TowneBank in Suffolk, Va., has agreed to buy Monarch Financial Holdings in Chesapeake, Va.
The $6.2 billion-asset TowneBank said in a press release Thursday that it will pay $220.6 million, or $18.57 a share, in stock for the $1.1 billion-asset Monarch. The deal, which is expected to close in the second quarter, values Monarch at 192% of its tangible book value.
TowneBank said in the release that it will control about 20.6% of the deposits in Virginia's Hampton Roads market once the deal is completed. The company will have $5.8 billion in deposits and $5.4 billion in loans.
"Since the founding of our two banks in 1998, our companies have been built around the values of serving others and enriching lives while striving to build a great community asset that will help our communities grow and prosper," G. Robert Aston Jr., TowneBank's chairman and chief executive, said in the release.
TowneBank said the deal should be accretive to its 2016 earnings and 17% accretive the next year. The company said it should earn back any dilution to its tangible book value within three years.
TowneBank said it plans to close 13 branches.
Brad Schwartz, Monarch's CEO, will become TowneBank's chief operating officer. Neal Crawford, president of Monarch's bank, will join Towne as president and CEO of Towne Financial Services Group, while William Morrison, CEO of Monarch Mortgage, is set to become chairman and CEO of TowneBank Mortgage and Realty Group. Jacqueline Amato, the current CEO of TowneBank Mortgage, will retire at the end of next year.
Sandler O'Neill and LeClairRyan advised TowneBank. Raymond James and Williams Mullen advised Monarch.