Capital One Snags Chevy Chase Bank

Capital One Financial (McLean, Va.) announced a definitive agreement with Bethesda, Md.-based Chevy Chase Bank in which Capital One will acquire Chevy for $520 million in cash and stock. By adding Chevy's $11 billion in deposits, Capital One will have one of the largest branch and ATM footprints in the Washington, D.C. metro area, according to the company.

"Chevy Chase is a great strategic fit for Capital One and the combination of our two banks is economically compelling. Chevy Chase provides an opportunity to acquire a well-run retail bank with local scale in one of the best local banking markets in the U.S. This transaction will enhance our strong deposit base, providing us with greater scope and scale in key Mid-Atlantic banking markets," said Richard Fairbank, chairman and CEO of Capital One in a statement. "At a time when core funding is key, we see our deposit strength as an important element of our continued success. The integration of Chevy Chase and the continued growth of our banking businesses is our highest priority. I am personally very pleased that we will be bringing onboard a bank of this caliber in our own backyard."

The combined company will have deposits of more than $110 billion, a managed loan portfolio of more than $159 billion and 983 branches. The $110 billion combined deposit portfolio is the 8th largest in the U.S.

The deal is subject to customary approvals but is expected to close in the first quarter of 2009.