MCLEAN, VA-Local institution Capital One Financial Corp. is acquiring Chevy Chase Bank for $520 million in a cash-and-stock deal, the company announced this morning. Specifically, Capital One will pay $445 million in cash and 2.56 million of its own shares; it is also taking a $1.75- billion markdown for potential losses in Chevy Chase’s loan portfolio, some of which include the now discredited option-ARM mortgages.

The deal will make Capital One the largest locally-based retail bank in the DC area. For the commercial real estate community, the impact of the acquisition is less clear. Chevy Chase has been a fairly regular contributor of capital to commercial real estate transactions here.

More recently, like many local community banks, it has filled the void in CRE financing. For instance, earlier this month it led a five-bank consortium to provide a $194-million, 54-month term financing to Connecticut & K Assoc. for 1000 Connecticut Ave.–a 12-story, 383,392-square-foot trophy office building under development in the city’s CBD. It was also one of the banks that supported a $75-million loan to the Mortgage Bankers Assoc. for the acquisition of 1331 L St., a 170,000-square-foot building.

A transaction has been rumored for weeks–at one time Citibank was said to be a serious suitor. Still, though, it has been difficult for the local CRE community to assess exactly what will be the impact of this local consolidation of banking resources. “I would like to see more details about the transaction before I make a judgment,” one broker–who has worked on deals with the bank–tells “Obviously, any pullback [in CRE finance] would not be welcome in this current environment.”

Once customary regulatory approval is received, the transaction is expected to close in Q1 2009. Capital One expects to achieve a reduction of $125 million in non-interest expenses and to incur $225 million of merger and integration costs as a result of the deal. The combined company will have deposits of more than $110 billion–the 8th largest in the US–a managed loan portfolio of more than $159 billion and 983 branches.