Old Point in Va. received eight offers before choosing TowneBank
Old Point Financial in Hampton, Va., was an extremely popular acquisition target, attracting eight letters of intent when it put itself up for sale.
TowneBank in Suffolk, Va., agreed in April to buy the $1.5 billion-asset Old Point for $203 million in cash and stock. The $17.5 billion-asset TowneBank expects to complete the acquisition in the second half of this year.
Old Point, which has been open to a deal since 2023, benefited from casting a wide net, contacting 13 banks, according to a regulatory filing tied to the pending merger. The decision to find a merger partner was made last November.
The Search Begins
Old Point’s board, which was grappling with intensifying regulatory demands across the industry, in addition to tight net interest margins and rising tech costs, formally launched a solicitation process late last year. The process targeted banks with less than $5 billion in assets for merger-of-equals scenarios and bigger banks as potential buyers.
Twelve of the 13 banks contacted entered into confidentiality agreements, with eight of those submitting nonbinding letters of intent. The filing did not share the details of the other offers.
TowneBank, which had recently acquired Farmers Bankshares and Village Bank and Trust, offered the “significantly highest purchase price” at $41 a share, or roughly $208 million. The consideration was evenly split between cash and stock.
Old Point’s board also favored the low execution risk, flexible deal structure, and TowneBank’s track record of smooth integrations.
Negotiations Progressed with Ease
Old Point in mid-February successfully lobbied TowneBank to increase the stock portion of the consideration to 60%. The banks entered into a 45-day exclusivity period on Feb. 18, and the first draft of the merger agreement was circulated about a month later.
Robert Shuford, Old Point’s chairman, president and CEO, began discussing the deal with Rich Lashley of PL Capital, one of the bank’s biggest investors, to shore up support. Lashley, during a March 31 conversation, indicated his willingness to sign a support agreement for the deal.
Each board approved the merger agreement on April 2; it was announced the following day. The deal priced Old Point at 180% of its tangible book value.
“Old Point has legendary status here in our community and most especially, in Hampton … where it was founded over 100 years ago,” G. Robert Aston, Jr., TowneBank’s executive chairman, said in a press release announcing the deal.
“I have the deepest respect for the Shuford family that has guided Old Point throughout the years with the highest of character and unwavering integrity,” Aston added. The acquisition “will create a combined franchise with a strong core deposit base, outstanding credit quality, and substantial synergies that will generate top-tier financial performance for our shareholders while helping our communities grow and prosper.”
The deal should be 10% accretive to TownBank’s 2026 earnings per share. TowneBank expects 6% dilution to its tangible book value.
TowneBank plans to cut about 45% of Old Point’s annual noninterest expense, largely due to significant branch overlap. It expects to incur $30 million in merger-related charges.