Peoples Bancorp Inc. has announced a definitive agreement to acquire Rockville, Maryland-based Capital Bancorp Inc. The transaction is structured as a stock-for-stock merger, with Peoples issuing a fixed exchange ratio of 1.11 shares of Peoples stock for each share of Capital stock. Based on Peoples' 20-day average stock price, the aggregate transaction value is approximately $728 million.
According to the filing, the deal is expected to be completed during the first half of 2027, subject to customary closing conditions, including shareholder and regulatory approvals. Following the close of the transaction, existing Peoples shareholders are expected to own approximately two-thirds of the combined company, while Capital shareholders will own the remaining one-third on a diluted basis. Additionally, three current directors from Capital will join the Board of Peoples.
Peoples management described the combination as transformational, noting that Capital operates a differentiated franchise anchored by a relationship-based commercial bank in the Washington, D.C., metropolitan area. The target company also owns several established specialty businesses, including OpenSky, a nationwide consumer credit card platform; Windsor Advantage, a loan service provider for community banks; Capital Home Loans; and a government-guaranteed lending platform focused on renewable energy.
On a pro forma basis, the combined company is expected to have approximately $14 billion in assets, $10 billion in loans, and $11 billion in deposits. The transaction is projected to result in fee income comprising approximately 23 percent of total revenue, up from the company's current profile. The filing states that the merger is expected to be accretive to earnings per share, with fully phased-in accretion of approximately 19 percent in 2027.
Capital Bancorp has demonstrated strong financial performance, with a last 12 months return on average assets of approximately 1.58 percent and a return on average tangible common equity of approximately 16 percent. Over the last three years, the company has grown assets, loans, and deposits at an annual rate of approximately 20 percent.
