‘‘If I’m thinking it, he’s saying it,” said Paul, whose relationship with Pincus goes back more than 25 years, when Pincus made Paul’s first commercial real estate loan. It wasn’t long after that meeting that the banks’ top executives signed an agreement on a $48.8 million merger, which they expect to finalize by this fall.

Paul and Pincus emphasized repeatedly that their banks focus almost exclusively on commercial customers and have little to do with the residential mortgage loan market that some economists largely blame for the nation’s economic turmoil.

‘‘We did this out of the opportunity to make our banks even stronger as a combined institution,” Pincus said.

While some analysts say Maryland has generally weathered the economic doldrums better than the rest of the nation, state banks had a rougher year than banks nationally last year, according to recent Federal Deposit Insurance Corp. data. Profits at commercial banks based in Maryland fell 59 percent in 2007 from the prior year to $223 million, compared with a national decline of only 22 percent. State banks’ net income last year was the lowest since at least 1993, according to the FDIC.

Those figures are misleading because the 2006 data include Mercantile Bankshares Corp. of Baltimore and affiliate banks, which were bought by PNC Financial Services Group that year, said Alison Tavik, a spokeswoman for the Maryland Bankers Association. The 2007 state FDIC data do not include the former Mercantile banks, she said.

‘‘The Mercantile numbers that were previously reported under Maryland banks are now being reported under national chartered institutions,” Tavik said. ‘‘The effect of the switch to a national charter is a unique characteristic of the Maryland data.”

Fidelity, which lost $7.2 million in 2007 following a $293,000 profit in 2006, and EagleBank, which saw slightly lower net income last year, are not the only local banks hammering out a merger or acquisition deal. American Partners Bank of Bethesda, which lost almost $7 million in 2007 and $4 million in 2006, recently agreed to be purchased by Affinity Financial Corp. of Irvine, Calif. Terms were not disclosed, and that institution is expected to change to Waterfield Bank.

Such bank mergers and acquisitions slowed dramatically across the nation in the fourth quarter of 2007 and so far this year, according to a recent report by Vienna, Va., bank consulting company Danielson Capital. Pricing has been lower than expected, the report says.

The tangible book value — a measure of a bank’s net worth — in the EagleBank-Fidelity deal was about 137 percent, according to Danielson. Three other agreements signed involving smaller banks in Virginia, West Virginia and North Carolina since October also had book values of less than 200 percent.

In comparison, in 2005 The Columbia Bank in Columbia sold to Fulton Financial Corp. for 342 percent of book value. In 2006, Mercantile Bankshares Corp. of Baltimore was bought by PNC Financial Services Group for 262 percent of book.

Even large bank deals are seeing declining prices. A recent purchase by Charlotte, N.C., giant Bank of America Corp. — Maryland’s largest bank in deposits — of LaSalle Bank Corp. had a book value of 220 percent.

‘‘The expectation of getting three times book is no longer realistic, and even getting two times book now seems out of reach [in smaller deals],” Danielson says.

Best of both entities

Though the Danielson report termed the EagleBank-Fidelity deal an acquisition, Paul and Pincus said it was really a merger. The new entity will take the name of EagleBank, which had $839 million in assets as of December, compared with $452 million at Fidelity.

‘‘We are taking the best practices of both entities,” said Paul, who is also president and CEO of parent Eagle Bancorp and will become chairman of the combined company. ‘‘We will be a much bigger bank but retain the local decision-making. ... The focus we have on serving the needs of the community is not changing.”

That local decision-making ability attracted Rob Anderson, president of Jabberu LLC — a Bethesda company that operates foreign language centers and sells related products and services — to Fidelity in late 2006. Previously, he had dealt with a big out-of-state institution for the business’ banking needs. Friends recommended Fidelity.

‘‘We haven’t gotten to the point of seeking financing, but if we do want to pursue that, we want to work with a bank that makes decisions locally,” said Anderson, who has opened four centers — two in Montgomery County and two in Virginia — in a little more than a year and hopes to take the concept nationally.

While it’s difficult to gauge the impact that the EagleBank-Fidelity marriage will have, Anderson said he was glad that the local emphasis won’t change.

Customers such as Anderson will see a deeper management staff who will provide more services and stronger capital resources and lending capabilities, Paul and Pincus said. They are still working through the process of deciding if any branches will be consolidated. EagleBank has nine branches — six in Montgomery County and three in Washington — while Fidelity has three branches in Montgomery, two in Washington and one in Vienna, Va.

Paul said he recently met with a potential client who was turned down by a larger bank for a $7.5 million loan and another who was turned down by some regional banks for a $150,000 loan.

‘‘We understand the business community here,” Paul said. ‘‘The New York and Charlotte banks don’t understand this marketplace.”

Losses blamed on mortgage activities, write-downs

Executives at Maryland banks whose profits dropped significantly last year largely blamed mortgage-related activities and write-downs.

First Mariner Bancorp of Baltimore, which saw a $10.1 million net loss last year after a $1.9 million profit in 2006, cited having to buy back ‘‘alt-A” loans — which are between conventional and subprime mortgages — from borrowers who were late on payments. The bank closed its wholesale lending division last year and did not have to repurchase any loans in the 2007 fourth quarter.

Executives with Provident Bankshares Corp. of Baltimore cited unanticipated write-downs of some securities in its investment portfolio, a decline in net interest income and an increase in its loan loss provision for a net earnings slide of almost $38 million. Provident’s core businesses remain profitable, and the bank is well-capitalized for regulatory purposes, executives said.

‘‘Our goal in 2008 is to make necessary adjustments to deal with an uncertain economy, grow our successful core businesses and continue to control expenses,” said Vicki Cox, a Provident spokeswoman.

Pincus blamed Fidelity’s $7.2 million net loss last year on the mortgage business that it sold. The mortgage division was a ‘‘little too big for our sized bank,” said Pincus, who will be vice chairman of the combined entity. He said Fidelity’s banking operations were profitable and its net interest margin, a measure of profitability, was better than the average for similar size peers..

Some Maryland banks have shed employees in the past year to save money. First Mariner cut more than 100 positions last year to drop to 683 in December, according to the FDIC. Fidelity was down to 98 employees in December from 288 a year earlier. Provident also saw workforce cuts.

Other banks have added employees. Sandy Spring Bancorp of Olney, which saw net earnings last year remain about level with 2006, boosted its workforce by 76 people last year. Congressional Bank of Potomac added 12 employees, while Monument Bank of Bethesda hired five more. EagleBank and HarVest Bank of Maryland in Rockville each added a net two positions last year.

Despite the tougher times, new community banks continue to sprout. Revere Bank opened in Laurel last year, and Blue Ridge Bank plans to open in Frederick this spring.

Having two local community banks join forces, as well as others enter the market, doesn’t concern Jack Hollerbach, president and CEO of HarVest Bank.

‘‘EagleBank and Fidelity aren’t really our competition,” said Hollerbach, whose community bank showed a profit last year after a loss in 2006. ‘‘Our competition comes from the big out-of-state banks.”