M&T Bank Corp. will acquire Provident Bankshares Corp. for $401 million in stock, the banks announced this morning, bringing an end to the last of Baltimore’s old-time banking giants.
Buffalo-based M&T will acquire 143 Provident branches and 198 ATMs across Maryland and Virginia in a stock-for-stock swap. The deal values Provident stock at $10.50 a share, well above its Thursday close of $5.80. Shares rose to $9.03 a share in pre-market trading today.
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The merger comes amid one of the worst economic crises in U.S. history, which has hit financial institutions particularly hard.
“This merger also provides the resources that Provident’s customers, employees and communities will require during this challenging economic environment,” Provident Chairman and CEO Gary Geisel said in a statement. “While Provident has performed well in this difficult environment, in the quarters ahead, we would face significant challenges, particularly in our investment portfolio.”
Provident Bank was founded in 1886, and was the last of Baltimore’s historic homegrown banks following the sale of Mercantile Bank to PNC last year.
But in recent months, Provident has been dragged down by losses in its real estate investment portfolio, including a $24.6 million write-off of its securities in the third quarter.
Provident Bank is the eighth-largest bank in Maryland in deposits, and last month received a $151 million investment from the Treasury Department designed to assist healthy banks in continued lending.
M&T said it expects to gain approximately $4.6 billion in deposits and $4.3 billion in loans in the merger, giving it the second-largest deposit share in Maryland.
“With our strong presence in Baltimore, we look forward to this opportunity to expand our commitment across the Mid-Atlantic region,” Michael Pinto, Chairman and CEO of M&T’s Mid-Atlantic Division said in a statement.
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