Peoples Bancorp to Acquire Capital Bancorp in $728 Million All-Stock Deal

Peoples Bancorp Inc. (NASDAQ:PEBO) announced Wednesday it will acquire Capital Bancorp (NASDAQ:CBNK) in an all-stock transaction valued at approximately $728.1 million. The deal announcement prompted a divergent reaction in the market, with shares of Peoples Bancorp falling 6% while Capital Bancorp stock surged 11%.

Transaction Details

Under the terms of the agreement, Capital Bancorp shareholders will receive 1.11 shares of Peoples common stock for each share of Capital common stock they own. The exchange ratio implies a value of $43.75 per share for Capital, based on Peoples' 20-day volume-weighted average price of $39.41 as of September 29.

Upon completion of the merger, former Capital shareholders are expected to own approximately 32% of the combined company. The acquisition is anticipated to close in the first half of 2027, pending customary regulatory and shareholder approvals from both companies.

Strategic Rationale and Combined Entity

The merger will create a combined financial institution with significant scale. According to the announcement, the new entity is expected to have:

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• Total assets: Approximately $14 billion
• Total loans: Approximately $10 billion
• Total deposits: Approximately $11 billion
• Banking locations: Over 150 across eight states and Washington, D.C.

The transaction combines Peoples' community banking, insurance, and investment services with Capital's commercial banking franchise in the Washington, D.C. and Baltimore metropolitan areas. It also incorporates Capital's nationwide businesses in digital consumer credit, government-guaranteed lending, and residential mortgages. As part of the integration, three members of Capital's board are expected to join the Peoples Board of Directors.

Financial Impact for Investors

Peoples Bancorp management expects the deal to be immediately accretive to its estimated earnings in 2027, excluding one-time transaction costs. The company projects a tangible book value earnback period of less than three years.

Furthermore, the pro forma return on average tangible common equity for the combined company is estimated to be approximately 20%. This suggests the acquisition is positioned to enhance shareholder value and profitability for Peoples Bancorp once integrated.