Baltimore banker Ed Hale is bemoaning the sale Monday of Mercantile Bankshares to a Pennsylvania bank, saying the move is “hurtful for the Maryland economy.”
“When you have a great old bank bought by someone from out of town, you lose the local identity they have,” said Hale, president and chief executive officer of 1st Mariner Bank.
PNC Financial Services Group Inc., based in Pittsburgh, said Monday it is buying Mercantile for about $6 billion in cash and stock.
Mercantile shareholders will receive a combination of 52.5 million shares of PNC stock and $2.13 billion in cash.
That means each share of Mercantile stock will be exchanged for 0.4184 shares of PNC stock and $16.45 in cash. The deal is expected to be completed in early 2007.
Mercantile chairman, President and CEO Edward Kelly III will become PNC vice chairman when the deal closes.
The deal allows PNC to expand its presence in the mid-Atlantic region, picking up 240 offices that Mercantile has in Maryland, Virginia, Washington, Delaware and southeastern Pennsylvania.
“This transaction is about the growth of two companies that fit together exceptionally well,” Kellysaid in a news release announcing the deal.
Hale predicted other banks will merge in the near future, further diminishing the local banking industry.
Jaime Black, a stock analyst writing for Morningstar, said PNC will benefit strategically from the deal because Mercantile is “one of the more efficient banks in our universe, while PNC is on of the least.”
“Perhaps in his new role as PNC?s vice chairman ? Kelly can help bring PNC?s costs closer to the industry average,” Black said Monday.
Moody?s said the Mercantile-PNC marriage may bring higher credit ratings for PNC, but said the profitability of the merged group may be less than that of Mercantile alone.
