ROCKVILLE, Md. – Capital Bancorp , Inc. (NASDAQ: NASDAQ:CBNK), based in Rockville, Maryland, and Integrated Financial Holdings, Inc. (OTCQX: IFHI), headquartered in Raleigh, North Carolina, have announced a definitive merger agreement. CBNK will acquire IFH in a deal valued at $66 million, excluding a pre-closing dividend to be paid to IFH shareholders.
IFH shareholders are set to receive $5.36 in cash and 1.115 shares of CBNK common stock for each IFH share they hold, based on CBNK's closing stock price of $20.00 on March 26, 2024. The per-share purchase price, inclusive of the cash consideration, is $27.66. Additionally, IFH shareholders are expected to receive approximately 0.469 shares of Dogwood State Bank as a dividend, valued at $7.69 per share or around $18 million in total.
Upon completion of the merger, Capital shareholders will own about 84% of the combined entity, with IFH shareholders owning the remaining 16%. The transaction is anticipated to close in the second half of 2024, pending regulatory and shareholder approvals, among other customary closing conditions.
This strategic move is expected to significantly expand Capital's commercial loan portfolio, with approximately 38% of the pro forma loan book comprising commercial & industrial (C&I) and owner-occupied commercial real estate loans. The merger is projected to be financially beneficial, with an estimated 17% earnings per share accretion for CBNK in 2025 and a return on tangible common equity increase of approximately 260 basis points.
The combined company will become a leading nationwide lender in government guaranteed lending, including services from Windsor Advantage, which specializes in U.S. Small Business Administration (SBA) and U.S. Department of Agriculture (USDA) lending.
Following the merger, Marc McConnell, Chairman, President, and CEO of IFH, will join the board of directors of Capital Bancorp, Inc. and Capital Bank. A. Riddick Skinner, currently EVP of Government Lending at IFH, will take up the role of Head of Government Guaranteed Lending Program at Capital Bank. Melissa Marsal and Mike Breckheimer of IFH will also join Capital Bank in leadership positions.
The transaction has been unanimously approved by the boards of directors of both Capital and IFH. Stephens Inc. and Squire Patton Boggs (US) LLP served as advisors to CBNK, while Raymond James & Associates, Inc. and Wyrick Robbins Yates & Ponton LLP advised IFH.
This news is based on a press release statement and contains forward-looking statements that are subject to various risks and uncertainties. Investors are cautioned not to place undue reliance on these statements, which speak only as of their dates.
InvestingPro Insights
Amid the announcement of Capital Bancorp, Inc.'s (NASDAQ: CBNK) definitive merger agreement with Integrated Financial Holdings, Inc., there are several key metrics and InvestingPro Tips that can provide investors with a deeper understanding of CBNK's financial landscape.
InvestingPro Data shows that CBNK has a market capitalization of $285.83 million and a Price/Earnings (P/E) ratio of 8.02, which is relatively low compared to the industry average, indicating that the stock may be undervalued. The company has also demonstrated a solid operating income margin of 29.45% over the last twelve months as of Q4 2023. Despite a slight decline in revenue growth during the same period, with a -3.89% change year over year, CBNK has managed to maintain a strong gross profit equal to its revenue, which is an encouraging sign of financial health.
From the perspective of shareholder returns, CBNK has shown a commitment to increasing shareholder value, as indicated by a dividend growth of 33.33% over the last year. This aligns with one of the InvestingPro Tips that CBNK has raised its dividend for three consecutive years, suggesting a stable and potentially growing income stream for investors. Moreover, analysts predict the company will be profitable this year, which could bolster investor confidence in the midst of the merger.
For those seeking additional insights, there are more InvestingPro Tips available for CBNK, including the latest analyst revisions and profit margin analyses. By visiting InvestingPro, investors can access these tips and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 5 additional tips listed on InvestingPro, investors can gain a more comprehensive understanding of CBNK's financial position and future prospects.
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