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With Eagle Bancorp's acquisition of Fidelity & Trust Financial Corp. completed, Fidelity branches will be converted to the EagleBank name by Monday, company executives say.

The deal makes EagleBank of Bethesda one of the largest community banks in suburban Maryland, with $1.4 billion in assets and 15 branches. A final decision on whether any branches will be consolidated has not been made, said Ronald D. Paul, chairman of parent Eagle Bancorp and chairman and CEO of EagleBank.

"We don't anticipate anything substantial," Paul said. "We are only looking at branches that overlay other existing branches."

Nine of the new entity's branches are in Montgomery County, with five in Washington, D.C., and one in Northern Virginia.

The all-stock transaction's value declined to $13.1 million from the $48.8 million announced in December. The difference largely has to do with losses by Fidelity's former mortgage division, which was sold, Paul said.

"We based the merger on certain conditions that we could modify," Paul said.

Earlier this year, Robert Pincus, former Fidelity chairman who is now Eagle's vice chairman, said Fidelity's mortgage division was a "little too big for our sized bank." Fidelity's banking operations were profitable, while net interest margin, a measure of profitability, was better than at similar banks of its size, Pincus said.

The transaction, which became effective Sunday, was dependent on not just stock price, but a conversion ratio determining how many shares of Eagle stock each Fidelity share would be worth.

When the deal was announced late last year, the conversion ratio was 0.9202, but the final conversion ratio was 0.3894. Eagle's stock price also fell to $8.34 on Monday from $11.51 in December.

The bank's press release last December said that the "value of the transaction at closing may be higher or lower, depending on whether there is any change in the exchange ratio, and the changes in the value of Eagle common stock."

Eagle plans to declare a 10 percent stock dividend so that former Fidelity shareholders will be eligible to receive the dividend.

For bank deals announced late last year that haven't closed until now, it is common to have the bank stock decline anywhere from 20 percent to 30 percent, said John Putnam, vice president of Vienna, Va., bank consulting company Danielson Capital.

However, a deal with a conversion ratio that is subject to change based on the book value of the other bank — in this case, Fidelity — is unique, he said.

There were five mergers announced in the first half of this year involving banks on the East Coast, stretching from Maine to South Carolina, according to recent Danielson Capital reports. That was down from nine in the same region in the first half of 2007.

Compatible banks

The integration of EagleBank and Fidelity is aided by their systems being so compatible, Paul said. Being bigger will help customers in such areas as having a larger lending limit, he said.

"We are bigger and cover more of the market," Paul said. "We will do the same type of banking we have always done, only with a bigger platform that can serve more customers."

In today's banking climate, the larger banks have exhibited a certain "nervousness," and it's an advantage to retain local decision-making, he said.

Pincus said in a statement that he had not before seen two merging banks that were as compatible in their goals, culture and focus.

"Both banks' success has been based on delivering superior customer service to the local business community," he said.