Telebanc Financial Corp., Arlington, Va., said it plans to buy Direct Financial Corp. for about $26.4 million in cash.
The deal would grow Telebanc's account base by 68%, adding Gibbsboro, N.J.-based Direct Financial's 14,000 accounts to its 21,000.
"We believe this is a nice synergy between two companies targeting the same niche customer," said Aileen Lopez Pugh, chief financial officer of $1 billion-asset Telebanc.
Neither Telebanc nor $300 million-asset Direct Financial have traditional banking offices. Instead, both sell Federal Deposit Insurance Corp.-insured savings products via the telephone.
This unusual approach allows Telebanc to offer better rates than most banks, Ms. Pugh said.
"Because we don't have to pay for bricks and mortar, we can operate at one-third to one-half the cost of traditional banks," she said.
Telebanc sells its services nationally, while Direct Financial, the holding company for Premium Federal Savings Bank, markets mostly to its local Central New Jersey region. Telebanc also plans to begin offering checking accounts to customers as soon as this quarter, Ms. Pugh said.
The deal is expected to close during the second quarter.