Fulton Financial Corp. of Lancaster, Pa., has signed a definitive agreement to buy Drovers Bancshares in nearby York.
The $144 million stock deal, announced Wednesday evening, is expected to close in the third quarter. The price is 2.7 times $787 million-asset Drovers' book value. Fulton would exchange 1.24 shares of its stock for each outstanding Drovers share.
The deal would create a $7.3 billion-asset company. David C. Hostetter, Fulton's executive vice president, said it makes sense because "it's a logical extension of our strategy to expand into contiguous marketplaces." York County adjoins Lancaster County.
Drovers is the holding company for the 117-year-old Drovers and Mechanics Bank in York. Its 16 branches would be merged into Fulton Bank but would operate as a separate Drovers Bank division. Mr. Hostetter said that A. Richard Pugh, Drovers' chairman, chief executive officer, and president, has signed a five-year contract to manage the division.
All of Drovers' 262 employees would be offered jobs in the merged organization, Mr. Hostetter said. "Our goal is to retain everyone. That is the area where we want the least disruption."
Fulton Financial, with $6.5 billion of assets, is the third-largest bank holding company in Pennsylvania. In addition to Fulton Bank, it owns 10 other subsidiaries in New Jersey, Pennsylvania, and Maryland.
The company's net income for the first three quarters rose 7% from the same period last year, to $77.3 million. Drovers' net dropped 37%, to $3.5 million, mainly because of more than $4.2 million of bad loans charged off during the first half.