Hovde Group upgrades TowneBank to 'outperform' following Old Point deal

Hovde Group upgrades rating on shares of regional lender TowneBank TOWN.O to "outperform" from "market perform" following announcement of a $203 million deal for rival Old Point Financial OPOF.O

The deal will expand TOWN's presence in Hampton Roads and boost the bank's 2026 EPS by about 10%

TOWN's risk-averse lending profile, combined with its growing footprint within Hampton Roads, positions the bank well to navigate an uncertain economic environment - Hovde Group

Brokerage expects Hampton Roads area to benefit from increasing military spending over time

Hovde cuts PT on TowneBank by $1 to $38, despite increase in EPS expectations, to account for uncertain economic backdrop that is currently weighing on the banking sector

Two of four brokerages rate the stock "buy" or higher and two "hold"; median PT is $39.50 - data compiled by LSEG

As of last close, TOWN shares down 9.4% YTD