TowneBank’s $120.4 Million Acquisition of Village Bank and Trust: What It Means for Shareholders and Customers (VBFC)

The banking sector is undergoing another major shift with TowneBank’s decision to acquire Village Bank and Trust Financial Corp. (Village) in a $120.4 million cash deal. Announced on September 23, 2024, this acquisition will see Village Bank merging into TowneBank, creating a larger and more competitive regional banking entity.

As financial institutions continue to consolidate to strengthen their market positions, this deal highlights TowneBank’s growth strategy and its push for greater regional dominance. This article provides a detailed breakdown of the merger, its financial implications, and what it means for Village shareholders and customers.

*UPDATE - Acquisition is fully approved and currently scheduled for completion at the end of March. VBFC to cease trading after 8:00PM EDT on March 31, 2025.

Key Details of the Merger

Here’s a snapshot of the transaction:

Acquiring Company: TowneBank
Target Company: Village Bank and Trust Financial Corp.
Subsidiary Involved: Village Bank
Transaction Value: $120.4 million
Consideration per Share: $80.25 in cash per share
Total Shares Outstanding: 1,500,343
Announcement Date: September 23, 2024
Shareholder Vote Date: December 19, 2024
Expected Closing Date: Early 2025 (pending regulatory approval)
Regulatory Bodies Involved: Federal Reserve, SEC, Virginia State Banking Commission

What the Merger Means for Village Bank Shareholders

The biggest impact of this merger will be felt by Village Bank shareholders, who are set to receive $80.25 per share in cash.

Why This Is Significant for Shareholders

Immediate Liquidity – Instead of stock-based compensation, shareholders will receive cash payments, eliminating market volatility risks.
Premium Offer – The offer price of $80.25 per share represents a premium over recent trading values, delivering immediate value to investors.
No Stock Market Risks – Unlike stock-based transactions where share values fluctuate post-merger, this all-cash deal provides certainty.

The Village Bank board of directors has unanimously recommended approval of the merger, urging shareholders to vote “FOR” the transaction during the special virtual meeting on December 19, 2024.

TowneBank’s Strategic Rationale: Why This Merger Makes Sense

TowneBank’s acquisition of Village is part of a broader growth strategy focused on expanding its market presence in Virginia. Here’s why the deal makes sense:

Geographic Expansion

TowneBank will deepen its footprint in Virginia, particularly in Midlothian, where Village Bank is headquartered.
The merger provides access to a strong customer base in a growing financial region.

Business and Commercial Growth

Village Bank has a solid portfolio of small and mid-sized business customers.
The acquisition allows TowneBank to expand its lending and deposit base, strengthening its business banking segment.

Competitive Edge

In a rapidly consolidating banking market, size matters. The larger the bank, the stronger its ability to offer competitive interest rates, better services, and advanced digital banking platforms.
TowneBank will gain greater financial strength, making it more competitive against regional and national banks.

Regulatory Approvals and Next Steps

The merger is not yet finalized. Several steps remain before the deal can be completed:

Shareholder Approval (December 19, 2024)

Village shareholders will vote on the merger agreement.
The board of directors unanimously supports the deal.

Regulatory Approvals

The merger must be reviewed by:

The Federal Reserve (to assess financial stability).
The Virginia State Banking Commission (to ensure compliance with state laws).
The SEC (for corporate and financial disclosures).

Expected Closing and Integration (Early 2025)

If approved, TowneBank will begin integrating Village’s operations.
Customers may see branding updates, new banking services, and changes to account structures in the months following the merger.

Potential Risks and Challenges

No merger is without hurdles. Here are some potential risks:

Regulatory Delays – Government agencies could take longer to approve the transaction.
Integration Issues – Combining different corporate cultures and banking systems can be challenging.
Customer Concerns – Some Village Bank customers may be concerned about changes to their accounts, fees, and services.

Despite these risks, the expected benefits for TowneBank and its expanded customer base make this a strong strategic move.

What This Means for Customers

For now, customers of both banks should not expect immediate changes. Here’s what they can anticipate in the long run:

Expanded Banking Services – TowneBank offers additional financial products, including commercial loans and wealth management services.
Larger ATM and Branch Network – Customers will have access to more branch locations and ATMs.
Updated Digital Banking Platforms – Expect improvements in mobile banking, online transactions, and customer service options.

TowneBank has emphasized a seamless transition with minimal disruption for Village Bank customers.

Final Thoughts

TowneBank’s acquisition of Village Bank and Trust Financial Corp. is a game-changer for Virginia’s banking industry. With $120.4 million on the table, shareholders benefit from an all-cash deal, while TowneBank strengthens its market presence.

As the merger progresses, both customers and investors should stay informed about upcoming changes. The deal represents a major step forward in regional banking consolidation, with long-term benefits for all parties involved.

FAQs About the TowneBank-Village Bank Merger

What happens to my Village Bank account after the merger?

For now, there are no immediate changes. Over time, some branch rebranding, account structure updates, and online banking changes may occur. Customers will be notified well in advance.

Will my Village Bank branch remain open?

TowneBank has not announced branch closures yet. However, some overlapping locations may consolidate to improve efficiency.

How do I know if I am eligible for the cash payment?

If you are a Village Bank shareholder as of the merger closing date, you will receive $80.25 per share in cash.

Will there be new banking products available?

Yes. TowneBank will introduce its expanded range of personal and business banking services to former Village Bank customers.

When will the merger be finalized?

If shareholders approve the deal and regulatory agencies give the green light, the merger is expected to close in early 2025.

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