Peoples Bancorp in Marietta, Ohio, has agreed to buy Capital Bancorp in Rockville, Md.
The $9.5 billion-asset Peoples said in a press release that it will pay $728.1 million in stock for the $3.9 billion-asset Capital. The deal, which is expected to close in the first half of next year, priced Capital at 191% of its tangible book value.
Capital has four business segments: commercial banking, OpenSky for secured credit cards, Windsor Advantage for SBA and USDA lending, and Capital Bank Home Loans. It has $3.1 billion of loans and $3.4 billion in deposits. Fee-based revenue represented about 22% of Capital’s total revenue in the second quarter. Windsor Advantage’s servicing portfolio totaled $3.4 billion.
“As Peoples approached $10 billion in assets, we were deliberate and patient in pursuing the right strategic opportunity,” Tyler Wilcox, Peoples’ president and CEO, said in the release. “We were looking for a transaction and a partner that strengthens our franchise well beyond scale alone, and Capital does exactly that.
The transaction is expected to be 19% accretive to Peoples’ 2027 earnings before merger-related expenses. It should take three years to earn back an estimated 10.8% dilution to Peoples’ tangible book value.
Peoples plans to cut about 30% of Capital’s annual noninterest expenses. Peoples expects to incur $56.5 million in merger-related expenses. The company is modeling in a 50% reduction in Capital’s debit card interchange fee income beginning in July 2028.
Three Capital directors will join Peoples’ board.
Raymond James and Dinsmore & Shohl advised Peoples. Stephens and Squire Patton Boggs (US) advised Capital.
Separately, Capital agreed to sell its branch in North Riverside, Ill., to an unnamed buyer. The sale includes $123.9 million of deposits to be sold at an estimated $3.3 million deposit premium. The bank will also receive a payment equal to the unpaid principal balance of loans transferred.
Luse Gorman advised the bank on the branch sale.