Hampton Roads based TowneBank (NASDAQ: TOWN) and Farmers
Bankshares, Inc. (OTCPK: FBVA), the parent company of Farmers Bank,
Windsor, Virginia, today announced the signing of a definitive
merger agreement pursuant to which Farmers Bankshares, Inc. and
Farmers Bank, will merge with and into TowneBank. The proposed
transaction will solidify TowneBank’s number one market share in
the Virginia Beach-Norfolk-Newport News MSA adding Isle of Wight
and Southampton counties to the company’s service area while
expanding Towne Insurance revenues.
“Our TowneBank family is humbled and excited to
join hands with our long-time friends at Farmers,” said G. Robert
Aston, Jr., Executive Chairman of TowneBank. “We believe our
partnership can bring additional products and expanded services to
the clients of Farmers Bank while helping our communities grow and
prosper.”
“We feel privileged to partner with our
neighbors at TowneBank,” stated Vernon Towler, CEO of Farmers.
“They share with Farmers Bank a commitment to philanthropy and
community engagement. TowneBank is an incredibly strong
organization.”
Based on financials reported on June 30, 2022
the combined companies would have total assets of $17.5 billion,
loans of $10.9 billion and deposits of $14.5 billion. Under the
terms of the agreement, shareholders of Farmers will receive 0.6050
shares of TowneBank common stock for each share of Farmers 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 Wednesday, August 17, 2022.
TowneBank expects the merger to be approximately
5% accretive to earnings per share 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.
In consideration of the merger, extensive due
diligence was performed by the management teams of TowneBank and
Farmers. The merger agreement was approved by the boards of
directors of Farmers and TowneBank. The merger is expected to close
in the first quarter of 2023 and is subject to customary
conditions, including regulatory approval as well as the approval
of Farmers’s shareholders.
Raymond James & Associates, Inc. served as
the financial advisor and Troutman Pepper Hamilton Sanders LLP
served as legal counsel to TowneBank in the transaction. Piper
Sandler & Co. served as the financial advisor and Williams
Mullen served as legal counsel to Farmers Bankshares in the
transaction.
About TowneBank:
Founded in 1999, TowneBank is a company built on
relationships, offering a full range of banking and other financial
services, with a focus of serving others and enriching lives.
Dedicated to a culture of caring, Towne values all employees and
members by embracing their diverse talents, perspectives, and
experiences.
Today, the bank operates over 40 banking offices
throughout Hampton Roads and Central Virginia, as well as
Northeastern and Central North Carolina – serving as a local leader
in promoting the social, cultural, and economic growth in each
community. Towne offers a competitive array of business and
personal banking solutions, delivered with only the highest ethical
standards. Experienced local bankers providing a higher level of
expertise and personal attention with local decision-making are key
to the TowneBank strategy. Towne has grown its capabilities beyond
banking to provide expertise through its controlled divisions and
subsidiaries that include Towne Wealth Management, Towne Insurance
Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial
Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031
Exchange, LLC, and Towne Vacations. With total assets of
$16.9 billion as of June 30, 2022, TowneBank is one of the
largest banks headquartered in Virginia.
About Farmers Bankshares,
Inc.
Headquartered in Windsor, Virginia, Farmers
Bankshares, Inc. is the holding company for Farmers Bank, Windsor,
Virginia. Farmers Bank was founded in 1919 and is a community bank
which operates eight branches and services areas throughout
Tidewater Virginia. Farmers Bankshares, Inc had total assets of
$608.6 million as of June 30, 2022. Additional information is
available at the company's website, www.farmersbankva.com.
Media contact:G. Robert Aston,
Jr., Executive Chairman, TowneBank, 757-638-6780J. Morgan Davis,
Chief Executive Officer, TowneBank, 757-673-1673Vernon M. Towler,
Chief Executive Officer, Farmers Bankshares, Inc., 757-242-9312
Investor contact:William B.
Littreal, Chief Financial Officer, TowneBank, 757-638-6813
Important Information and Where to Find
It:
This press release does not constitute an offer
to sell or the solicitation of an offer to buy securities of
TowneBank or a solicitation of any vote or approval. Farmers will
deliver a definitive proxy statement/offering circular to its
shareholders seeking approval of the Merger and related matters. In
addition, TowneBank may file other relevant documents concerning
the proposed Merger with the Federal Deposit Insurance Corporation
(“FDIC”). Before making any voting or investment decision,
investors and security holders are urged to read the proxy
statement/offering circular and any other relevant documents to be
filed with the FDIC in connection with the proposed transaction
because they contain important information about TowneBank,
Farmers, and the proposed Merger. Shareholders are also urged to
carefully review TowneBank’s public filings with the FDIC,
including, but not limited to, its Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
proxy statements. Free copies of TowneBank’s public filings (when
available) may be obtained through the website maintained by the
FDIC at https://efr.fdic.gov/fcxweb/efr/index.html. These documents
may also be obtained, without charge, from TowneBank at
https://investor.townebank.com/investor-relations/default.aspx
under the tab “Documents” or by directing a request to Investor
Relations – TowneBank, 6001 Harbour View Blvd., Suffolk, Virginia
23435. In addition, free copies of the definitive proxy
statement/offering circular, when available, may be obtained by
directing a request by telephone or mail to Farmers Bankshares,
Inc., 50 East Windsor Boulevard, Windsor, Virginia 23487,
Attention: Investor Relations (telephone: (757) 242-6111) or by
accessing Farmers’ website at https://www.farmersbankva.com/invest.
The information on TowneBank’s website and Farmers’ website is not,
and shall not be deemed to be, a part of this report or
incorporated into other filings TowneBank makes with the FDIC.
TowneBank, Farmers, and their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from the shareholders of Farmers in
connection with the proposed Merger. Information about the
directors and executive officers of Farmers and TowneBank and other
persons who may be deemed participants in the solicitation,
including their interests in the Merger, will be included in the
proxy statement/offering circular when it becomes available.
Additional information about the directors and executive officers
of TowneBank can be found in TowneBank’s proxy statement in
connection with its annual meeting of shareholders, filed with the
FDIC on April 18, 2022. Additional information about the directors
and executive officers of Farmers can be found in Farmer’s proxy
statement in connection with its annual meeting of shareholders, as
sent previously to Farmers’ shareholders on or about April 7,
2022.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains certain
forward-looking statements as defined by the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are not
historical facts, but instead represent only the beliefs,
expectations, or opinions of TowneBank and Farmers and their
respective management teams regarding future events, many of which,
by their nature, are inherently uncertain and beyond the control of
TowneBank and Farmers. Forward-looking statements may be identified
by the use of such words as: “believe,” “expect,” “anticipate,”
“intend,” “plan,” “estimate,” or words of similar meaning, or
future or conditional terms, such as “will,” “would,” “should,”
“could,” “may,” “likely,” “probably,” or “possibly.” These
statements may address issues that involve significant risks,
uncertainties, estimates, and assumptions made by management,
including statements about (i) the benefits of the Merger,
including future financial and operating results, cost savings,
enhancements to revenue and accretion to reported earnings that may
be realized from the Merger and (ii) TowneBank’s and Farmers’
plans, objectives, expectations and intentions and other statements
contained in the presentation that are not historical facts. In
addition, these forward-looking statements are subject to various
risks, uncertainties and assumptions with respect to future
business strategies and decisions that are subject to change and
difficult to predict with regard to timing, extent, likelihood and
degree of occurrence. As a result, actual results may differ
materially from the anticipated results discussed in these
forward-looking statements because of possible uncertainties.
The following factors, among others, could cause
actual results to differ materially from the anticipated results or
other expectations expressed in the forward-looking statements: (1)
the business of Farmers and Farmers Bank may not be successfully
integrated into TowneBank, or such integration may take longer, be
more difficult, time-consuming or costly to accomplish than
expected; (2) the expected growth opportunities or cost savings
from the Merger may not be fully realized or may take longer to
realize than expected; (3) deposit attrition, operating costs,
customer losses and business disruption following the Merger,
including adverse effects on relationships with employees and
customers, may be greater than expected; (4) the regulatory
approvals required for the Merger may not be obtained on the
proposed terms or on the anticipated schedule; (5) the shareholders
of Farmers may fail to approve the Merger; (6) economic,
legislative or regulatory changes, including changes in accounting
standards, may adversely affect the businesses in which TowneBank
and Farmers are engaged; (7) the impacts of the ongoing the impact
of the COVID-19 pandemic and the associated efforts to limit its
spread; (8) competitive pressures in the banking industry that may
increase significantly; (9) changes in the interest rate
environment that may reduce margins and/or the volumes and values
of loans made or held as well as the value of other financial
assets held; (10) changes in the credit worthiness of customers and
the possible impairment of the collectability of loans; (11)
general economic conditions, either nationally or regionally, that
may be less favorable than expected, resulting in, among other
things, a deterioration in credit quality and/or a reduced demand
for credit or other services; (12) cybersecurity threats or
attacks, the implementation of new technologies, and the ability to
develop and maintain reliable electronic systems; (13) competitors
may have greater financial resources and develop products that
enable them to compete more successfully; (14) changes in business
conditions; (15) changes in the securities market; and (16) changes
in the local economies with regard to TowneBank’s and Farmers’
respective market areas.
Additional factors that could cause actual
results to differ materially from those expressed in the
forward-looking statements are discussed in TowneBank’s reports
(such as Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K) filed with the FDIC and
available on the Securities Exchange Act Filing website maintained
by the FDIC at https://efr.fdic.gov/fcxweb/efr/index.html.
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