Pennsylvania's oldest bank, Valley Bank and Trust Co. of Chambersburg, has agreed to merge with Dauphin Deposit Corp.
Valley, which serves Franklin County, is the sole operating unit of $334 million-asset Valley Bancorp. Dauphin, based in Harrisburg, is a $4.5 billion company with more than I 00 offices in 12 Pennsylvania counties, and one in Maryland.
John C. Brugler, Valley's president and chief executive, says the decision to merge was not an easy one. The bank was founded in 1809, and its community commitment always has been paramount, he said.
Regulatory Burden Cited
But, he added, "regulations keep adding to our cost burdens and that makes it tough to maintain lofty margins."
Valley last year returned 1.17% on assets, having averaged 1.1% over the past five years. Mr. Brugler says the merger would be a good value for the shareholders.
A Relative Newcomer
He also said Dauphin, founded in 1835, likely would preserve Valley's heritage.
"For the last few years, we've been surveying our customers with a You're the Boss' program, and all the customer [repsonse] cards came to me," Mr. Brugler said.
"That's how we are about service, and Dauphin, which feels its niche is central Pennsylvania, promotes community banking."
|A Sentimental Aspect'
Valley already had studied Dauphin, however. "Consolidations were increasing, and we wanted to be prepared for offers, so we evaluated the arena of potential acquirers. In fact, Dauphin wasn't the first to approach us," Mr. Brugler said.
Valley is the 31st-oldest bank in the country. "There was a sentimental aspect to the decision, but the regulatory aspect and the value of the offer led to months of deliberation over the decision," Mr. Brugler said.
The merger agreement is valued at $68.8 million. It is expected to go through in December, when each share of Valley common stock will be exchanged for between 2.1 and 2.4 shares of Dauphin common.