- Key insight: The merger is structured to preserve National Capital's 137-year charter and brand — with the older, smaller bank technically surviving at both the holding company and bank level, even as Old Dominion shareholders walk away with nearly two-thirds of the combined entity.
- Forward look: The merged institution plans to list on either the Nasdaq or New York Stock Exchange as the deal closes in the fourth quarter.
- Relevant stats: The deal combines Old Dominion's $1.6 billion in assets with National Capital's $735 million to create a 10-location institution across Washington, D.C., and four states.
Old Dominion National Bank is merging with The National Capital Bank of Washington in a $98 million deal.
The combination — announced on Monday — brings together one of the D.C. area's newest community banks and one of its oldest to form a $2.4 billion institution with 10 locations across the nation's capital and four states. The deal is expected to close in the fourth quarter, with the merged entity going public on either the Nasdaq or New York Stock Exchange concurrently, National Capital CEO Randy Anderson told American Banker.
While the merger is being described as one of equals, Old Dominion holds around $1.6 billion in total assets while National Capital has $735 million. The deal is uniquely structured to avoid a direct merger of the latter into the former to preserve National Capital's 137-year "history and legacy," according to Anderson.
Old Dominion National Bank is merging into National Capital Bank at the bank level, while National Capital Bancorp — the public holding company — is merging into ODNB Financial, the private holding company, at the corporate level. The surviving institution will operate as National Capital Bank from Capitol Hill, retaining its namesake's charter.
Anderson noted that the merger will strengthen margins for the combined institution. National Capital Bank runs net interest margins in the mid-3% range, and folding Old Dominion's higher-cost deposit base into that structure should bring down funding costs across the organization, he said.
Old Dominion, founded in 2007, had leaned on brokered deposits to fuel its growth — a common pressure point for young, fast-growing banks — but had recently begun shifting toward lower-cost deposits by building out a title company business, according to Anderson.
"They have, in the recent year or two, done a pretty good job of focusing on the title company business, and that has brought in some lower cost deposits," Anderson said. "They were already headed in that direction. We're just accelerating it."
Geography was also a factor, though a secondary one, Anderson added, as National Capital is heavily concentrated in the D.C. market, and Old Dominion's offices in Virginia and Pennsylvania offer some diversification against localized risk.
Old Dominion shareholders are expected to hold approximately 65% to 68% of the combined entity, and 10 of the 17 board seats. Under the deal's terms, National Capital Bancorp shareholders can elect to receive stock, cash or a combination of the two.
Those choosing stock would receive 5.239 shares of ODNB Financial for each share they own. The cash option values each share at $83. A third option allows shareholders to take 90% of their consideration in stock and 10% in cash.
Mark Merrill, Old Dominion's current chairman and CEO, will take the helm as CEO of the combined holding company and bank, as well as president of the combined bank. Anderson will serve as the nonexecutive chairman of both the combined holding company and combined bank.
The two CEOs have known each other for more than a decade, and previously worked together. Anderson said that the two banks have done deals together for the past decade, and learned that "from a cultural perspective, we have a good alignment in terms of our credit culture."
He added that the two banks operate on the same system, share an auditor, and are both regulated by the Office of the Comptroller of the Currency, allowing for both a smooth internal integration and a "pretty seamless deal from our customer standpoint."
That degree of familiarity is often a prerequisite for making deals work. A merger between two California credit unions, for example,
The announcement comes amid a slight uptick in bank merger activity this quarter, according to analysts from JPMorganChase. While deal volume for the year has been comparable to 2025, the average deal size so far in the second quarter has been significantly smaller compared to the first quarter and the same period last year.
