Independence Federal Savings Bank in Washington said late Wednesday that it has agreed to buy the $168 million-asset Colombo Bancshares Inc. in Rockville, Md.

The deal would unite two companies that are mostly owned by Washington businessman Morton A. Bender and his family.

Colombo Bank would be merged into the $173 million-asset Independence Federal, whose branch count would go from four to nine.

Each share of the privately held Colombo would be exchanged for 2.82 shares of Independence.

Mr. Bender, who owns 90% of Colombo's stock, won control of Independence two years ago after a racially charged battle.

His opponents at the time had argued that Independence, which focuses on black customers, should remain black-owned, but Mr. Bender, who is white, won regulatory approval to acquire up to 51% of its stock. He remains the majority owner.

Though Independence was well capitalized as of Sept. 30, it has been struggling. It lost $501,000 for the first nine months of last year and 4.41% of its loans were not current at the end of the third quarter, according to data from the Federal Deposit Insurance Corp. The data indicated that Independence had been unprofitable from 2002 through 2007.

Colombo Bank earned $145,000 for the first nine months of last year.

The deal is expected to close by the end of the second quarter.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.

Corrected February 17, 2009 at 2:05AM: A previous version of this story overstated Independence Federal Savings Bank's loss and Colombo Bank's profit for the first three quarters of last year. Independence lost $501,000, and Colombo earned $145,000.