HARRISBURG, Pa. - Dauphin Deposit Corp. said it has reached an agreement to absorb Valley Bancorp, a smaller Pennsylvania company based in Chambersburg.

The merger agreement, valued at about $68.8 million, was approved by the boards of both companies. Each share of Valley common stock is expected to be exchanged for between 2.1401 and 2.4193 common shares of Dauphin Deposit, depending on the market value of Dauphin's common stock before the effective date of the merger. The deal is expected to close during the fourth quarter.

Dauphin, which has $4.5 billion of assets, has 102 branches in central and eastern Pennsylvania and Maryland. Valley, with $326 million of assets, has 14 branches.

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