DC-area banks to merge in $98M deal

Dive Brief:

Tysons Corner, Virginia-based ODNB Financial Corp., the holding company of Old Dominion National Bank, and Washington, D.C.-based National Capital Bancorp, the holding company of The National Capital Bank of Washington, have agreed to merge in a deal valued at $97.8 million, the banks said Monday.
The combined bank would have $2.4 billion in assets, $1.9 billion in loans and $2 billion in deposits, according to an investor presentation. With the merger, the holding company will adopt the National Capital Bancorp name and the bank will take on The National Capital Bank of Washington name, while shareholder ownership is expected to be about 68% ODNB and 32% National Capital Bancorp.
The deal is expected to close in the fourth quarter, the banks said.

Dive Insight:

The combination of ODNB, which has about $1.6 billion in assets, and National Capital Bancorp, with about $735.3 million in assets, is set to result in the seventh-largest bank headquartered in the D.C. metro area. The combined lender will have 10 branches across four states and the nation’s capital.

National Capital, founded in 1889 and headquartered on Capitol Hill, is D.C.’s oldest bank.

Old Dominion, meanwhile, was founded in 2007 and serves the D.C. metro area and central Virginia. It also serves central Pennsylvania through Centre 1st Bank, located in State College. Old Dominion also has a Boca Raton, Florida, office.

ODNB CEO and Chair Mark Merrill will become CEO of the combined holding company and bank, as well as president of the bank. ODNB President Jack Infield will be president of the combined holding company.

Randy Anderson Jr., chair and CEO of NACB, will become non-executive chairman of the boards of the combined holding company and combined bank. The combined company's board will have 10 directors from ODNB and seven directors from NACB.

“This strategic combination creates a strong and promising future for our organization, our customers and our shareholders,” Merrill said in the news release. “NACB brings one of the strongest deposit bases in the Washington, D.C., region, which complements ODNB's best-in-class growth rate.”

Merrill said he and Anderson “have known each other for more than a dozen years and have worked together in the past. We share the same philosophy and values, and we believe that bringing our teams together as one company will be a meaningful step forward for both organizations.”

Anderson said ODNB and NACB are both “community-focused organizations with similar cultures and a shared commitment to customers.”

“This merger brings together two strong teams dedicated to exceptional client service, lasting relationships, and helping individuals and businesses achieve their financial goals,” Anderson said in the release. “With greater scale, expanded resources, higher loan limits, and broader geographic reach, we will be better positioned to serve customers, support employees with additional career opportunities, deepen our presence in existing markets, and expand more effectively into the markets we seek to serve.”

Under the terms of the deal, National Capital Bancorp stockholders have three options, the release said. They can choose 100% stock consideration with an exchange ratio of 5.2390 shares of ODNB common stock for each share of NACB owned, with a value of $85.08 per share; 100% cash consideration at $83 per share; or a mixture of 90% stock and 10% cash. For the latter two options, the cash portion can’t exceed 10% of the total consideration or $1 million (12,048 shares) per shareholder. ODNB’s common stock is valued at about $16.24 per share.

One-time merger costs are estimated at about $8.1 million before tax, while cost savings of about $5.4 million are expected in 2027 and $7.8 million in 2028.

The deal is expected to generate earnings-per-share accretion of about 53% in 2027, and the tangible book value earnback period is estimated at 3.4 years, according to the investor presentation.

National Capital Bancorp expects to list its common stock on the Nasdaq or New York Stock Exchange under the ticker symbol “NACB.”