Orrstown Financial Services, of Shippensburg, Pa., and Towson-based Hamilton Bancorp, which operates seven branches including a location in Ellicott City, have signed a definitive agreement under which Hamilton will merge with and into Orrstown. Hamilton shareholders will receive a combination of stock and cash currently valued at $58.5 million.

Per the agreement, Hamilton shareholders will receive 0.54 shares of Orrstown common stock and $4.10 per share in cash for each share of Hamilton common stock owned. Upon completion of the transaction, the combined company is expected to have approximately $2.5 billion in assets, $1.7 billion in loans and $2.1 billion in deposits. With operations in south central Pennsylvania and central Maryland, the combined organization will be better positioned to serve its marketplaces.

The transaction is expected to close in the second quarter of 2019. Following the closing, one of Hamilton’s current directors will be added to the boards of directors of Orrstown and Orrstown Bank. In addition, Ellen Fish, executive vice president of Hamilton, will join Orrstown as executive vice president and senior lender for the Greater Baltimore region.