Fast-growing TowneBank is buying Raleigh-based Dogwood State Bank in a deal valued at about $476 million.
Shares of Dogwood gained more than 50% to $23.60 in morning trading. The thinly traded bank stock has mostly sold for $13 to $16 over the past year. Its previous record close was $21.50 in November 2021.
The move will add 17 offices in eastern North Carolina and South Charlotte to TowneBank, which now operates 55 offices from Richmond, Virginia, through upstate South Carolina. It also has significant insurance, mortgage and wealth management units.
Dogwood operates in the Raleigh, Charlotte and Triad markets, along with the Outer Banks, Morehead City, Greenville, Fayetteville, Wilmington and eastern Tennessee. It had assets of $2.4 billion as of June 30.
Dogwood was formed in 2019 through the recapitalization of Morehead City-based Sound Bank, moving the headquarters to Raleigh. At the time, Dogwood raised $70 million in 2019 from three investment firms, plus $30 million from individuals and families. It added another $28 million in capital in 2021 and $16 million in 2023.
The move comes seven-and-a-half years after TowneBank acquired Raleigh-based Paragon State Bank for about $325 million, expanding its reach into North Carolina’s major markets.
Pending approval of the Dogwood purchase by regulators, TowneBank expects to have assets of $22 billion. The transaction should increase TowneBanks’s earnings per share in 2027 by about 8% because of cost savings, the Portsmouth, Virginia-based company said.
Dogwood CEO Steve Jones is slated to become president of TowneBank’s North Carolina and South Carolina operations. Dogwood director Robin Perkins will join TowneBank’s board. He is CEO of Spinners Capital in Sanford.
“This partnership will bring new opportunities for our customers, employees, and shareholders, while building to the legacy we’ve created at Dogwood,” Jones said.
Dogwood’s largest shareholders include McLean, Virginia-based FJ Capital Management, with a 10.7% stake, and Patriot Financial Partners of Radnor, Pennsylvania, with 5.4%, according to an April 2024 securities filing. Fielding Miller, CEO of the Raleigh-based Captrust investment firm, owned 2.5%, while Jones owned 2%, according to the filing.
Dogwood shareholders will receive 0.7 shares of TowneBank for each Dogwood share they own, according to a press release.
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.