Weekly Real Estate News
Summary
Peoples Bancorp agreed to acquire Capital Bancorp in an all-stock transaction valued at approximately $728.1 million. The pending deal would create a company with roughly $14 billion in assets and add Capital Bank Home Loans, a residential mortgage division that lends in all 50 states, along with Capital’s other nationwide specialty businesses.
Peoples Bancorp has agreed to acquire Capital Bancorp in an all-stock transaction valued at approximately $728.1 million, a deal that would push the Ohio-based bank well beyond $10 billion in assets and bring a nationwide residential mortgage operation into its financial-services platform.
The companies announced the agreement Wednesday, one day after signing it. Capital Bancorp will merge into Peoples, followed by Capital Bank, N.A. merging into Peoples Bank. The transaction remains subject to shareholder and regulatory approvals and is expected to close during the first half of 2027.
Capital shareholders would receive 1.11 shares of Peoples common stock for each Capital share. Based on Peoples’ 20-day volume-weighted average closing price of $39.41 through Sept. 29, the companies valued the consideration at $43.75 per Capital share. Because the consideration is stock, its market value can change before closing.
Former Capital shareholders are expected to own approximately 32% of Peoples after the merger. Three Capital directors are expected to join the Peoples board at or shortly after closing, subject to Peoples’ governance and director-evaluation procedures.
Peoples is buying more than a regional bank
The mortgage business is a significant part of the transaction for the housing industry. Rockville, Maryland-based Capital operates Capital Bank Home Loans, a residential mortgage division that Capital says lends in all 50 states.
Capital also brings OpenSky, its nationwide credit-card business, and Windsor Advantage, a government-guaranteed lending and servicing platform. Windsor Advantage had a servicing portfolio of approximately $3.4 billion, according to the merger announcement.
“Its commercial banking franchise deepens our presence in the attractive Washington, D.C. and Baltimore markets, while OpenSky, Windsor Advantage and Capital Bank Home Loans add complementary nationwide businesses that further diversify our revenue and expand our growth opportunities,” Peoples President and CEO Tyler Wilcox said.
Capital reported $3.9 billion in assets, $3.1 billion in gross loans and $3.4 billion in deposits as of June 30. Fee-based revenue accounted for approximately 22% of its total second-quarter revenue.
If completed, the combined company is expected to have approximately $14 billion in assets, $10 billion in loans and $11 billion in deposits, along with more than 150 banking locations across eight states and Washington, D.C. Those figures are company projections for the combined institution, not current results.
A second major Peoples transaction in 2026
The agreement follows another acquisition by Peoples this year. WRE News reported Sunday that the Federal Reserve approved Peoples’ $76.6 million acquisition of Citizens National Bank of Paintsville, with Federal Reserve Gov. Michael Barr dissenting over concerns about banking-market concentration in Pikeville, Kentucky.
The Capital transaction is substantially larger and would alter Peoples’ scale more dramatically. In its Form 8-K filed with the Securities and Exchange Commission, Peoples disclosed that both boards unanimously approved the merger agreement and that completion requires approval from shareholders of both companies, required regulatory clearances, effectiveness of a Form S-4 registration statement and other customary conditions.
The agreement also contains reciprocal restrictions governing competing acquisition proposals and provides for termination under specified circumstances. The merger must be completed by the one-year anniversary of the agreement unless the companies mutually agree to extend that deadline, according to the SEC filing.
Peoples projects earnings benefit in 2027
Peoples expects the acquisition to be immediately accretive to its estimated 2027 earnings before one-time transaction costs. It projects a tangible book-value earnback period of less than three years and a pro forma return on average tangible common equity of approximately 20%.
Those figures are forward-looking estimates. They depend on the transaction closing and on assumptions about integration, costs, revenue and the performance of the combined institution.
The deal would also give Peoples a more geographically and operationally diversified franchise than its traditional regional banking footprint. Capital’s Washington-area commercial banking operation would add Mid-Atlantic scale, while the mortgage, credit-card and government-guaranteed lending businesses operate nationally.
For mortgage professionals, the most consequential piece may be what Peoples ultimately does with Capital Bank Home Loans. The merger announcement identifies the mortgage division as one of the nationwide businesses expected to broaden Peoples’ revenue and growth opportunities, but the companies have not announced changes to the mortgage brand, distribution model or workforce. Until the transaction receives its approvals and closes, Capital Bancorp and Peoples Bancorp remain separate companies.
