Nearly two months after it agreed to buy a small bank on the Eastern Shore, Mercantile Bankshares Corp. said yesterday that it would acquire Farmers Bank of Mardela Springs in a transaction valued at roughly $3.9 million.
Directors of both banks approved a definitive agreement to merge Farmers Bank, which has $28 million in assets, with Peninsula Bank, a Princess Anne-based Mercantile affiliate that has 16 branches.
The acquisition bolsters Mercantile's presence on the Eastern Shore. In October, the Baltimore-based banking company agreed to acquire Home Bank, which has more than $46 million in assets and five offices, three of them in Ocean City.
Farmers Bank has branches in Mardela Springs, Sharptown and Salisbury, all on the Eastern Shore.
"This just helps to consolidate our position," said H. Furlong Baldwin, chairman and chief executive of Mercantile. "It is just a continuance of new affiliates in new territories."
Alex Hart, a banking analyst with Ferris, Baker Watts Inc., said the Eastern Shore market was dominated by small banks, so there was plenty of room for consolidation.
"This is just indicative of Mercantile's recognition that the more rural markets offer a good opportunity to them," Hart said. "There are a lot of small country bank players that they could benefit from owning."
Mercantile's stock closed unchanged yesterday at $33.50 a share.
Mercantile has $6.5 billion in assets and 17 banking affiliates in Maryland, Delaware and Virginia.
Farmers Bank shareholders will receive 1.25 shares of Mercantile common stock for each share of their stock. Farmers has 92,028 shares outstanding.
The transaction is subject to approval of regulators and Farmers Bank stockholders. It is expected to be completed next year in the third quarter.
Mercantile also said yesterday that its directors approved a quarterly dividend of 26 cents a share.
The directors agreed to increase the company's authorization to buy back an additional 1 million shares of common stock. Mercantile is already authorized to buy 1.5 million shares of its stock.
Pub Date: 12/11/96