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MFB Acquisition buying Maryland Financial Bank

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MFB Acquisition buying Maryland Financial Bank

MFB Acquisition Corp. agreed to acquire Towson-based Maryland Financial Bank.

Under the terms of the merger agreement, Maryland Financial Bank will be merged into MFB Acquisition, with MFB Acquisition surviving the merger. The surviving entity will be a Maryland-chartered bankers' bank that will operate under Maryland Financial Bank's name and continue Maryland Financial Bank's existing operations.

MFB Acquisition will purchase the outstanding shares of Maryland Financial Bank common stock in exchange for cash. The cash payment will be based on Maryland Financial Bank's tangible common equity as of the end of the month before the effective time of the merger, subject to certain adjustments including the potential resolution of an identified loan participation prior to closing. MFB Acquisition will also acquire the bank's outstanding shares of preferred stock.

SNL valuations for bank and thrift targets in the Mid-Atlantic region between Dec. 8, 2016, and Dec. 8, 2017, averaged 133.39% of book, 136.60% of tangible book and had a median of 30.59x last-12-months earnings, on an aggregate basis.

"The merger will increase capital, increase our lending limit, increase our capacity to do more loan participations, maintain and improve the quality of staff, and will help diversify product offerings," Maryland Financial Bank President and CEO Bob Chafey and Chairman Rick Hook said in the release.

F. Eduardo Parreira, managing director and one of the founders of MFB Acquisition, said that the acquisition of Maryland Financial Bank marks the entry of MFB Acquisition into the correspondent banking services market.

The members of Maryland Financial Bank's board will join the board of surviving entity, to join Parreira and his fellow managing director and MFB Acquisition founder Marcelo Sacomori.

The current directors of Maryland Financial Bank, as well as Sacomori and Parreira, all entered into support agreements, in which they agreed, among other things, to vote their shares of Financial Bank common stock and MFB Acquisition common stock, respectively, in favor of the merger.

In addition, the holder of all of Maryland Financial Bank's outstanding shares of preferred stock has entered into a support and stock purchase agreement with MFB Acquisition, executing a consent approving the merger and agreeing to sell its shares of preferred stock of Maryland Financial Bank to MFB Acquisition immediately prior to the effective time of the merger.

As of Sept. 30, Maryland Financial Bank had approximately $63.8 million in assets. The bank operates one branch in Baltimore County, Md., ranked No. 25 with a 0.27% share of approximately $17.67 billion in total market deposits.

The merger is expected to close in the second or third quarter of 2018, subject to stockholder and regulatory approval.

Baker Donelson Bearman Caldwell & Berkowitz PC acted as legal counsel to MFB Acquisition. Opencap Global Inc. and The Kafafian Group Inc. provided certain financial advisory assistance to MFB Acquisition. Kilpatrick Townsend & Stockton LLP acted as legal counsel to Maryland Financial Bank, and Olsen Palmer LLC acted as its financial adviser.

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