Mercantile Bankshares Corp. said yesterday that it will acquire Home Bank, a community bank on the Eastern Shore, in a transaction valued at about $14 million.
The directors of Mercantile and Home Bank approved a definitive agreement that calls for merging the Newark-based bank with Peninsula Bank, an affiliate of Mercantile that has 16 branches and is based in Princess Anne.
"This is a fill-in acquisition," said H. Furlong Baldwin, chairman and chief executive of Baltimore-based Mercantile, which has $6.5 billion in assets and operates 21 community banks in Maryland, Virginia and Delaware. "This was one of those opportunities where we can take a smaller bank and blend it in with one of our existing strongholds. It is just a sound community bank. It is just a perfect partner to our franchise."
Home Bank has $46.4 million in assets and five offices, three of which are in Ocean City.
Under the deal, Mercantile will exchange 2.6 shares of its common stock for each share of Home Bank's common stock. Home Bank has 175,947 shares outstanding, and an additional 6,829 shares may be issued to holders of stock options, the companies said.
Mercantile's shares closed up 12.5 cents to end the day at $30.375 a share.
The deal is subject to the approval of regulatory authorities and stockholders of Home Bank.
Home Bank has been a strong performer with few loan problems, wide margins and solid profits. For all of 1995, Home Bank earned $681,000 and returned 14.28 percent on shareholder equity.
"It is kind of like a mini-Mercantile," said John M. Kline, a banking analyst with West Orange, N.J.-based Ryan, Beck & Co. "This is a company that has a similar conservative lending culture" to Mercantile's.
The Home Bank deal follows Mercantile's acquisition of Sparks State Bank in Baltimore County, completed nearly a year ago.
Pub Date: 10/22/96