Bank merger is likely

March 18, 2003|by ANDREW SCHOTZ

F&M Bancorp - the parent company of Farmers & Mechanics Bank - has tentatively agreed to merge with Mercantile Bankshares Corp., creating the state's second-largest bank holding company.

The combined companies would have deposits of $9.9 billion, ranking behind only Bank America, said David Borowy, who handles investor relations for Mercantile.

The transaction is valued at $500 million in stock and cash, officials from both companies said.

Mercantile will pay $46 in cash, or 1.2831 shares of Mercantile for each F&M Bancorp share, or a combination of cash and shares.


The deal, which was announced last Thursday, is subject to approval by F&M Bancorp's shareholders and the state's Division of Financial Regulation. Both companies' boards of directors have approved the transaction.

Numerous attempts to reach someone at the Division of Financial Regulation for comment Monday afternoon were unsuccessful.

An employee at F&M Bancorp, which is based in Frederick, Md., referred questions to Borowy.

Farmers & Mechanics Bank has branches in Washington, Frederick and other counties. It is not connected to Farmers & Merchants Bank & Trust, which is known as F&M in Washington County.

Home Federal Savings Bank, another F&M Bancorp subsidiary, also operates in Washington County.

Mercantile, which is based in Baltimore, is the parent company of 20 affiliates in Maryland, Virginia and Delaware.

None of its affiliates have branches in Washington County. The closest Mercantile properties are Fredericktown Bank & Trust in Frederick County and The Fidelity Bank in Allegany County.

"Through the addition of F&M (Bancorp), Mercantile will also enter a new market in Washington County," Edward J. Kelly III, Mercantile's chairman, president and chief executive officer, said in a prepared statement.

Borowy said that about 21 branches will close after the merger, but they haven't been picked. Most will be F&M Bancorp holdings, but possibly some Fredericktown Bank & Trust branches, too, he said.

Borowy said it's too soon to say how many jobs might be affected.

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