Virginia’s TowneBank has announced a significant expansion into North Carolina by acquiring Dogwood State Bank for $476 million in stock. This deal comes as TowneBank is finalizing its $203 million acquisition of Old Point Financial Corp. in Hampton, Virginia. The acquisition of Dogwood will enhance TowneBank’s footprint in the region, adding 17 branches in North Carolina and South Carolina to its existing 15 locations in North Carolina.
The transaction will increase TowneBank’s presence along the East Coast, including a strategic location in Charleston, South Carolina. This move is expected to strengthen the bank’s profile along the busy I-85 corridor, which connects Richmond, Virginia, to Greenville, South Carolina. According to Peter Gwaltney, CEO of the North Carolina Bankers Association, this corridor is becoming a hub for major employers and experiencing “tremendous growth.”
TowneBank announced its plans to acquire Old Point in April, with that transaction set to close on September 1, 2023. As part of the Dogwood acquisition, Dogwood’s CEO, Steve Jones, will join the merged entity as president of the Carolinas market. TowneBank Chairman Robert Aston expressed enthusiasm about the merger, stating, “We are excited to have Steve and his talented teammates join hands and hearts with our Towne family.”
Jones, who has a long-standing respect for Aston and TowneBank, emphasized the importance of retaining his management team for the merger’s success. He stated, “If all of a sudden myself, my executive team, and our bankers all left, then what would they be buying? I thought it was very critical for the success of the merger for our team to stay around.”
The acquisition of Dogwood also introduces a new line of business for TowneBank in Small Business Administration (SBA) lending. Dogwood has successfully originated 140 SBA 7(a) loans worth $135 million during the nearly completed fiscal year, a capability TowneBank currently lacks, having originated only three 7(a) loans totaling $820,000 this year. Jones remarked, “I think TowneBank was very excited to have that added capability.”
Founded in 2021 as the Sound Banking Company, Dogwood State Bank has seen rapid growth, acquiring the $683 million asset Community First Bancorp in August 2024. Jones noted the successful integration of Community First into the Dogwood platform, with outstanding retention of deposits. The bank reported a net income of $7.4 million for the quarter ending March 31, 2024, a substantial increase from $1.8 million during the same quarter in 2023.
This acquisition positions TowneBank among other regional banks expanding in North Carolina, such as PNC Financial Services Group and Fifth Third Bancorp. Gwaltney highlighted North Carolina’s favorable business environment as a key factor attracting banks to the region. “Our economic development partnership has been very aggressive and successful in bringing businesses to expand into North Carolina,” Gwaltney said.
TowneBank anticipates completing the Dogwood acquisition by early 2026. Following the integrations of both Old Point and Dogwood, TowneBank expects to reach $22 billion in assets, with $16 billion in loans and $19 billion in deposits. The bank projects an 8% earnings-per-share accretion by 2027 from the Dogwood acquisition.
Jones sees numerous growth opportunities arising from the merger. “What it does for our bankers is give us a bigger balance sheet, so we’re able to do bigger loans and handle a different type of client,” he explained. Additionally, the merger will allow TowneBank to integrate its substantial property-and-casualty insurance business and expand its mortgage offerings.
Gwaltney concluded that this merger creates a “strong organization” with effective leadership and scale. The upcoming developments will be closely watched as TowneBank navigates its expansion into the burgeoning markets of North and South Carolina.