EagleBank, Fidelity & Trust To Merge

Commerce Bank's famous founder Vernon Hillstarts a Chevy Chase firm to invest in banking and now two local banks merge. Is there more to come?

Bethesda's EagleBank, and Fidelity & Trust Bank are pairing up in a $48.8 million deal and becoming EagleBank, the companies announced.

EagleBank operates six offices in Montgomery County and three branched in DC. Fidelity & Trust Bank six locations, with one in Northern Virginia, three in Montgomery, and two in DC.

The transaction is subject to regulatory and shareholder approval.

"The combination is structured as a stock-for-stock exchange, under which Fidelity's shareholders will receive 0.9202 shares of Eagle common stock for each share of Fidelity common stock owned, subject to possible reductions under certain circumstances set forth in the merger agreement," according to a statement. "Based upon the closing stock price for Eagle Bancorp Inc. on November 30, 2007, the aggregate value of the transaction would be $48.8 million, or $11.51 per share of Fidelity common stock. The value of the transaction at closing may be higher or lower, depending on whether there is any change in the exchange ratio, and the changes in the value of Eagle common stock. Following the completion of the merger, Fidelity & Trust's shareholders will own approximately 28% of Eagle Bancorp's outstanding common stock, assuming no change in the exchange ratio."

As of Sept. 30, Eagle Bancorp Inc. had $802 million in assets and Fidelity & Trust had $452 million in assets.

"Once the combination is consummated Ronald Paul will become Chairman of Eagle Bancorp, Inc., with [Fidelity chairman]Robert Pincus serving as Vice Chairman. Mr. Paul will continue his duties as Chairman and Chief Executive Officer of EagleBank and Mr. Pincus will be Vice Chairman of EagleBank."

Paul appears to have bought Fidelity of Bethesda at an attractive price. He paid Fidelity about 1.37 times the bank's book value, which is a low price in a market where banks recently have traded for 2.62 times book value, according to SNL Financial, a financial research firm.


By Dan Beyers  |  December 3, 2007; 8:16 AM ET
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