2.4% share of roughly $426.77 billion in total market deposits, according to Market Intelligence data.
TowneBank expects the merger to be approximately 5% accretive to EPS with fully phased-in cost savings on a GAAP basis. TowneBank anticipates the tangible book value dilution per common share impact to be less than 3% on a GAAP basis and accretive excluding accumulated other comprehensive income and interest rate marks impact, according to a news release.
Raymond James & Associates Inc. was the financial adviser, and Troutman Pepper Hamilton Sanders LLP was legal counsel to TowneBank. Piper Sandler & Co. was the financial adviser, while Williams Mullen was the legal counsel to Farmers Bankshares in the transaction.
To use S&P Capital IQ Pro's branch analytics tools to compare market overlap, click here. To create custom maps, click here.
