Chevy Chase Bank finds buyer

December 05, 2008|By From Sun staff and news services

Capital One Financial Corp. said yesterday that it will acquire Bethesda-based Chevy Chase Bank for $520 million in cash and stock, expanding its presence in its own backyard.

Privately held Chevy Chase Bank has a sizable presence in the Baltimore area, where it is the 14th-largest bank, according to the most recent figures from the Federal Deposit Insurance Corp.

The bank has about $11 billion in deposits, with nearly 300 branches in Maryland, Virginia, Delaware and the District of Columbia. Thirty-four branches are in the Baltimore area. Two years ago, the bank bought naming rights to the University of Maryland's stadium in College Park, now called Chevy Chase Bank Field at Byrd Stadium.

After receiving $3.56 billion as part of the government's bank investment program and raising more than $700 million through a stock offering, McLean, Va.-based Capital One will use $445 million in cash and 2.56 million shares to acquire Chevy Chase.

Rumors about a possible buyer for Chevy Chase had circulated for several weeks. Citigroup Inc., whose recent stock price decline pushed it to accept a federal government rescue last month, was among the bidders reportedly looking to acquire the regional bank. Citi officials would not comment yesterday on speculation that it was interested in acquiring Chevy Chase.

Unlike Citi, Capital One has remained profitable during the credit crisis and has been able to tap capital markets in recent months to boost its capital reserves.

Chevy Chase Bank is the latest in a string of regional banks that Capital One has purchased in recent years as it expands to become a full-service banking operation after primarily operating as a credit card lender.

The Chevy Chase deal is expected to close during the first quarter.

Shares of Capital One fell 60 cents, or almost 2 percent, to close at $30.99 yesterday.

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