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Carrollton Bank, Bay Bank to merge

Carrollton Bancorp, parent company of Carrollton Bank, and Bay Bank FSB said Monday they would merge in a transaction valued at $25 million.

Bay Bank was created after Bay National Bank, of Baltimore, failed on July 9, 2010, and was closed by the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation named the receiver. Bay National’s deposits were assumed by Jefferson Bancorp Inc., parent company of Bay Bank FSB. Bay Bank will be the surviving entity and will have 12 bank branches in the Baltimore-Washington market.

“The Board is very excited about this transaction. It represents the execution of our stated strategy to be opportunistic in our growth through mergers with like minded Maryland community banks,” Kevin Byrnes, chairman of Bay Bank, said in a prepared statement. “We believe that our access to capital when coupled with our highly experienced management team will allow us to grow to the scale necessary to meet the needs of our customers on a full service basis.”

The stock and cash deal will include repayment of $9.1 million to the U.S. Treasury Department for TARP funding of Carrollton.

According to the companies, the stock part of the deal is based on a fixed exchange ratio of 2.2217 Carrollton shares for each Jefferson share, and values Carrollton shares at $6.20 per share. In connection with the merger, the current Carrollton shareholders will be entitled to elect to exchange for $6.20 per share up to 50 percent of the outstanding shares of Carrollton common stock in the aggregate.

Shares of Carrollton Bancorp gained $1.05, or nearly 26 percent, Monday to close at $5.10. Jefferson Bancshares stock was unchanged at $2.15 per share.