Shares of Howard Bancorp (NASDAQ:HBMD) jumped as much as 30% higher on Tuesday after the Maryland bank agreed to be acquired by F.N.B. (NYSE:FNB). The deal values Howard at about $418 million, a substantial premium compared to the market's valuation of the bank a day ago.
Howard Bank operates 13 full-service branches in the Baltimore and greater Washington, D.C., area, with an emphasis on its namesake Howard County, Maryland. That's an affluent suburban area that banks are eager to serve, and Pittsburgh-based F.N.B. is paying up to gain share there.
Terms of the deal call for F.N.B. to pay $21.96 per share in stock for Howard, a premium of more than 40% to Howard's Monday closing price of $15.62. F.N.B. intends to combine Howard and its $2.6 billion in assets into its First National Bank of Pennsylvania operations, creating the sixth largest deposit share in the Baltimore market.
The deal is a terrific outcome for Howard Bancorp holders, with the stock trading below $10 per share as recently as a year ago.
Howard shares are trading pretty close to the offer price, meaning the market expects the deal to close as expected and does not expect any other suitor to step in and outbid F.N.B. That seems like the most likely outcome, and there isn't much reason for those on the sidelines to jump in right now.
Assuming no surprises from regulators, Howard shareholders should receive shares of F.N.B. sometime in early 2022 after the deal closes.