Virginia-based TowneBank has announced plans to acquire Dogwood State Bank for $476 million in stock, marking a significant expansion into North Carolina. This move follows TowneBank’s nearing completion of its acquisition of Old Point Financial Corp., which is expected to finalize on September 1, 2023. The acquisition of Dogwood will add 17 branches across North Carolina and South Carolina to TowneBank’s existing 15 locations in North Carolina.
The transaction positions TowneBank to enhance its presence along the East Coast, including a location in Charleston, South Carolina. It will also strengthen the bank’s footprint in the I-85 corridor between Richmond, Virginia, and Greenville, South Carolina. According to Peter Gwaltney, CEO of the North Carolina Bankers Association, this corridor is experiencing tremendous growth due to major employers relocating to the area.
The merger will bring together key leadership from Dogwood with TowneBank. Steve Jones, CEO of Dogwood, will assume the role of president of TowneBank’s Carolinas market. In a statement, Robert Aston, Chairman of TowneBank, expressed enthusiasm about Jones joining the team, highlighting his admiration for Dogwood’s growth under Jones’s leadership. Joining Jones will be Natasha Austin, the chief operating officer of Dogwood, as the Carolinas director of retail banking, and Christopher Kwiatkowski, who will oversee government-guaranteed lending.
Jones reflected on his long-standing respect for Aston and TowneBank, noting the importance of retaining Dogwood’s 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?” This continuity, according to Jones, is critical for a smooth transition.
The acquisition also provides TowneBank with an essential new business line in Small Business Administration (SBA) lending. In the current fiscal year, Dogwood has successfully originated 140 SBA 7(a) loans totaling $135 million, while TowneBank’s SBA production has been minimal, with only three loans totaling $820,000 thus far this year. Jones noted that building an SBA group from scratch is a significant challenge, making this acquisition a strategic advantage for TowneBank.
Founded in 2021 as the Sound Banking Company, Dogwood has undergone several transformations, including a rebranding after its acquisition by West Town Bancorp in 2017. The bank expanded last year by acquiring Community First Bancorp in Seneca, South Carolina, showcasing its ability to integrate new assets effectively.
For the quarter ending March 31, Dogwood reported a net income of $7.4 million, a substantial increase from $1.8 million during the same period in 2024. As TowneBank prepares to absorb both Old Point and Dogwood, it anticipates having assets totaling $22 billion, with $16 billion in loans and $19 billion in deposits by early 2026. The company projects an 8% earnings-per-share accretion in 2027 from the Dogwood acquisition.
Gwaltney emphasized the broader trend of banks expanding in North Carolina, driven by the state’s favorable business climate. He noted that aggressive economic development efforts have attracted banks to the region, where growth opportunities abound.
Jones remains optimistic about the future, stating, “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.” The merger not only enhances TowneBank’s lending capacity but also allows it to integrate a robust property-and-casualty insurance business and expand its mortgage offerings.
This strategic acquisition is set to create a formidable organization poised for growth in the rapidly evolving banking landscape of North Carolina and beyond.
