WashingtonFirst Bankshares in Reston, Va., has agreed to buy 1st Portfolio Holding Corp., a direct mortgage lender in Fairfax, Va.

The $1.4 billion-asset WashingtonFirst said in a press release Thursday that it will pay $7.7 million in stock to 1st Portfolio's accredited shareholders. WashingtonFirst will also issue shares of its common stock in exchange for up to $7 million in new capital, representing 1st Portfolio's tangible equity capital in excess of $2.5 million. At March 31, the amount of such excess capital was about $5.1 million.

The seller's nonaccredited shareholders, who hold about 2% of the lender's common stock, will receive cash. The transaction is expected to close early in the third quarter.

WashingtonFirst said it expects the deal to initially be 2% to 3% dilutive to its tangible book value per share, with an earnback period of two years.

WashingtonFirst plans to run 1st Portfolio Wealth Advisors as a subsidiary, while 1st Portfolio Lending Corp. will be managed as a division of WashingtonFirst Bank. Michael Rebibo, 1st Portfolio's president and chief executive, will join WashingtonFirst as an executive in charge of those businesses.

"We have known Michael Rebibo … for many years," Shaza Andersen, WashingtonFirst's chief executive, said in the release. Rebibo "is a former banker who shares our vision and understanding of what is required to be a successful community bank in the 21st century."

Sandler O'Neill and Troutman Sanders advised WashingtonFirst. Cooley LLP provided legal advice to 1st Portfolio.

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