Mercantile to buy bank in Carroll Co.

Corporation to merge Union National into Westminster affiliate

`It made great sense'

Move seen as chance to increase role in rapidly growing area


January 22, 2000|By Bill Atkinson | Bill Atkinson,SUN STAFF

Mercantile Bankshares Corp. said yesterday that it has reached an agreement to acquire Union National Bank of Westminster for about $70 million.

The Baltimore-based Mercantile, which is the largest independently owned banking company in the state, plans to merge Union National into Westminster Bank and Trust Co., a Mercantile affiliate.

The deal will give Mercantile a larger share of the rapidly growing Carroll County market, adding 10 branches and $309 million in assets.

Combined, the banks will have 20 branches, $557 million in assets and about 225 employees.

"It made great sense for us," said H. Furlong Baldwin, chairman and chief executive officer of Mercantile, which has $7.9 billion in assets. "Carroll County is one of the real growth counties in the state. This is an opportunity to enlarge that affiliate."

Shares of Mercantile fell $1.125 to $28.0625, while Union National's shares jumped $4.0937 to $31.25.

"It looks like it is a pretty good deal," said John J. Rezai, associate director of research at May Davis Group, a Baltimore-based investment banking firm. "In terms of price, [Mercantile] got good value for their shareholders."

Virginia W. Smith, Union National's president and chief executive officer, said it was not an easy decision to sell the 184-year-old bank.

"There is sadness, there is no question," Smith said. "I do believe this is the best thing for all of our constituency, but there is sadness."

The bank is selling because Union National's shareholders are growing older and want a ready market for their stock as they sell it, she said. Mercantile provides that avenue because it is much larger and its shares are readily traded.

In addition, Union National is fighting to gain market share and faces stiff competition from a number of banks, including BB & T Corp., a giant regional banking company based in Winston-Salem, N.C. It bought Carroll County Bank and Trust Co. last year.

Smith said Carroll County Bank's decision to sell gave Union National executives reason to pause because the former has a larger share of the Carroll County market.

The merger will give Union National and Westminster Bank about 27 percent of the deposits in the market, which about matches Carroll County Bank's share, Smith said.

Under the agreement, Mercantile will exchange 1.15 shares of its common stock for each share of Union National Bancorp. It has 1.965 million shares outstanding, plus options for 60,936 shares that can be exercised prior to the closing.

The deal, which must be approved by regulators and Union National stockholders, is expected to close in July, Smith said.

Smith said the merged bank will be renamed and about three branches will likely be closed.

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