Capital Bancorp Agrees to All-Stock Peoples Takeover

The Tip Desk · November 8, 2026 · 4 min read

Peoples will pay 1.11 shares a share, or $43.75, as net interest income rose to $53.1 million and core earnings reached $0.89 a share.

Capital Bancorp, Inc. (CBNK), the holding company for Capital Bank, N.A., agreed on September 29, 2026 to be acquired by Peoples Bancorp, Inc. in an all-stock deal that values the company at $43.75 a share, or 1.11 Peoples shares for each Capital share, an implied 22.7% premium to the September 29 close. The transaction is subject to regulatory approvals, shareholder approval and other customary closing conditions.

The combination announcement landed in a quarter when the Rockville, Maryland-based lender still posted double-digit loan growth, a wider net interest margin and higher core earnings. Gross loans held for investment were $3.1 billion at September 30, 2026, up $292.3 million, or 10.4%, from a year earlier.

Net interest income was $53.1 million, up $2.1 million, or 4.2%, from the second quarter. Interest income of $72.3 million rose $2.3 million from the prior quarter, which the company attributed primarily to $2.4 million from Commercial Bank loan growth and $0.5 million from OpenSky due to higher balances and yields. Interest expense was $19.2 million.

Net interest margin including card was 5.81%, up 17 bps from the second quarter, with 14 bps from the Commercial Bank loan portfolio and 4 bps from OpenSky on higher balances. Core NIM of 4.18% rose 14 bps, primarily 11 bps from organic Commercial Bank growth. The average yield on interest-earning assets was 7.91%. Total cost of deposits was 2.30%.

GAAP net income was $13.1 million, or $0.80 a share, down from $14.3 million, or $0.87 a share, in the second quarter. Core net income, which excludes merger-related expenses and certain other pre-tax adjustments, was $14.7 million, or $0.89 a share, up $0.4 million, or 3.2%, from $14.3 million of core net income in the second quarter. Merger-related expenses of $1.6 million were added back in the core reconciliation.

Fee revenue was $15.0 million, up $0.7 million from the second quarter, and represented 22.1% of total revenue. The company said the quarter-over-quarter increase was driven by $0.4 million of other income from fees on USDA transactions that did not close and higher SBIC income, plus $0.3 million of government lending revenue from USDA and SBA gain on sale.

Noninterest expense was $45.7 million, up $2.5 million from the second quarter as the company executed growth initiatives and incurred merger-related expenses. Core noninterest expense of $44.1 million rose $1.0 million, primarily $1.0 million of higher personnel costs from planned headcount investment. The efficiency ratio was 67.1%; the core efficiency ratio was 64.8%.

The provision for credit losses was $4.9 million, up $1.3 million from the second quarter, primarily a $1.0 million higher reserve requirement largely attributable to loan growth. Net charge-offs were $3.8 million, or 0.49% of portfolio loans annualized, versus 0.50% in the second quarter. Nonperforming assets were $60.5 million, or 1.59% of total assets. Substandard loans were $71.4 million, or 2.3% of portfolio loans.

Total deposits of $3.3 billion fell $52.0 million, or 6.1% annualized, from June 30, 2026, primarily an $89.3 million decrease in DDA products tied to the title business and a $45.2 million reduction in a single customer relationship. Excluding title-company deposits and that relationship, deposits increased $82.5 million, or 11.8% annualized. Low-interest and noninterest-bearing DDA deposits were $1.2 billion, or 36.1% of deposits. The average loans-to-deposit ratio was 96.0%.

Tangible book value per share was $23.98, up 9.0% annualized from the second quarter. Common Equity Tier-1 capital was 13.25% and Tier 1 leverage was 10.84%. The company declared a $0.14 a share cash dividend payable November 25, 2026. It suspended its remaining $12.4 million repurchase authorization and does not currently expect to buy shares while the Peoples deal is pending.

On the same date as the merger, the company announced a purchase-and-assumption agreement to sell its North Riverside, Illinois branch, subject to regulatory approvals. Based on September 30 deposit composition, the bank would have received a deposit premium of about $3.2 million had the sale closed then, plus a payment equal to the unpaid principal of loans transferred. Loans held for sale rose $51.9 million, including a $60.2 million reclassification from held for investment tied to the pending branch sale. Total deposits include $111.1 million expected to be assumed in that transaction.