The Bank Slate


Capital Bancorp in Md. to buy government-guaranteed lender IFH

Integrated Financial Holdings, a government-guaranteed lender in Raleigh, N.C., has found a new buyer.

The $548 million-asset parent of West Town Bank & Trust, which had a proposed sale to MVB Financial called off in May 2023, agreed to sell itself to Capital Bancorp in Rockville, Md.

The $2.2 billion-asset Capital agreed to pay $66 million in cash and stock for Integrated Financial. Prior to closing, Integrated Financial is expected to distribute its minority equity interest in Dogwood State Bank in a dividend valued at $18 million.

The deal is expected to close in the second half of this year.

Integrated Financial specializes in Department of Agriculture and Small Business Administration lending. About 38% of Capital’s loan portfolio will consist of government-backed loans after the deal closes.

“This acquisition represents a continuation of our strategy to build a highly diversified business that generates best-in-class returns for our shareholders and allows us to better serve our customers,” Ed Barry, Capital’s CEO, said in a press release.

“IFH’s expertise originating and servicing USDA and SBA loans fits well with our strategic objectives and will allow us to serve a market with substantial need and growth potential,” Barry added.

The deal is expected to be 17% accretive to Capital’s 2025 earnings per share. It should take less than two years for the company to earn back an estimated 5% dilution to its tangible book value.

Capital plans to cut 25% of Integrated Financial’s annual noninterest expenses, or about $7 million. It expects to incur $10.9 million of pretax merger-related expenses.

Marc McConnell, Integrated Financial’s chairman, president and CEO, will join Capital’s board. A. Riddick Skinner, who oversees government lending, will join Capital as head of the government guaranteed lending program.

Melissa Marsal, the seller’s chief operating officer, will join Capital in a leadership role, while Mike Breckheimer, chief strategy officer, will become head of Windsor Advantage.

Stephens and Squire Patton Boggs advised Capital. Raymond and Wyrick Robbins Yates & Ponton advised Integrated Financial.

MVB agreed in August 2022 to by Integrated Financial for $98 million in stock, pricing the seller at 128% of its tangible book value. A few months later, MVB said that “changing market conditions” and “understandable delays in regulatory processes” led to the decision to terminate the deal.

Leave a Reply

Your email address will not be published. Required fields are marked *