The 177-year-old F&M Bancorp of Frederick, Md., is trying to keep up with its neighbors in the increasingly competitive Maryland banking scene.
F&M, the parent company of Farmers and Mechanics National Bank, last week entered into a letter of intent to acquire the $28 million Bank of Brunswick in a deal valued at $6.3 million, or 2.5 times book value.
The transaction is the latest indication that the traditionally conservative F&M is becoming more aggressive.
"It says they've acknowledged that they need to grow," said Alex Hart, an equity analyst at Ferris Baker Watts in Baltimore. "There are a lot of things going on that are new to them, especially with their cross-town competition buying Elkridge [National Bank]."
In late September, FCNB Corp., the. parent company of Frederick County National Bank, acquired Elkridge National Bank in a deal that further bolstered the market share of Frederick County National in the area.
At more than $500 million of assets, Frederick County National has grown into a major rival of the normally staid F&M.
At the consummation of the Brunswick deal, expected by the third quarter of 1995, F&M will have 21 offices and close to $700 million of assets.
The merging of Brunswick's two offices into F&M means that F&M will have grown by more than $80 million of assets during the past year.
"We're always looking for branches. and acquisition possibilities," said Charles W. Hoff 3d, chairman of the board and chief executive office of F&M. "If something is nearby, and it looks right, we'll go after it."
F&M has applied this philosophy twice already in recent months. It has acquired branches from two larger banks -- Citizens Bank of Maryland in Laurel and First National Bank of Maryland in Baltimore -- that are consolidating.
"We've found this to be a fairly active trend," Mr. Hoff said. "The big guys are trying to shed the smaller branches, and we are definitely bidding against each other for these things. We may be running out of them though."
F&M also consummated a purchase last month of three branches from the Resolution Trust Corp. and is in the process of building two de novo branches in the area.
For the Brunswick acquisition, F&M agreed to pay the hefty 2.5 times the book value of Brunswick's stock on the date of closing, provided that the rate does not fall below nine share of F&M common stock for each share of Brunswick stock.