On Tuesday, Keefe, Bruyette & Woods maintained their Market Perform rating on TowneBank (NASDAQ:TOWN) with a steady price target of $35.00. TowneBank recently announced the acquisition of Village Bank (VBFC) for a total of $120 million paid entirely in cash. The deal will add approximately $750 million in assets, which is about 4% of the combined entity's pro forma assets, resulting in TowneBank having $17.8 billion in assets.
The acquisition is set to enhance TowneBank's presence in Richmond, Virginia, as Village Bank's assets become part of its portfolio. Keefe, Bruyette & Woods expressed a positive view of the transaction, recognizing it as a strategic move for TowneBank to utilize its excess capital effectively.
The firm's analyst noted the acquisition as a modest but strategic expansion for TowneBank, which is expected to strengthen its market share in the Richmond area. The addition of Village Bank's assets is seen as a beneficial step for TowneBank's growth trajectory.
The affirmation of the Market Perform rating and the $35.00 price target reflects the firm's outlook on TowneBank's stock performance in light of the recent acquisition. The target remains unchanged, suggesting that the firm anticipates the bank's stock to trade in line with market expectations.
In other recent news, TowneBank has announced a definitive agreement to acquire Village Bank and Trust Financial Corp. and its subsidiary, Village Bank, in a deal valued at approximately $120 million.
This move is designed to enhance TowneBank's presence in the Richmond MSA and generate potential revenue synergies with Towne Financial Services Group. The combined entity is projected to possess assets of $17.8 billion, loans of $12.1 billion, and deposits of $14.9 billion.
The merger, approved by both companies' boards, is set to provide Village shareholders with $80.25 per share in cash. The transaction is expected to be about 6% accretive to TowneBank's earnings per share, subject to full cost savings on a GAAP basis. The deal is anticipated to close in the first half of 2025, pending regulatory approval and Village shareholder consent.
Piper Sandler & Co. and Troutman Pepper Hamilton Sanders LLP are advising TowneBank, while Janney Montgomery Scott and Williams Mullen (NASDAQ:MULN) are advising Village.
InvestingPro Insights
In the wake of TowneBank's acquisition of Village Bank, keen investors might be interested in some of the latest metrics and performance indicators from InvestingPro. With a market capitalization of $2.47 billion and a P/E ratio of 16.54, TowneBank shows a stable valuation in the banking sector. The company has demonstrated a solid track record with a dividend yield of 2.96%, backed by a consistent history of dividend payments over the last 22 years, and has raised its dividend for 12 consecutive years. These InvestingPro Tips highlight TowneBank's commitment to shareholder returns, which may reassure investors looking for stable income streams.
Moreover, the recent share price performance has been robust, with a 25.81% return over the last six months and an impressive 53.34% return over the past year, indicating strong investor confidence in the company's strategy and growth potential. This is further supported by the fact that analysts have revised their earnings upwards for the upcoming period, reflecting optimism about TowneBank's profitability following the Village Bank acquisition.
It's worth noting that there are additional InvestingPro Tips available that could provide further insights into TowneBank's performance and outlook. For investors who are interested in a deeper analysis, visiting the InvestingPro platform will offer a comprehensive set of tips and data points to inform their investment decisions.
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