Capital Bancorp Buying Integrated Financial In $66 Million Deal

By Amit Chowdhry • Mar 29, 2024

Capital Bancorp and Integrated Financial Holdings announced that they have entered into a merger agreement under which Capital Bancorp will acquire Integrated Financial in a cash and stock transaction valued at $66 million, exclusive of the value of a dividend to be received by Integrated Financial shareholders at or immediately before closing.

Under the merger’s terms, Integrated Financial shareholders will receive $5.36 in cash and 1.115 shares of Capital Bancorp common stock for each share of Integrated Financial common stock, subject to certain adjustments.

Based on the closing price of Capital common stock of $20 on March 26, 2024, the implied per-share purchase price, including the cash consideration, is $27.66.

During or immediately before the closing, Integrated Financial is expected to distribute its minority equity interest in Dogwood State Bank to Integrated Financial shareholders in the form of a dividend equal to about 0.469 shares of Dogwood State Bank for each share of Integrated Financial common stock, a value of $7.69/share or approximately $18 million based on the closing price of Dogwood State Bank on March 26, 2024. At closing, Capital shareholders will own approximately 84%, and Integrated Financial shareholders will own about 16% of the combined company.

This deal adds another high-return vertical to Capital’s business model. It complements its existing commercial and consumer businesses and contributes to a highly diversified and differentiated earnings mix across various local, regional, and national businesses.

The deal will create a best-in-class nationwide lender in government-guaranteed lending across both the U.S. Department of Agriculture (USDA) and U.S. Small Business Administration (SBA) government-guaranteed lending. Including Windsor Advantage’s government-guaranteed servicing platform, Capital is well-positioned to capitalize on this growing niche.

These are some of the financial and strategic benefits of the merger:

1.) Grows commercial loan book: about 38% of the pro forma loan book will consist of C&I and owner-occupied CRE

2.) Balanced pro forma business mix: 70% contribution from commercial and 30% contribution from consumer on a net income basis based on illustrative adjusted full year 2023 earnings

3.) Expected to produce 17% EPS accretion in 2025 with manageable tangible book value dilution of 5% earned back in approximately 1.8 years

4.) Significant accretion to returns profile: Expected to be about 260bps accretive to Capital Bancorp’s already high return on tangible common equity in 2025

5.) Pro forma fee income contribution will exceed about 20% of total revenue

Upon the closing of the deal, Marc McConnell, Chairman, President and CEO of IFH, will join the board of directors of Capital Bancorp and Capital Bank. And A. Riddick Skinner, EVP of Government Lending at Integrated Financial Holdings, will join Capital Bank as Head of Government Guaranteed Lending Program. Melissa Marsal, EVP and Chief Operating Officer of Integrated Financial, will join Capital Bank in a leadership role. Plus, Mike Breckheimer, EVP and Chief Strategy Officer at Integrated Financial, will join Capital Bank as Head of Windsor Advantage.

The deal with Integrated Financial Holdings was unanimously approved by both boards of directors and is expected to be completed in the second half of 2024, subject to approval of Capital’s and Integrated Financial’s shareholders, regulatory approvals, and the satisfaction of other customary closing conditions.

Stephens served as financial advisor and Squire Patton Boggs (US) LLP served as legal advisor to Capital Bancorp. Raymond James & Associates served as financial advisor and Wyrick Robbins Yates & Ponton LLP served as legal advisor to Integrated Financial.


“Capital has a track record of creating value by investing in teams and lines of businesses that generate strong returns for shareholders. This acquisition represents a continuation of our strategy to build a highly diversified business that generates best-in-class returns for our shareholders and allows us to better serve our customers. IFH’s expertise originating and servicing USDA and SBA loans fits well with our strategic objectives and will allow us to serve a market with substantial need and growth potential.”

– Ed Barry, Chief Executive Officer of Capital Bank

“We are excited for this partnership with Capital and for the benefits that it brings to both banks. With a larger balance sheet and our combined lending and deposit-gathering capabilities we believe that we can secure and grow our position as a leader in nationwide government guaranteed lending.”

– Marc McConnell, Chairman, President and CEO of Integrated Financial Holdings